Revolution or restatement? Awaiting answers to Lucas' unanswered questions.

• Author: Funk, William
• Position: A Colloquium on Lucas

A tremendous amount of effort has gone into analyzing and deciphering Lucas v. South Carolina Coastal Council.(1) One might reasonably ask why; what is it about the Lucas case that's so significant? One thing that might be significant is that this case is the foot in the door for a property rights revolution. Many scholars have been waiting to see if the Reagan-Bush Supreme Court is going to reinvigorate property rights in a way that we haven't seen for more than a half century of Supreme Court jurisprudence.(2)

Another reason that Lucas may be significant is that it will affect environmental laws and regulation. There are a number of environmental statutes that, in effect, prohibit people from developing their property under various circumstances. These include the Endangered Species Act;(3) section 404 of the Clean Water Act, which protects wetlands from development;(4) the Coastal Zone Management Act, which encourages states to pass laws to protect barrier beaches;(5) and various historic preservation laws to preserve properties whether developed or not.(6)

Of course, Lucas does not "affect" these laws by making them unconstitutional, by changing their substantive standards, or by implementing regulations that in fact restrict the development of private property. The South Carolina Supreme Court's determination on remand that indeed there was a taking of Lucas' property without just compensation does not permit Lucas to build on the property. All it means is that he will be paid for not building. The decision by the U.S. Supreme Court that restrictions such as those in Lucas might constitute takings does not end such environmental regulation. It does not stop the 404 program from denying permits for wetlands development. It does not stop the Endangered Species Act from telling people they can't develop their lands because of endangered species. What it may mean is that the government will have to pay to maintain that land as undeveloped.

Now, that can have impacts. If the government has to pay for things which it has previously gotten for free, it may start to think about whether these things are worth the cost. Is it really worth it to preserve wetlands? Is it really worth it to preserve beaches or species or historical things if we have to pay for them? Think about your ordinary life and think about the things you might do differently if you had to pay for them. For example, would you pay to read this article? It is easy to see how what you are charged to do may affect what you do. These are some of the reasons we are concerned about this case. Now the question is, is this case really worth all this effort?

The significance of Lucas can be determined by examining four questions that this case leaves unanswered: (1) What does the Court mean by total destruction of value? (2) What is the property when the Court speaks of total deprivation of value of the property? (3) When does government regulation diminish the value? (4) What is the scope of state nuisance law that will excuse government from having to pay compensation? Each of these questions has an answer that would expand or contract the impact of the Lucas case.

Justice Scalia said there are two circumstances that always are a taking.(7) One is when the government physically invades the property, and that's not this case. The other is when the government totally deprives the property of value, and that is this case. The question is, what does he mean by total deprivation of value? Does he really mean that the value of the land is zero dollars? If that's what he means - and that would be consistent with this case where there was a finding in the court below that there was no value to the land - then this case will have little impact at all because there is hardly any land in the United States that is worth zero dollars.

Wetlands that cannot be developed have a positive value, and even courts that are negative about the wetlands law find positive value.(8) Lucas' land undoubtedly has value to a person who wants to sell drinks and hotdogs on the beach on hot sunny days. Lucas can do it and other people can't; the land is worth some value to him. It's not worth $900,000, which is what he paid for it, but it's worth something.(9) And someone would be willing to pay dollars for it, albeit perhaps not a whole lot, maybe $1,000 for both lots. But that's not zero.

So, does the Court really mean zero or does it mean something else, such as not suitable for economic development? The decision uses various verbal formulations. It refers to the denial of "all economically beneficial or productive use of land,"(10) of "economically viable use of [the owner's] land,"(11) of "all economically feasible use,"(12) of "all economically valuable use,"(13) and of the "only economically productive use."(14) It refers to "the extraordinary circumstance when no productive or economically beneficial use of land is permitted,"(15) to the situation where the owner is left "without economically beneficial or productive options,"(16) where the owner must "sacrifice all economically beneficial...