Constitutional wish granting and the property rights genie.

• Author: Brownstein, Alan E.

Finally, in Dolan v. City of Tigard,(2) a recent Takings Clause case, Chief Justice Rehnquist seemed to suggest that the long sought after wish was about to be granted. In rejecting Justice Stevens' dissenting argument that business regulations deserved "a strong presumption of constitutional validity,"(3) the Court cited decisions invalidating warrantless searches of business property and striking down restrictions on commercial speech.(4) Rehnquist then proclaimed in unequivocal terms, "We see no reason why the Takings Clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or Fourth Amendment, should be relegated to the status of a poor relation in these comparable circumstances."(5)

As any reader of fairy tales can report, however, asking powerful entities like genies or supreme court justices to grant one's wishes can be a precarious undertaking. The wish maker is often likely to end up with sausages on their spouse's nose or suffering some other unanticipated calamity.(6) The same fate can easily befall lawyers and judges who think that the doctrinal grass is always greener in the cases protecting some other right than the one they are asserting and, accordingly, demand equal treatment. Instead of doing the hard work of explaining the unique purposes that justify the protection of an interest as a right in particular circumstances, such jurists insist that an interest, such as property, deserves the same form or level of constitutional protection afforded some other distinct interest because both interests are "rights."

The purpose of this essay is to demonstrate the intellectual bankruptcy of this kind of constitutional reasoning as it applies to property rights and the Takings Clause. Taking property rights proponents at their word, I analogize property to other constitutionally recognized interests to suggest just how much currently provided protection property rights might lose if they were treated comparably to other enumerated and non-enumerated rights. I conclude that the only appropriate way to protect property for constitutional purposes is to examine this right independently of other rights and to develop a suitable jurisprudence of property rights that is grounded on the nature of property as an interest, not in terms of its poor or rich relation to other rights.

1. THE TAKINGS CLAUSE AND STATE ACTION

   Regardless of the substantive content of a right or the purported rigor of the review provided to laws that arguably abridge the right, no constitutional issue arises unless the threshold of state action is passed.(7) Both the Takings Clause of the Fifth Amendment and takings principles incorporated into the Due Process Clause of the Fourteenth Amendment are governed by this basic limitation of the Constitution's coverage. Private individuals do not "take" property for constitutional purposes anymore than private individuals "abridge" freedom of speech. Only the state can violate the Constitution by impairing rights.

   Over the last two decades, however, the Court has systematically restricted the scope of state action by narrowly construing or distinguishing earlier Warren Court precedent.(8) In doing so, it has implicitly insisted that state action principles must be applied consistently and mechanically - regardless of the underlying constitutional cause of action that is at issue.(9) Thus, if the Takings Clause deserves an equal seat in the pantheon of rights, one must necessarily conclude that Takings claims are limited by the same state action requirements that are applied to other, supposedly more favored rights.

   One important state action case is Flagg Brothers, Inc., v. Brooks.(10) In Flagg Brothers, plaintiff challenged the actions of a warehouseman who proposed to sell the goods that he had been storing for her on the grounds that she was in default on her storage bill. Plaintiff argued that the sale of her belongings without a hearing and prior judicial determination that she was in default for the alleged amount owed constituted a deprivation of her property without due process of law.(11) The warehouseman's conduct was "attributable" to the state because he was acting pursuant to a New York statute that explicitly authorized the sale of a debtor's property in circumstances of this kind.(12)

   The Supreme Court dismissed plaintiff's suit. The majority opinion written by Justice Rehnquist held that commercial dispute resolution arrangements are not the exclusive prerogative of the government. Therefore, plaintiff could not establish state action by asserting that the warehouseman was engaged in a public function as were, for example, the Democratic Party's officials in the white primary cases.(13) More importantly, the Court also found that the state's statutory authorization of the sale of a defaulting debtor's goods did not constitute state action because the state merely permitted the warehouseman to take such an action. Since the state did not require the warehouseman to sell plaintiff's belongings, the governmental compulsion necessary to transform private decisions and conduct into state action was lacking in this case.(14)

   From the Court's perspective, all that New York had accomplished through the adoption of its warehouseman lien statute was to deny judicial relief to debtors who protested a warehouseman's sale of their stored goods. The state's refusal to provide a remedy for plaintiff 's alleged injury no more constituted state action in causing plaintiff 's injury than would the state's enforcement of a statute of limitations that deprived a person of redress because they had delayed too long in filing suit.(15) Thus, Justice Rehnquist wrote,

   If the mere denial of judicial relief is considered sufficient encouragement to make the State responsible for those private acts, all private deprivations of property would be converted into public acts whenever the State, for whatever reason, denies relief sought by the putative property owner.... Here, the State of New York has not compelled the sale of a bailor's goods, but has merely announced the circumstances under which its courts will not interfere with a private sale. Indeed, the crux of respondent's complaint is not that the State has acted, but that it has refused to act.(16)

   If property rights under the Takings Clause are equivalent to other constitutionally protected interests, they should be governed by the same state action requirements that Iimit procedural due process guarantees. The holding of Flagg Brothers - that the withdrawal of state remedies for the consequences of private conduct, permitted but not compelled by state statute, does not constitute state action - should be fully applicable to Takings Clause claims. Treating due process and substantive property rights equally under state action doctrine, however, risks significantly undermining recent Takings Clause decisions.

   Consider how state action doctrine might affect the Court's decision in Nollan v. California Coastal Commission,(17) the case on which the Court's analysis in Dolan is grounded.(18) Nollan involved a challenge to the kind of land use dealmaking that is currently employed by many states and communities as an alternative to the direct regulation of property development. Under a dealmaking approach, the owner of land who is seeking to develop her property must meet certain pre-conditions before a development proposal will be approved. Typically, these preconditions involve the transfer of property interests the state could not obtain through direct regulation because of Takings Clause constraints.(19)

   Thus, in Nollan, the California Coastal Commission wanted property owners to allow the public physical access across their beachfront so that people might be able to walk from one public beach to another.(20) A Commission regulation imposing a public easement over the land would constitute a permanent physical invasion of the property, however, and as such, it would violate the Takings Clause unless just compensation was paid to the owner.(21) When the property owners sought the requisite approval of their plans to construct a three bedroom house on their property, the Commission conditioned its granting of permission to construct the house on the owners' transfer of the sought after easement to the public. Pursuant to this "deal," the Commission argued, the Takings Clause was effectively circumvented because the owner had voluntarily given the state the easement it desired. Thus, the easement could be obtained without paying the owner compensation.(22)

   The Court's decision in Nollan limited this dealmaking model to those situations in which an "essential nexus" exists between the condition the state imposes on the land owner and some burden or externality created by the owner's development proposal that the state may legitimately seek to mitigate or offset.(23) In the case before it, the house the owners sought to construct did not interfere with any state interest that would be advanced by providing the public access across their beachfront. Without that connection, the state's conditioning of its permission to construct a house on the granting of the requested easement was not a legitimate regulatory response to the external costs the owner's proposed construction project would impose on the public. Instead, it was little more than extortion backed by the state's authority to deny development proposals at its discretion.(24)

   Nollan was an important constitutional victory for property owners, but it is important to understand the legal predicate on which the decision is based. The state only uses dealmaking instead of direct regulation in those circumstances when it cannot achieve its goals through regulation alone. If the state could arrange for public access across an owner's beachfront property directly without obtaining the owner's consent to that intrusion beforehand, the state would not have...