Contracting for Control of Landscape-Level Resources

• Author: Karen Bradshaw Schulz & Dean Lueck
• Position: Associate Professor of Law, Sandra Day O'Connor College of Law, Arizona State University/Professor of Agricultural and Resource Economics, University of Arizona
• Pages: 2507-2549

Contracting for Control of Landscape-Level Resources Karen Bradshaw Schulz  & Dean Lueck  ABSTRACT: Environmental governance increasingly focuses on public– private partnerships. We focus on contracting as a subset of the role of private actors governing landscape-level resources—such as wildlife habitats, scenic vistas, and firescapes—that exceed individual parcel sizes and are thus difficult for individual landowners to control unilaterally. Numerous contractual arrangements have emerged to exert coordinated control over landscape-level resources. We hypothesize that variations in laws and transaction costs, which are controlled largely by the homogeneity of landowner preferences across fragmented parcels, drive private control of landscape-level resources. In the absence of effective private control, government agencies may assume control of the landscape-level resources. A series of case studies discusses how law shapes the conditions that favor private contracting regimes of landscape-level resources, which highlight broader themes of law as a catalyst for new governance.  Associate Professor of Law, Sandra Day O’Connor College of Law, Arizona State University.  Professor of Agricultural and Resource Economics, University of Arizona. The authors gratefully acknowledge the comments provided by George J. Busenberg, Robert Fischman, Christine Klein, Rhett Larson, Yael R. Lifshitz Goldberg, Troy Rule, and Eric Singer. We benefitted from the contributions by the participants of the Spontaneous Order and Emergence of New Property Systems of Property Workshop at New York University School of Law, the Politics and Economics of Wildfire Policy Conference at University of California, Santa Barbara, and the Junior Faculty Retreat at Arizona State University College of Law. We appreciate the research assistance provided by Lauren A. Ferrigni and library services provided by Beth DeFelice. 2508 IOWA LAW REVIEW [Vol. 100:2507 I. INTRODUCTION ........................................................................... 2509 II. LANDSCAPE GOVERNANCE .......................................................... 2513 A. C ONTRACT AS A M ECHANISM FOR P UBLIC –P RIVATE E NVIRONMENTAL G OVERNANCE ............................................. 2513 B. L ANDSCAPE -L EVEL R ESOURCES ............................................... 2514 C. G OVERNMENT M ANAGEMENT OF L ANDSCAPES ........................ 2519 1. Legislation ................................................................... 2520 2. Common Law .............................................................. 2522 3. Executive and Agency Control ................................... 2523 III. EXAMPLES OF LANDSCAPE-LEVEL RESOURCES ............................ 2524 A. B IOLOGICAL L ANDSCAPES : W ILDLIFE AND M ARINE F ISHERIES .. 2524 B. U NDERGROUND L ANDSCAPES : O IL –G AS AND G ROUNDWATER ... 2526 C. T HE S CENIC AND R ECREATIONAL L ANDSCAPE ......................... 2528 IV. CONTRACTING TO MANAGE THE WILDFIRE LANDSCAPE ............. 2529 A. O VERVIEW OF THE C ASE S TUDIES ............................................ 2530 B. C OMMERCIAL T IMBERLANDS —P UBLIC AND P RIVATE .............. 2533 1. Contracting Between Private Commercial Timberland Owners ......................................................................... 2533 2. Contracting Between Private and Public Commercial Timberland Owners .................................................... 2534 C. W ILDLAND U RBAN I NTERFACE A REAS ..................................... 2535 1. Southern California Homeowners ............................. 2535 2. The Four Forests Restoration Initiative ..................... 2537 D. C ATTLE R ANCHERS ............................................................... 2539 1. Wildfire and Texas Cattle Ranching .......................... 2540 2. Malpai Borderlands Group ......................................... 2542 V. FINDINGS AND IMPLICATIONS ...................................................... 2543 A. F INDINGS .............................................................................. 2543 1. Capacity of Private Parties to Manage Large Landscapes ................................................................... 2544 2. Influence of Law on Landscape Governance ............ 2545 B. I MPLICATIONS ....................................................................... 2547 VI. CONCLUSION .............................................................................. 2548 2015] CONTRACTING FOR CONTROL OF RESOURCES 2509 I. INTRODUCTION Policy discussions increasingly envision a role for private actors in a wide variety of governance contexts. 1 Growing awareness that industry actors and nongovernmental organizations play vital leadership roles in the development of law and policy call traditional notions of the government as a unilateral decisionmaker into question. 2 Environmental law is a particularly fertile ground for studying public–private approaches. 3 Collaborative 1. See Kenneth W. Abbott & Duncan Snidal, The Governance Triangle: Regulatory Standards Institutions and the Shadow of the State , in THE POLITICS OF GLOBAL REGULATION 44, 70–71 (Walter Mattli & Ngaire Woods eds., 2009) (discussing standard bargaining and public–private governance arrangements); Orly Lobel, The Paradox of Extralegal Activism: Critical Legal Consciousness and Transformative Politics , 120 HARV. L. REV. 937, 983 (2007) (explaining that non-state actors play an important role in areas of management once thought to be controlled solely by state actors). See generally Jody Freeman, The Private Role in Public Governance , 75 N.Y.U. L. REV. 543 (2000) (emphasizing the role of private actors in administrative regulations); Eric W. Orts & Cary Coglianese, Debate, Collaborative Environmental Law: Pro & Con , 156 U. PA. L. REV. PENNUMBRA 289 (2007) (debating the proper role of private actors in determining environmental policy); R.A.W. Rhodes, The New Governance: Governing Without Government , 44 POL. STUD. 652 (1996) (noting a trend towards “new governance” approaches that emphasize the role of private parties). 2. See generally Freeman, supra note 1 (describing agencies and private organizations working together to resolve conflict). 3. Burgeoning literatures on topics including regulatory negotiation, new governance, bottom-up approaches, and insurers as regulators benefitted from early empirical studies in environmental law. See, e.g. , WILLIAM D. LEACH, CTR. FOR COLLABORATIVE POLICY, IS DEVOLUTION DEMOCRATIC? ASSESSING COLLABORATIVE ENVIRONMENTAL MANAGEMENT 1 (2004) (proposing “a framework for assessing devolution in terms of inclusiveness, representativeness, procedural fairness, lawfulness, deliberativeness, and empowerment”); Jody Freeman, Collaborative Governance in the Administrative State , 54 UCLA L. REV. 1 (1997) (using examples from Occupational Safety and Health Administration (“OSHA”) and the Environmental Protection Agency (“EPA”) to argue current collaborative models are not ideal); Cameron Holley, Aging Gracefully? Examining the Conditions for Sustaining Successful Collaboration in Environmental Law and Governance , 26 ENVTL. & PLAN. L.J. 457 (2009) (investigating the factors that impact long-term success of corporate collaboration); Guy Mundlak & Issi Rosen-Zvi, Signaling Virtue? A Comparison of Corporate Codes in the Fields of Labor and Environment , 12 THEORETICAL INQ. L. 603 (2011) (examining motivations behind corporate social responsibility in the labor and environmental sectors); Haitao Yin et al., Risk-Based Pricing and Risk-Reducing Effort: Does the Private Insurance Market Reduce Environmental Accidents? , 54 J.L. & ECON. 325 (2011) (analyzing variations in financing of cleanup of accidental leaks from underground fuel tanks). 2510 IOWA LAW REVIEW [Vol. 100:2507 environmental governance 4 and new governance 5 approaches are increasingly evaluated for their flexibility and nimbleness in addressing complicated environmental problems. 6 We focus on a specific subset of private governance of environmental resources: the use of contract. Contracts govern multiple natural resources on vast western landscapes. Any single land parcel is potentially subject to a multitude of contracts. Contracts governing landscape-level resources 7 range 4. Collaborative environmental management is the topic of considerable discussion in environmental and natural resources law. See, e.g. , Allyson Barker et al., The Role of Collaborative Groups in Federal Land and Resource Management: A Legal Analysis , 23 J. LAND RESOURCES & ENVTL. L. 67 (2003) (analyzing whether the framework for regulating public land accommodates work by collaborative groups); Lee P. Breckenridge, Nonprofit Environmental Organizations and the Restructuring of Institutions for Ecosystem Management , 25 ECOLOGY L.Q. 692 (1999) (examining changing roles for nonprofits and implications thereof for research management); Alejandro Esteban Camacho, Mustering the Missing Voices: A Collaborative Model for Fostering Equality, Community Involvement and Adaptive Planning in Land Use Decisions, Installment One , 24 STAN. ENVTL. L.J. 3, 56–65 (2005) (arguing current types of negotiated land use regulations lead to inefficient and inflexible outcomes in the long run); Timothy P. Duane, Community Participation in Ecosystem Management , 24 ECOLOGY L.Q. 771 (1997) (using case studies from California to examine ecosystem management and community involvement); Cameron Holley, Removing the Thorn from New Governance’s Side: Examining the Emergence of Collaboration in Practice and the Role for Law, Nested Institutions, and Trust , 40 ENVTL. L. REP. 10656 (2010) (examining case studies to evaluate what conditions must be present for successful collaboration); Robert A. Kagan, Political and Legal Obstacles to Collaborative Ecosystem Planning , 24 ECOLOGY L.Q. 871 (1997) (discussing obstacles that prevent effective collaborative ecosystem management); Bradley...