Private property rights are a cornerstone of the American free enterprise system – indeed, one of the cornerstones of freedom guaranteed in our Constitution. Like many of our constitutional freedoms, however, citizens must remain ever vigilant to keep government at all levels from encroaching and infringing on these rights. In a prior post I talked about the farmer in California that had to go to the Supreme Court to keep the government from seizing a portion of his raisin crop. Here are some more examples of why such vigilance is a never-ending task:
The government must pay for damages if it destroys your property.
Arkansas Game & Fish Commission v. United States: It is not just private citizens that have issues with property rights infringement. Often the federal government will abuse the property rights of states and states sometimes do the same to local governments. While these inter-government disputes are typically more complex than those involving citizens, they establish case law that is often then applicable to similar actions in the private sector. In this case, the Army Corps of Engineers (federal government) flooded hundreds of acres of timber owned by the Arkansas Game & Fish Commission. Despite the fact that the flooding continued for eight years, and destroyed hundreds of thousands of dollars in timber, the U.S. refused to pay for any of the damage. The U.S. Supreme Court held that property owners (the state of Arkansas in this case) may pursue claims for damages when their property is destroyed or damaged by government action.
If a government entity wants to impose conditions on a permit, any such requirements must be aimed at preventing some related public harm.
Koontz v. St. Johns River Management District: Permitting by governments at all levels is often an opportunity for private property rights abuse. Many times government officials use the authority granted under permit laws and rules to step outside the intent of the law and impose requirements that are arbitrary and capricious. This is a particularly troublesome situation for small business and private citizens as governments often bank on the inability of the property owners to sustain a lengthy legal battle to uphold their rights. The government usually wins, not because they are right, but because the property owner in question cannot afford to fight. In this case, Mr. Koontz – an entrepreneur who wanted to develop his commercially zoned property near Tampa, Florida – was told that in order to receive the necessary permit approvals, he would have to 1) dedicate 75 percent of his property to conservation, and 2) pay for the improvement of 50 acres of government property. When he refused, his permit was denied. Although the Florida Supreme Court saw no problem with this at all (despite recognizing that the government’s conditions had nothing to do with any impact his development would have on the public) the U.S. Supreme Court ruled that if the government wants to impose conditions on a permit, any such requirements must be aimed at preventing some related public harm, the intended purpose of the permit process in the first place.
Local authorities should be forbidden from “revoking” a small business owner’s right to continue a long-standing business on private property.
White Trust v. City of Elk River: Constitutional principles generally prohibit local authorities from forcing landowners to remove existing structures from their property, but that doesn’t always stop regulators from seeking to weed out existing businesses with retroactive zoning codes. In this Minnesota case, the City of Elk River decided to revoke the White family’s right to continue running a commercial campground on their land—a business that they have run since the 1970s. The Minnesota Supreme Court recently heard arguments in this case and plaintiffs are urging the court to hold that local authorities are constitutionally forbidden from “revoking” a small business owner’s right to continue a long-standing business on private property.
Local governments have a sad history of seeking to improve tax revenue by using their powers to obtain property from private land owners by eminent domain, or limitation on use retroactively by permit or zoning, and then sell the property to a “connected” developer for less than market value. The developer then develops the property in a manner that results in more tax revenue for the local government in question. It’s a win-win for the developer and the local government and a lose-lose for the hapless property owner. In Michigan, voters recognized this “economic development” activity for what it is (property theft) and passed Proposal 4 in 2006 to make it more difficult for local governments to play this game.
For more information on property rights and other small business litigation you can visit the NFIB Legal Center.