FROM "SIT AND WAIT" TO "PROACTIVE REGULATION": A MODEL FOR ENVIRONMENTAL REGULATION OF PRIVATE PROPERTY.

• Author: Stern, Shai

1. INTRODUCTION 34 II. ENVIRONMENTAL THREATS AND THE MECHANISMS TO TACKLE THEM 40 III. PROPERTY LAW, THE GOVERNMENT POWERS THAT AFFECT PRIVATE LAND OWNERSHIP, AND THE RIGHT TO COMPENSATION 44 IV. WHY IS THE EXAMINATION OF CURRENT PROPERTY LAW FUNDAMENTALLY FLAWED? 47 V. THE FOUR CHARACTERISTICS UNIQUE TO ENVIRONMENTAL REGULATION 52 A. Empirical and Scientific Certainty of Risk 53 B. The Irreversibility of the Damage 56 C. Cross-Border Damages 59 D. Urgencies and Emergencies 63 VI. HOW GOVERNMENTS SHOULD ACT IN RESPONSE TO ENVIRONMENTAL THREATS 66 VII. CONCLUSION 73 I. INTRODUCTION

   There are several measures that governments can follow to address environmental threats; however, they often negatively affect a landowner's private property rights. This is evident in a pending case before the U.S. Supreme Court (the Court). Specifically, on January 24, 2022, the Court granted certiorari in the case of Sackett v. United States Environmental Protection Agency. (1) on a fundamental environmental law question that has not yet been decided: What is the appropriate definition of "waters of the United States" (WOTUS) in the Clean Water Act (CWA)? (2) The Sackett Court may ultimately resolve this issue that was most recently addressed in the fractured 4-1-4 decision of Rapanos v. United States. (3)

   At the center of the Sackett case is an Idaho couple, Michael and Chantelle Sackett, who purchased a vacant lot in 2004 to build their family home in a residential neighborhood of Priest Lake, Idaho. (4) In May 2007, a month after the Sacketts began construction of their home and obtained all necessary local permits, officials from the United States Environmental Protection Agency (EPA) and the United States Army Corps of Engineers (Corps) entered the lot and informed the Sacketts' construction workers that the homesite contained "wetlands" subject to federal regulation as "navigable waters" under the CWA. (5) These officials directed that all work should cease until the Sacketts obtained federal approval in the form of a CWA permit from the Corps. (6)

   The legal question underlying the Sackett case is which lands are defined as wetlands requiring development approval from the federal authorities. (7) Although the Court has previously rejected broad definitions given by EPA, (8) it has not formulated a uniform test for that definition. For example, the Sacketts claim that EPA and the Corps inappropriately asserted jurisdiction over their wetlands by applying Justice Kennedy's "significant nexus" test established in Rapanos, (9) and that these agencies should have relied upon Justice Scalia's narrower "continuous surface connection" test, also established in that case (i.e., wetlands must have a "continuous surface connection" to a "relatively permanent" "water of the United States" for CWA jurisdiction to be applicable). (10) Since Rapanos, lower courts, and regulators, are uncertain on which test is proper when determining if a water body constitutes a water of the United States. (11)

   Opinions regarding the implications of the ruling are divided. While some believe that the harm done to the Sacketts is disproportionate and significantly impairs their property rights, others believe that their claim is opportunistic, mainly because they knew about the condition of the property before they bought it. (12) While the Sackett case stands before the Court, it nevertheless tells a much broader story about how environmental regulations can adversely affect a landowner's private property rights and lead to a number of different implications as discussed further below.

   For decades, the courts, as illustrated in both Rapanos and Sackett, have tried to formulate a clear policy regarding environmental regulations that harm private property. On the one hand, a liability rules-based policy was formulated due to the severity of the environmental threats and the increasing extent of the environmental damage.

   According to this policy, governments at the federal, state, and local levels can infringe on private property to address environmental challenges. Thus, for example, a government can determine land uses, restrict development on certain lands of environmental value, and base the issuance of development permits on conditions that comply with environmental requirements. On the other hand, courts have not formulated a clear policy concerning compensation to property owners who suffer the imposition of restrictions on or expropriation of their property for environmental purposes. Despite establishing several categorical rules (such as emergencies, (13) physical invasion of land. (14) and complete denial of any viable use of land (15)), most environmental regulations that harm private property are examined in a consequential, ad-hoc manner. (16)

   The lack of a clear formula concerning environmental regulation undermines attempts by governments at various levels to deal with environmental threats, as it prohibits them from pre-selecting the most appropriate means for dealing with them. Thus, a government confronting an environmental challenge that harms private property cannot be aware, in advance, whether it will owe compensation to the property owners or whether it is exempt from paying compensation. Nor can property owners plan their investments or know, in advance, the scope of their rights. In this sense, both landowners and governments are adversely affected by the muddled, incoherent, and unpredictable jurisprudence concerning applicable governmental powers and economic consequences. (17) Government regulation of these challenges should focus on avoiding adverse effects to the environment.

   Notwithstanding the above, today, more than ever, governments face significant environmental challenges and threats. (18) The scientific community increasingly deepens its knowledge about the existence of threats and the extent of expected damage to humans, animals, and plants. (19) Research finds that environmental damage materializes daily in different parts of the planet and threatens human lives and health, activity of ecosystems, and supplies of water and food. (20) These threats and the enormous extent of their damage require governments to act immediately. Indeed, governments worldwide work to reduce environmental threats and limit greenhouse gas emissions; conserve natural resources; expand the treatment of air, water, and soil pollution; and promote greener energies. (21) These actions are significant changes from the existing situation and put humanity in a period of transition.

   The severity of environmental threats and their diverse character require governments to cooperate internationally and establish basic principles for joint action. For example, the international community established the no-harm principle (22) and the principle of common but differentiated responsibilities (CBDR); (23) both aim to allow countries with different interests to cooperatively tackle environmental threats. Local governments understand that property rules--requiring owner consent--are ineffective; successfully addressing environmental threats requires liability rules that allow government action before those threats materialize. (24) Governments struggle to address environmental threats with the means at their disposal: economic incentives, regulation, and expropriation of private property. Naturally, and as the story of the Sackett case demonstrates, those who bear the burden of these necessary steps are property owners.

   This Article seeks to dispel the legal fog about property regulation and provide governments and property owners with a model for examining the impact of environmental regulation on private property. The Article further assesses the unique characteristics of environmental regulation and finds that four such characteristics may affect compensation to private owners for the harm they sustain. The first characteristic of environmental regulation is its urgency. Pressing environmental challenges require quick action from governments. In some cases, governments must take action to prevent immediate damage, while in others they must act immediately to ward off a long-term threat. The second characteristic is the scientific uncertainty characterizing much of environmental decision-making. Even though science increasingly reveals the characteristics of environmental threats, the extent of their damage, and the means to deal with them, (25) many environmental threats lack solid scientific confirmation. The third characteristic is concern about the irreversibility of the damage. This concern is a crucial element in governments' willingness to accelerate responses to environmental threats--they want to preserve their future discretion. Finally, an additional characteristic of environmental regulation is that the damage often crosses borders. Due to the global characteristics of environmental threats, there may be a distance between where the regulation is imposed and where the damage might materialize. This distance complicates a property owner's liability for damages that materialize outside the boundaries of their community, their state, and even their continent.

   Identifying these characteristics is essential for describing the nature of environmental threats accurately. As this Article asserts, these characteristics play a crucial role in dispersing the legal smokescreen over environmental regulation that harms private property. According to the model proposed in this Article, the characteristics of environmental threats help determine whether a government imposing environmental regulation is required to compensate owners. Examining these characteristics through the justifications for compensation--fairness and efficiency--answers some of the most pressing and confusing questions occupying decision-makers and courts: Why should the government be exempted from compensation in emergencies? Why is compensation due when the government...