Givings

Yale Law Journal

Volumn 111, Issue 3, 2001, Pages 547-617

  Bell, Abraham ^a,b   Parchomovsky, Gideon ^c  

^a HARVARD LAW SCHOOL   (United States)

^b UNIVERSITY OF CHICAGO   (United States)

^c FORDHAM UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0042195345     PISSN: 00440094     EISSN: None     Source Type: Journal    
DOI: 10.2307/797543     Document Type: Article

References (378)

1. Among the many famous examinations of takings are RICHARD A. EPSTEIN, TAKINGS (1985);
2. WILLIAM A. FISCHEL, REGULATORY TAKINGS (1995);
3. Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of "Just Compensation " Law, 80 HARV. L. REV. 1165 (1967);
4. Joseph L. Sax, Takings and the Police Power, 74 YALE L.J. 36 (1964).
5. For a historical overview of takings, see William Michael Treanor, The Original Understanding of the Takings Clause and the Political Process, 95 COLUM. L. REV. 782(1995).
6. We do not intend "distributions of property" to be a precise definition of givings any more than we mean "seizures of property" to be a precise definition of takings. Rather, we seek to present a broad depiction of the concept of givings. As we discuss throughout the Article, one of our chief goals is to distinguish between those givings for which a charge should be assessed, which we call "chargeable givings," and other distributions of wealth by the government that do not require the assessment of charge, and need not, for convenience's sake, even be referred to as givings. In this sense, we note that the takings literature often describes the concept of takings broadly, while employing a narrower definition of takings (referring only to compensable takings) where the context so demands. The broad definition helps define the outer boundaries of the concept, while the narrower use of the term helps guide the finer application of the law. In general, we acknowledge that the term "giving" necessarily partakes of much of the ambiguity of the term " taking."
7. Within the mainstream of legal literature, givings generally have been noticed only in very narrow contexts such as unconstitutional conditions, RICHARD A. EPSTEIN, BARGAINING WITH THE STATE 3-12 (1993),
8. offsets, J. Gregory Sidak & Daniel F. Spulber, Givings, Takings, and the Fallacy of Forward-Looking Costs, 72 N.Y.U. L. REV. 1068 (1997). There are three notable exceptions. First, Donald Hagman and Dean Misczynski undertook a landmark study of windfalls (givings) and wipeouts (takings) in 1978, collecting various studies of and articles about windfall recapture schemes in the United States, Great Britain, Australia, Canada, and New Zealand.
9. WINDFALLS FOR WIPEOUTS (Donald G. Hagman & Dean J. Misczynski eds., 1978). Windfalls for Wipeouts owes an intellectual debt of gratitude to Henry George's single tax scheme for taxing away unimproved land value.
10. HENRY GEORGE, PROGRESS AND POVERTY (Robert Schalkenbach Found. 1929) (1879). Hagman and Misczynski's work precedes the revolution in takings law wrought by cases such as Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), and focuses more on practical land planning schemes than theoretical analysis. Nonetheless, Windfalls for Wipeouts provides an important touchstone for our work, and we incorporate many of its insights throughout our Article. Using Hagman and Misczynski's terminology, Eric Kades engaged in a more extensive analysis of windfalls, concerning himself with "economic gains independent of work, planning, or other productive activities that society wishes to reward," rather than specifically with government action.
11. Eric Kades, Windfalls, 108 YALE L.J. 1489, 1491 (1999).
12. A more extensive literature about taxing windfall gains exists in the field of taxation. E.g., ACRS "Windfall" Recapture Proposal, 27 TAX NOTES 1172 (1985);
13. Alan D. Viard, The Implementation and Rationale of Windfall Recapture, 28 TAX NOTES 1384 (1985).
14. Second, Louis Kaplow undertook a broader analysis of all government action affecting wealth - negatively or positively. Louis Kaplow, An Economic Analysis of Legal Transitions, 99 HARV. L. REV. 509 (1986). Kaplow thus places the givings and takings question in the broader context of gain and loss resulting from uncertainty about government action. Kaplow's insights are incorporated into our analysis in Part III. Third, C. Ford Runge and several associates have analyzed "givings" and argued for their importance in examining takings.
15. C. FORD RUNGE ET AL., GOVERNMENT ACTIONS AFFECTING LAND AND PROPERTY VALUES: AN EMPIRICAL REVIEW OF TAKINGS AND GIVINGS (Lincoln Inst. of Land Policy, Working Paper No. WP96CR1, 1996).
16. The taking analogue is downzoning, which may be a compensable taking if it goes "too far." Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922); see also Lucas, 505 U.S. at 1014 (citing Mahon, 260 U.S. at 415); infra Sections II.C, II.D. Upzoning and downzoning are sometimes defined differently in different contexts. WILLIAM A. FISCHEL, THE ECONOMICS OF ZONING LAWS 22 (1985).
17. Cf. Lucas, 505 U.S. at 1027 (concluding that environmental regulations depriving land of "all economically beneficial use" effect a taking); Dooley v. Town of Fairfield, 197 A.2d 770, 772 (Conn. 1964) (finding that declaration of an area as a flood plain zone was a taking because "the use of the plaintiffs' land [had] been, for all practical purposes, rendered impossible"); State v. Johnson, 265 A.2d 711, 716 (Me. 1970) (invalidating a wetland protection statute because the benefit it effected on harmed property owners " [was] so disproportionate to their deprivation of reasonable use that such exercise of the State's police power [was] unreasonable"); Morris County Land Improvement Co. v. Township of Parsippany-Troy Hills, 193 A.2d 232 (N.J. 1963) (holding a local wetland ordinance unconstitutional because it deprived the landowner of any reasonable use of the land). More recent cases have taken a more favorable stand on environmental regulation. See, e.g., Graham v. Estuary Props., Inc., 399 So. 2d 1374 (Fla. 1981) (sustaining wetland regulations); Claridge v. N.H. Wetlands Bd., 485 A.2d 287 (N.H. 1984) (sustaining restrictive wetland regulations).
18. Matthew L. Spitzer, The Constitutionality of Licensing Broadcasters, 64 N.Y.U. L. REV. 990 (1989) (noting the role of government in distributing license frequencies and arguing for privatization on First Amendment grounds);
19. Krystilyn Corbett, Note, The Rise of Private Property Rights in the Broadcast Spectrum, 46 DUKE L.J. 611 (1996) (discussing the property treatment of frequencies in Telecommunications Act of 1996);
20. cf. Charles A. Reich, The New Property, 73 YALE L.J. 733 (1964) (discussing the expanded role of government in creating property and wealth).
21. We discuss many other examples throughout the Article. Infra Parts III, IV.
22. Abraham Bell & Gideon Parchomovsky, Takings Reassessed, 87 VA. L. REV. 277 (2001).
23. In Takings Reassessed, we defined derivative takings: [Derivative takings are] a hybrid of their more familiar close cousins. They resemble regulatory takings in that they reduce the value of property without physically appropriating it. Yet, they are distinct from regulatory takings in that they may arise as the result of a physical taking. And, unlike its cousins, the derivative taking may never appear alone; it must always be preceded by a physical or regulatory taking. Id. at 280-81. The existence of cognizable givings, as established in this Article, mandates a slight amendment to the concept of derivative takings to incorporate the possibility of derivative takings being created by an underlying giving. See id. at 281 n.14.
24. Infra Section II.B.
25. See, e.g., Charles W. Logan, Getting Beyond Scarcity: A New Paradigm for Assessing the Constitutionality of Broadcast Regulation, 85 CAL. L. REV. 1687 (1997);
26. Cass R. Sunstein, Television and the Public Interest, 88 CAL. L. REV. 499 (2000).
27. See, e.g., Jill K. Pearson, Note, Balancing Private Property Rights with Public Interests: Compensating Landowners for the Use of Railroad Corridors for Fiber-Optic Technology, 84 MINN. L. REV. 1769 (2000).
28. See Steven W. Watkins, Note, Congressional Attempts To Amend the Clean Water Act: American Wetlands Under Attack, 72 N.D. L. REV. 125 (1996) (describing recent federal attempts at reducing wetlands restrictions on private property).
29. Various studies have shown that "greenbelt" regulations enhance property values. E.g., Mark R. Correll et al., The Effects of Greenbelts on Residential Property Values: Some Findings on the Political Economy of Open Space, 54 LAND ECON. 207 (1978);
30. G.J. Knapp & A.C. Nelson, The Effects of Regional Land Use Control in Oregon: A Theoretical and Empirical Review, 18 REV. REGIONAL STUD. 37 (1988);
31. George R. Parsons, The Effect of Coastal Land Use Restrictions on Housing Prices: A Repeat Sale Analysis, 22 J. ENVTL. ECON. & MGMT. 25 (1992).
32. U.S. CONST. amend. V ("[N]or shall private property be taken for public use, without just compensation.").
33. While we argue that a law of givings is necessary, we do not opine on whether it should be viewed as a branch of constitutional law, nor on what branch of government should be responsible for instituting the law of givings. Together, Article I, Section 8, Clause 1 and Article IV, Section 3, Clause 2 of the Constitution clearly give the federal government the power both to give and to take; the states already have both powers, without reference to the Federal Constitution. The Takings Clause of the Fifth Amendment explicitly limits the federal takings power, and, as incorporated by the Fourteenth Amendment (and interpreted by the Supreme Court), the state takings power as well. It is not evident, however, that the Takings Clause does not imply a similar limitation on the federal and state givings power. Indeed, given our claim that the law of givings is a necessary accompaniment of the law of takings, one might argue that the Takings Clause implicitly limits both the state and federal power to give. These and opposing arguments can only be made in reference to broader theories of constitutional interpretation that are beyond the scope of this Article. In any event, we see no limitation on legislative implementation of a law of givings.
34. 304 N.W.2d 455 (Mich. 1981).
35. Id. at 457.
36. See id. (defining "public use" broadly).
37. We do not endorse this conception of the Takings Clause on normative grounds. Nonetheless, relative wealth is a possible baseline for measuring takings, and various studies suggest that relative wealth is an important determinant of welfare. E.g., ROBERT H. FRANK, CHOOSING THE RIGHT POND 28-35 (1985);
38. FRED HIRSCH, SOCIAL LIMITS TO GROWTH 27-31 (1976) (developing the concept of positional goods);
39. THORSTEIN VEBLEN, THE THEORY OF THE LEISURE CLASS 26-34 (Random House 1934) (1899);
40. Richard A. Easterlin, Does Economic Growth Improve the Human Lot? Some Empirical Evidence, in NATIONS AND HOUSEHOLDS IN ECONOMIC GROWTH 89 (Paul A. David & Melvin W. Reder eds., 1974);
41. Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1, 18-21 (1992).
42. The Court has indicated: [E]ven though a person has no "right" to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interests . . . . Perry v. Sindermann, 408 U.S. 593, 597 (1972). But see Rust v. Sullivan, 500 U.S. 173 (1991) (permitting restrictions on speech about abortion in clinics receiving federal funding). See generally Kathleen M. Sullivan, Unconstitutional Conditions, 102 HARV. L. REV. 1413 (1989) (discussing the unconstitutional conditions doctrine);
43. Cass R. Sunstein, Why the Unconstitutional Conditions Doctrine Is an Anachronism (With Particular Reference to Religion, Speech, and Abortion), 70 B.U. L. REV. 593 (1990) (noting the limitations of the current unconstitutional conditions doctrine).
44. THE FEDERALIST NO. 10 (James Madison).
45. See, e.g., Cass R. Sunstein, Naked Preferences and the Constitution, 84 COLUM. L. REV. 1689, 1690 (1984) (describing the Takings Clause as one of several clauses aimed at curbing "naked preferences" of faction); Treanor, supra note 1, at 836-55 (discussing the importance of Madisonian political analysis in the drafting of the Takings Clause);
46. infra Section III.C. But see Daryl J. Levinson, Making Government Pay: Markets, Politics and the Allocation of Constitutional Costs, 67 U. CHI. L. REV. 345, 373-77 (2000) (questioning whether modern public choice theory supports compensation for takings).
47. Michelman, supra note 1, at 1178; see also Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 CAL. L. REV. 837, 853-57 (1983) (using Madisonian analysis for local land-use decisions).
48. See infra Section III.C.
49. Hanoch Dagan & James J. White, Governments, Citizens, and Injurious Industries, 75 N.Y.U. L. REV. 354, 408 (2000) ("Takings doctrine is complex and multifaceted; some say chaotic. If there is some measure of coherence or consensus in this vast and diverse body of judicial opinions and scholarly commentary, it is that the purposes of just compensation are essentially two: efficiency and distributive justice." (citations omitted)).
50. See, e.g., RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 58 (4th ed. 1992) ("The simplest economic explanation for the requirement of just compensation is that it prevents the government from overusing the taking power.");
51. William A. Fischel & Perry Shapiro, Takings, Insurance, and Michelman: Comments on Economic interpretations of "Just Compensation" Law, 17 J. LEGAL STUD. 269, 269-70 (1988) (noting that the compensation requirement "disciplin[es] the power of the state, which would otherwise overexpand unless made to pay for the resources that it consumes").
52. Kaplow, supra note 3, at 567-70 (describing the fiscal illusion justification for takings compensation).
53. See id. at 567-68.
54. See Harold Demsetz, Toward a Theory of Property Rights, 57 AM. ECON. REV. 347, 347-57 (1967) (arguing that property rights arise to effect internalization of externalities, both positive and negative).
55. Armstrong v. United States, 364 U.S. 40, 49 (1960).
56. E.g., Michael Axline, Forest Health and the Politics of Expediency, 26 ENVTL. L. 613 (1996) (exploring the negative impact of logging on natural resources and taxpayers);
57. Paul Stanton Kibel, Reconstructing the Marketplace: The International Timber Trade and Forest Protection, 5 N.Y.U. ENVTL. L.J. 735, 744-54 (1996) (explaining the cost of native forest destruction, and discussing the possibility of a government-logging interest collusion);
58. R. Brent Walton, Ellickson's Paradox: It's Suicide To Maximize Welfare, 7 N.Y.U. ENVTL. L.J. 153, 155 (1999) ("The limber industry has destroyed millions of acres of America's silva.");
59. cf. Garret Hardin, The Tragedy of the Commons, 162 SCIENCE 1243 (1968) (describing the difficulty of preventing overuse of public resources).
60. The line between takings and taxes or penalties is not an easy one to draw. Infra Section IV.A.
61. See, e.g., Michelman, supra note 1, at 1168, 1182; Cass R. Sunstein, On Property and Constitutionalism, 14 CARDOZO L. REV. 907, 918 (1993) ("Properly understood, the defense of property rights is a defense of programs of redistribution as well.");
62. cf. Louis Kaplow & Steven Shavell, Why the Legal System Is Less Efficient than the Income Tax in Redistributing Income, 23 J. LEGAL STUD. 667 (1994) (discussing the role of legal rules and taxation in the redistribution of income). But see EPSTEIN, supra note 1, at 298-99, 314-24 (disallowing redistribution as a public purpose).
63. See, e.g., Raymond J. Keating, It's Time To Get the Government Out of the Sports Business, USA TODAY MAG., Mar. 1, 2000, at 28.
64. Cf. Haw. Hous. Auth. v. Midkiff, 467 U.S. 229 (1984) (allowing private takings by tenant farmers); infra Section IV.C (discussing the proximity between givings and takings).
65. The "benefit-offset" principle allowed the taking party to reduce the compensation to property owners by the amount of benefit that the taking conferred on the owners' remaining property. For discussion, see FISCHEL, supra note 1, at 80-84; Harry N. Scheiber, The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts, 5 PERSP. AM. HIST. 329 (1971); and infra Section IV.C. For cases applying the principle, see, for example, St. Louis & San Francisco Railway v. Mathews, 165 U.S. 1 (1897); McKeen v. City of Minneapolis, 212 N.W. 202 (Minn. 1927); and Pierce County v. Thompson, 144 P. 704 (Wash. 1914).
66. The doctrine of average reciprocity of advantage originated with Justice Holmes in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), who noted that some regulations, while diminishing the value of property in one respect, could be said to benefit the property owner in another, such that no additional compensation was required. For example, he explained that a regulation forcing mining companies to leave intact pillars of coal in abandoned mines was excused from the compensation requirement because the regulation benefited the mine owners by protecting the safety of their employees. Id. at 415. It has never been entirely clear how the concept of "advantage" is to be measured in order to determine whether a given regulation produces average reciprocity. If the value of the advantage must be precisely equal to the loss, the question of whether there is average reciprocity of advantage (thereby defeating the need for finding a taking) becomes identical to the question of whether "just compensation" has been paid. On the other hand, if the calculus is looser, as seemed to be the case in Penn Central Transportation Co. v. New York City, 438 U.S. 104, 130-35 (1978), some average reciprocity of advantage may be found in any taking of private property. See Raymond R. Coletta, Reciprocity of Advantage and Regulatory Takings: Toward a New Theory of Takings Jurisprudence, 40 AM. U. L. REV. 297 (1990) (arguing for expanded use of reciprocity of advantage and elimination of compensation whenever the net effect of government action is positive); infra Section IV.C.
67. "The floor area ratio measures the amount of floor area relative to total site area, including all floor space in office and other nonresidential multi-story buildings." Frederick W. Acker, Note, Performance Zoning, 67 NOTRE DAME L. REV. 363, 373 (1991).
68. See supra note 14.
69. Infra notes 251-254 and accompanying text.
70. Bell & Parchomovsky, supra note 8, at 280-81.
71. Treanor, supra note 1, at 798-818.
72. Compare, e.g., Miller v. Schoene, 276 U.S. 272 (1928) (finding no taking where a state regulation required owners to cut down red cedar trees infected with a virus that could kill apple trees), with Dep't of Agric. & Consumer Servs. v. Mid-Fla. Growers, Inc., 521 So. 2d 101 (Fla. 1988) (holding that full and just compensation was required when the state, pursuant to its police power, destroyed healthy trees); compare Pa. Coal Co. v. Mahon, 260 U.S. 393 (1922) (finding a taking when a statute totally annulled previously existing mining rights), with Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987) (holding that no compensation was required when a statute restricting mining activity did not make it impossible for the plaintiff to engage in profitable mining operations). For academic commentary, see BRUCE A. ACKERMAN, PRIVATE PROPERTY AND THE CONSTITUTION 3 (1977) (describing takings jurisprudence as a "set of confused judicial responses"); Coletta, supra note 38, at 299-300 (describing takings jurisprudence as a "chameleon of ad hoc decisions that has bred considerable confusion");
73. Gideon Kanner, Hunting the Snark, Not the Quark: Has the U.S. Supreme Court Been Competent in Its Effort To Formulate Coherent Regulatory Takings Law?, 30 URB. LAW. 307, 308 (1998) ("The incoherence of the U.S. Supreme Court's output in this field has by now been demonstrated time and again by practitioners and academic commentators ad nauseam, and I refuse to add to the ongoing gratuitous slaughter of trees for the paper consumed in this frustrating and increasingly pointless enterprise.");
74. Andrea L. Peterson, The Takings Clause: In Search of Underlying Principles Part I - A Critique of Current Takings Clause Doctrine, 77 CAL. L. REV. 1301, 1304 (1989) ("[I]t is difficult to imagine a body of case law in greater doctrinal and conceptual disarray.");
75. Carol M. Rose, Mahon Reconstructed: Why the Takings Issue Is Still a Muddle, 57 S. CAL. L. REV. 561 (1984).
76. Jed Rubenfeld, Usings, 102 YALE L.J. 1077, 1081 (1993).
77. E.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982).
78. 260 U.S. 393 (1922).
79. Bell & Parchomovsky, supra note 8, at 279-81.
80. This example is very loosely based upon United States v. Causby, 328 U.S. 256 (1946).
81. We assume that the restrictions are substantial enough to support a takings claim under Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).
82. See supra note 44.
83. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982).
84. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1029 (1992).
85. Id. at 1022.
86. Hadacheck v. Sebastian, 239 U.S. 394 (1915).
87. 438 U.S. 104 (1978).
88. Id. at 124.
89. 483 U.S. 825 (1987).
90. 512 U.S. 374 (1994).
91. Id. at 391.
92. See, e.g., John D. Echeverria, Takings and Errors, 51 ALA. L. REV. 1046, 1051-52 (2000) ("According to some courts and commentators, the relatively demanding Nollan/Dolan analysis should apply not only to land use exactions but also to other kinds of regulations and other government actions that affect private property interests." (citations omitted));
93. Lee Anne Fennell, Hard Bargains and Real Steals: Land Use Exactions Revisited, 86 IOWA L. REV. 1, 11 (2000) (discussing the various uncertainties concerning the scope of the Nollan and Dolan holdings). But see City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702-03 (1999) (holding Dolan's rough proportionality rule inapplicable to a takings claim based on a denial of a development permit).
94. There have also been attempts to rationalize the doctrine without resort to grand theory. E.g., Andrea L. Peterson, The Takings Clause: In Search of Underlying Principles Part II - Takings as Intentional Deprivations of Property Without Moral Justification, 78 CAL. L. REV. 53 (1990).
95. Michelman, supra note 1, at 1214-24.
96. Michelman recognized the potential unfairness of refusing compensation on utilitarian grounds, even after taking into account demoralization costs, and he presented a Rawlsian fairness approach as an alternative to his utilitarian approach. However, he viewed a purely fairness-based jurisprudence as practically unworkable. Id. at 1245-53.
97. FISCHEL, supra note 1, at 351-53.
98. Saul Levmore, Takings. Torts, and Special Interests, 77 VA. L. REV. 1333, 1334 (1991).
99. EPSTEIN, supra note 1. Epstein also sees torts as giving rise to constitutionally required compensation.
100. Kaplow, supra note 3, at 531, 537, 554. Kaplow writes: The similarity between the arguments for and against compensation of losses and taxation of gains suggests that advocacy of one result for losses should be accompanied by advocacy of a corresponding result for gains. If the common view in many contexts is that losses should be compensated or otherwise mitigated, while gains can be ignored, the question is which position should be abandoned. Id. at 555. Kaplow concludes with "a general preference for ignoring both gains and losses." Id. 69. Id. at 538-41.
101. Lawrence Blume & Daniel L. Rubinfeld, Compensation for Takings: An Economic Analysis, 10 RES. L. & ECON. 53, 67 (1987).
102. Sax, supra note 1, at 62-63. Sax later recanted major parts of his theory. Joseph L. Sax, Takings, Private Property and Public Rights, 81 YALE L.J. 149 (1971).
103. Rubenfeld, supra note 45, at 1078-81.
104. Cf. Reich, supra note 6 (discussing the role of government in creating wealth).
105. There might also be givings to public actors, just as there are takings from public actors. See, e.g., Michael H. Schill, Intergovernmental Takings and Just Compensation: A Question of Federalism, 137 U. PA. L. REV. 829 (1989).
106. Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).
107. Homesteading acts were a popular form of government giving in the nineteenth and early twentieth centuries. See, e.g., Homestead Act, ch. 75, § 1, 12 Stat. 392 (1862) (repealed 1976); Enlarged Homestead Act, ch. 160, §§ 1-6, 35 Stat. 639 (1909) (repealed 1976); Stock-Raising Homestead Act, ch. 9, § 1, 39 Stat. 862 (1916) (repealed 1976). In citing homesteading acts as examples of givings, we do not argue that they should necessarily be viewed as chargeable givings. We discuss the mechanics of distinguishing chargeable from nonchargeable givings in Part IV.
108. See generally RUNGE ET AL., supra note 3; Bill Johnson, Editorial Notebook: How Fair Is It for City To Grab Land for Select Firms?, DETROIT NEWS, Apr. 11, 1997, at A10.
109. See supra note 4 and accompanying text for a definition of upzoning.
110. For a description of recent zoning tools such as transferable development rights, see John M. Armentano, Zoning and Land Use Planning, 27 REAL EST. L.J. 216 (1998);
111. Julian Conrad Juergensmeyer et al., Transferable Development Rights and Alternatives After Suitum, 30 URB. LAW. 441 (1998);
112. Charles L. Siemon, Successful Growth Management Techniques: Observations from the Monkey Cage, 29 URB. LAW. 233 (1997). As is the case with regulatory takings, it is difficult to delineate precisely when the use of zoning bestows a giving. See infra Section II.D.
113. See supra note 14.
114. Bell & Parchomovsky, supra note 8; Parsons, supra note 14.
115. For a discussion of current taxes on givings, see infra Section VI.A.
116. Bell & Parchomovsky, supra note 8, at 280-81.
117. U.S. CONST. amend. V.
118. More broadly, Kaplow has noted the importance of taking account of benefits created by government policy because "policy change is presumably undertaken in order to generate net gains in social welfare." Kaplow, supra note 3, at 552.
119. See RUNGE ET AL., supra note 3, at 12-20.
120. We assume, for purposes of this example, that the height restriction constitutes a compensable regulatory taking. Under Penn Central's multifactor test, the precise determination is highly fact-specific. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 136 (1978); supra Subsection II.A.2.
121. We discuss this remedy further infra Section IV.C.
122. Penn Central, 438 U.S. at 134-45. Lynda Oswald observed that the average reciprocity of advantage has undergone a dramatic, and unfortunate, transformation through time: Simply put, in its original form, the rule stated that a land use regulation that resulted in benefits to regulated landowners roughly equal to the burdens imposed on them did not violate the United States Constitution. In its modern, corrupted form, however, the average reciprocity of advantage rule states that if a land use regulation results in benefits to society as a whole roughly equal to the burdens imposed upon the regulated landowners, no taking has occurred. As a result of this perversion, the average reciprocity of advantage rule has lost its former potency as a tool for distinguishing valid police power actions from invalid regulatory takings and instead has become a method for simply rubberstamping legislative acts. Lynda J. Oswald, The Role of the "Harm/Benefit" and "Average Reciprocity of Advantage" Rules in a Comprehensive Takings Analysis, 50 VAND. L. REV. 1449, 1489 (1997).
123. 467 U.S. 229 (1984).
124. Id. at 233-34.
125. We develop this idea further infra Section IV.C.
126. 304 N.W.2d 455 (Mich. 1981).
127. Tina Lam, De-Stadium, DETROIT FREE PRESS, May 17, 1999, LEXIS, Nexis Library, Detroit Free Press File;
128. Protect the Taxpayers, DETROIT NEWS, Oct. 19, 1999, at A10.
129. 165 U.S. 1 (1897).
130. While we refer to the enhanced liability rule as a "taking," we do not mean thereby to imply that it altered a form of property rule protection, rather than liability rule protection. Nor do we assert that the enhanced liability standards would necessarily be recognized as regulatory takings under any of the legal standards currently used. Rather, we point to the "taking" in its broadest sense - an adverse impact upon the property value as a result of a change in the legislative scheme.
131. Some commentators concluded that railroads received excess subsidies and homeowners inadequate compensation. E.g., FISCHEL, supra note 1, at 80-81; Scheiber, supra note 37, at 362-65.
132. See infra Sections IV.C, IV.D.
133. FISCHEL, supra note 1, at 83-84. An additional problem was direct subsidy of construction costs. See infra notes 138-139 and accompanying text.
134. 304 N.W.2d 455 (Mich. 1981).
135. See Peter E. Millspaugh, Eminent Domain: The Emerging Government/Business Interface, 59 U. DET. J. URB. L. 167, 167 (1982).
136. An exaction is the conditioning of a government benefit on the payment of a property right. See supra note 61 and accompanying text. A narrower definition of exaction would presume the wrongfulness of the condition and view the payment as improperly compelled. See BLACK'S LAW DICTIONARY 581 (7th ed. 1999).
137. See David J. Benson, Bonus or Incentive Zoning - Legal Implications, 21 SYRACUSE L. REV. 895 (1970);
138. Jerold S. Kayden, Zoning for Dollars: New Rules for an Old Game? Comments on the Municipal Art Society and Nollan Cases, 39 WASH. U. J. URB. & CONTEMP. L. 3, 3 (1991) ("Through the land use regulatory technique formally known as 'incentive zoning,' cities grant private real estate developers the legal right to disregard zoning restrictions in return for their voluntary agreement to provide urban design features such as plazas, atriums, and parks, and social facilities and services such as affordable housing, day care centers, and job training.").
139. 483 U.S. 825 (1987).
140. Id. at 841-42.
141. Id. at 833-37.
142. See Kayden, supra note 103.
143. 512 U.S. 374 (1994).
144. See Peterson, supra note 62, at 78-79.
145. The difference between exaction and incentive zoning terminology might be seen as a question of where the baseline building right is seen to lie. If the building rights are viewed in some sense as already inhering in the property, the demanded public amenity should be called an "exaction." However, if the building rights are viewed as a gift by the zoning authority given as a reward to those who provide public amenities, the additional building rights should be referred to as incentive zoning rights. See also infra Section VI.A.
146. 438 U.S. 104 (1978).
147. Id. at 114.
148. Id. at 137.
149. 257 N.E.2d 870 (N.Y. 1970).
150. More precisely, the court granted the residents a conditional injunction to be vacated upon the payment of permanent damages. Id. at 874-75.
151. E.g., Ian Ayres & Eric Talley, Solomonic Bargaining: Dividing a Legal Entitlement To Facilitate Coasean Trade, 104 YALE L.J. 1027, 1039-40 & n.46 (1995) (using Boomer as an example of a private takings case).
152. See Boomer, 257 N.E.2d at 875-76 (Jasen, J., dissenting). The Boomer decision has proved controversial on many grounds. See Daniel A. Farber, Reassessing Boomer: Justice, Efficiency, and Nuisance Law, in PROPERTY LAW AND LEGAL EDUCATION 7 (Peter Hay & Michael H. Hoeflich eds., 1988). In retrospect, we can see that the court underestimated the damage to the plaintiffs. Id. at 11-12. There is also room to question whether the court, exercising its equitable powers, was the proper institution to effect the giving and takings.
153. See NEIL K. KOMESAR, IMPERFECT ALTERNATIVES 14-28 (1994).
154. 276 U.S. 272 (1928).
155. Id. at 280.
156. 337 U.S. 325 (1949).
157. The case invokes - and resolves admirably - a number of other challenges undergirding the laws of givings and takings. Chief among these challenges are issues of valuation, see infra Section V.B, framing of the transaction, see infra note 239, and time of measurement, see infra Section V.C.
158. 260 U.S. 393 (1922).
159. 505 U.S. 1003 (1992).
160. For a justification of this limit on the definition of derivative takings, see Bell & Parchomovsky, supra note 8, at 290-92.
161. 328 U.S. 256 (1946).
162. Bell & Parchomovsky, supra note 8, at 279-80.
163. See supra notes 1, 44.
164. See supra note 3.
165. See RUNGE ET AL., supra note 3.
166. See supra note 2.
167. Indeed, this makes a formal powers analysis an unlikely candidate for framing the law of givings. However, a powers analysis may remain useful in the context of takings. See infra Section IV.B.
168. Elizabeth Garrett, Harnessing Politics: The Dynamics of Offset Requirements in the Tax Legislative Process, 65 U. CHI. L. REV. 501, 503 (1998) (discussing the "zero-sum nature of federal allocative decisions").
169. We develop this point further infra Section III.C.
170. Takings may also present opportunities for financial gain for the corrupt. Barry Bagman may wish to sell his property in Cercla Estates, but he may be unable to find a buyer. In exchange for an appropriate campaign contribution, Peter might arrange for Barry's property to be confiscated by means of eminent domain. Peter might also threaten a taking for inadequate compensation in order to extort contributions. Nevertheless, such a situation differs from the givings example in that it would involve a victim with an incentive to turn to legal authorities.
171. We discuss the differences between grants to singled-out individuals or companies, on the one hand, and grants to the public at large, on the other, infra Section IV.B.
172. C. PETER MAGRATH, YAZOO (1966). The Yazoo land frauds provided the background for the Supreme Court's landmark decision on the Contracts Clause, Fletcher v. Peck, 10 U.S. 87 (1810).
173. See also Mark A. Graber, Naked Land Transfers and American Constitutional Development, 53 VAND. L. REV. 73 (2000) (discussing cases illustrating that takings were "the paradigmatic constitutional taboo" during the nineteenth century).
174. The Pacific Railroad Acts granted 12,800 acres to railroad companies for every mile of track laid, as well as $48,000 for every mile laid in mountainous terrain. They also subsidized loans. See Act of July 3, 1866, ch. 158, 14 Stat. 79; Act of July 2, 1864, ch. 216, 13 Stat. 356; Act of July 1, 1862, ch. 120, 12 Stat. 489.
175. DAVID HOWARD BAIN, EMPIRE EXPRESS (1999).
176. A. Timothy Martin, The Development of International Bribery Law, 14 NAT. RESOURCES & ENV'T 95, 97 (1999).
177. For a discussion of these and other prominent cases of corruption, see JOHN T. NOONAN, JR., BRIBES (1984).
178. LEASES UPON NAVAL OIL RESERVES AND ACTIVITIES OF THE CONTINENTAL TRADING CO. (LTD.) OF CANADA, SUPPLEMENTAL REPORT, S. REP. NO. 70-1326, pt. 2, at 3 (1928).
179. E.g., Kimberly Kindy & Hanh Kim Quach, Proposed Budget Most Pork-Laden Yet, ORANGE COUNTY REG., June 15, 2000, at A1 ("The problem is the entire budget has become a grab bag of pork-barrel projects." (quoting State Senator Tom McClintoch));
180. Larry Sandier, Amtrak Critic Wants Thompson Ousted, MILWAUKEE J. SENTINEL, July 13, 2000, at 1B ("When you add pork-barrel trains to carry very few people through rural districts represented by powerful congressmen . . . that is the opposite of what is needed."). In one notable, and apparently facetious, exception, a recent essayist proclaimed: "Pork is good. Pork is virtuous. Pork is the American way."
181. Jonathan Cohn, Roll Out the Barrel: The Case Against the Case Against Pork, NEW REPUBLIC, Apr. 20, 1998, at 24, 28.
182. 364 U.S. 40 (1960).
183. Id. at 49.
184. John Rawls, Justice as Fairness, 67 PHIL. REV. 164, 165 (1958).
185. See WILL KYMLICKA, CONTEMPORARY POLITICAL PHILOSOPHY 50-94 (1990).
186. See Alan E. Brownstein, Illicit Motive in the Municipal Land Use Regulation Process, 57 U. CIN. L. REV. 1 (1988); Sunstein, supra note 23, at 1670.
187. See, e.g., Patricia Munch, An Economic Analysis of Eminent Domain, 84 J. POL. ECON. 473, 487-88 (1976) (studying exercises of eminent domain in Chicago, and finding that the indigent - i.e., those with lower-value property - were consistently undercompensated relative to affluent property owners).
188. See RUNGE ET AL., supra note 3.
189. Michelman, supra note 1, at 1216-17.
190. Id. at 1217.
191. Id.
192. Supra Section II.C.
193. In this Part, we do not provide criteria for determining when givings call for a charge. We defer that discussion to infra Part IV.
194. See, e.g., Hanoch Dagan, Takings and Distributive Justice, 85 VA. L. REV. 741, 764 (1999);
195. Michael A. Heller & James E. Krier, Deterrence and Distribution in the Law of Takings, 112 HARV. L. REV. 997, 998-1002 (1999); Michelman, supra note 1, at 1218-24.
196. Procrustes, in Greek mythology, had one bed for all. Those who were too tall for the bed had their legs chopped off, while those who were too short were stretched to fit. EDITH HAMILTON, MYTHOLOGY 210-11 (1942).
197. Infra Section III.C.
198. As a normative theory, economic efficiency prescribes that "law should be made to conform as closely as possible to the dictates of wealth maximization." RICHARD A. POSNER, THE PROBLEMS OF JURISPRUDENCE 362 (1990).
199. A government suffering from fiscal illusion labors under the misimpression that the true net value of its action is reflected by the effect on the government's budget. Lawrence Blume & Daniel L. Rubinfeld, Compensation for Takings: An Economic Analysis, 72 CAL. L. REV. 569, 621 (1984).
200. Law and economics literature generally employs a Kaldor-Hicks wealth-maximization criterion for efficiency. See THOMAS J. MICELI, ECONOMICS OF THE LAW 4 (1997). Analyzing takings from the viewpoint of the citizen victim, Kaplow argued that there is no economic justification for failing to treat gains precisely like losses. Kaplow, supra note 3, at 553.
201. This figure represents the present value of the future revenue stream to be created by property taxes.
202. The $2.9 million loss represents the difference between the S3 million in costs and the $100,000 in revenues.
203. The $2 million gain represents the difference between the $5 million in societal benefits and the $3 million in costs.
204. Our fuller treatment of the incentives on government behavior appears in Section II.C. Due to distributional effects among voters, as well as the nonuniformity of nonpecuniary factors, such as ideology, that affect government and the electorate, distorted incentives may persist even in the instance of a mechanism that compensates for fiscal illusion.
205. See studies discussed in FISCHEL, supra note 1, at 96-97; and Joseph J. Cordes & Burton A. Weisbrod, Governmental Behavior in Response to Compensation Requirements, 11 J. PUB. ECON. 47 (1979). See also Bell & Parchomovsky, supra note 8, at 291 n.53 (referring to studies).
206. See, e.g., Blume & Rubinfeld, supra note 158, at 597-98.
207. Kaplow, supra note 3.
208. See Blume & Rubinfeld, supra note 158, at 584-89.
209. Kaplow, in particular, notes repeatedly the symmetry between the upside and downside of the risk of government action. Kaplow, supra note 3, at 553-55.
210. See MICELI, supra note 159.
211. This assumes the ready availability of substitutes for the property that would be taken.
212. Thomas J. Miceli, Do Governments Provide Efficient Compensation for Takings?, ILL. REAL EST. LETTER, Winter/Spring 1993, at 8, 9.
213. Based on the following calculation: ($150,000 - $100,000)/($150,000 - $50,000) = 0.5.
214. Based on ($150,000 - $101,000)/($150,000 - $50,000) = 0.49.
215. Based on (0.5 × $100,000) - (0.49 × $101,000) = $510.
216. Basedon 1 - [($150,000 - $100,000)/($150,000 - $50,000)] = 0.5.
217. Based on 1 - [($150,000 - $101,000)/($150,000 - $50,000)] = 0.51.
218. Based on (0.51 × $101,000) - (0.5 × $100,000) = $1510.
219. See Matthew Purdy, Yankees Look Away from Bronx, N.Y. TIMES, Sept. 24, 1995, § 1, at 45 (citing criticism of Steinbrenner for driving down attendance with negative comments about Yankee Stadium and the surrounding neighborhood);
220. Vivian S. Toy, Streak Alive as Yankees Veto 13th Stadium Plan in a Year, N.Y. TIMES, Sept. 6, 1995, at B3 (noting Steinbrenner's criticism of traffic and parking problems in arguing for greater municipal assistance).
221. For an interesting discussion of the advantages of reducing the value of one's property in interactions with private actors to diminish the risks of theft or conversion, see Douglas W. Allen, Creating Wealth by Destroying It: An Extension of Demsetz's Theory of Property Rights (Mar. 2001) (unpublished manuscript, on file with authors). Naturally, Allen does not discuss givings. Nor does he address the implications of his analysis for takings.
222. DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE 22-24 (1991).
223. This view is generally, if not entirely accurately, referred to as Pigouvian. See FISCHEL, supra note 1, at 203-04.
224. See FARBER & FRICKEY, supra note 179.
225. See id.
226. For a discussion of the differences between subsidies and givings, see infra Section IV.A.
227. See supra Section II.D.
228. 304 N.W.2d 455 (Mich. 1981).
229. Millspaugh, supra note 101, at 180.
230. MANCUR OLSON, THE LOGIC OF COLLECTIVE ACTION (1965).
231. Levinson, supra note 23, at 376.
232. Id. Levinson discusses the difficulties with the takings regime, but does not discuss the possibility of creating a jurisprudence of givings. He does occasionally allude to the possibility of accounting for benefits. See infra note 193 and accompanying text.
233. Levinson offers three distinct models of government decisions on takings - one based on majoritarian decisionmaking, one based on interest-group power, and one based on bureaucratic aggrandizement. Levinson, supra note 23, at 361-87.
234. Id. at 363-64.
235. Our example is a slightly modified version of Levinson's. See id. at 364-66. The terminology of givings is ours. Levinson refers to "benefits." Levinson presumes that the person from whom the property is taken can be excluded from the benefits. While this presumption is unlikely in our simplified example, it is quite possible in more complex real world situations.
236. While Levinson does not suggest a regime for assessing charges for givings, he does acknowledge that if "compensation were financed from a tax on regulatory windfalls, only efficient regulations would win majority support." Id. at 366. In Section VI.A we demonstrate the inadequacy of the alternative of taxing givings.
237. See, e.g., Hi-Craft Clothing Co. v. NLRB, 660 F.2d 910, 916 (3d Cir. 1981) (mentioning "the unspoken premise that government agencies have a tendency to swell, not shrink, and are likely to have an expansive view of their mission"); ANTHONY DOWNS, INSIDE BUREAUCRACY (1967);
238. WILLIAM A. NISKANEN, JR., BUREAUCRACY AND REPRESENTATIVE GOVERNMENT 5-12 (1971);
239. AARON WILDAVSKY, THE POLITICS OF THE BUDGETARY PROCESS (4th ed. 1984);
240. William A. Niskanen, Jr., Bureaucrats and Politicians, 18 J.L. & ECON. 617, 618 (1975) (constructing a model of bureaucratic supply on the "assumption that the bureau acts to maximize its budget").
241. But see Ian Ayres & John Braithwaite, Tripartism: Regulatory Capture and Empowerment, 16 LAW & Soc. INQUIRY 435, 436 (1991) (reporting that the theory of agency or bureaucratic capture "has not seemed to be theoretically or empirically fertile to many sociologists and political scientists working in the regulation literature");
242. David B. Spence & Frank Cross, A Public Choice Case for the Administrative State, 89 GEO. L.J. 97, 121-22 (2000) (arguing that "agency capture is no longer regarded as a valid descriptive theory of bureaucratic behavior").
243. Levinson, supra note 23, at 380-82.
244. See infra Section IV.C.
245. At the outset, we must acknowledge the important groundwork laid by Donald Hagman and Dean Misczynski's collection WINDFALLS FOR WIPEOUTS, supra note 3, which explored the possibility of establishing a system of compensation for takings (including regulatory takings) to be funded by revenues raised from taxing or collecting fees from givings recipients. Windfalls for Wipeouts notes many historical schemes related to givings charges in the United States and other countries, and we incorporate those insights into our recommendations in this Part, and, later, in our discussion of alternatives to charges for givings in Part V.
246. We use the terms "recipient" and "beneficiary" interchangeably.
247. Valuation of the measure of compensation might be accomplished by a number of different metrics, such as market value or willingness to sell. We discuss valuation questions in Part V. A fuller analysis is beyond the scope of this Article.
248. Kaplow, supra note 3, at 519.
249. See supra Subsection II.A.2.
250. See Richard H. McAdams, Relative Preferences, 102 YALE L.J. 1, 62 (1992) (suggesting that prizes are cultural means of solving public-good market failures).
251. See A. MITCHELL POLINSKY, AN INTRODUCTION TO LAW AND ECONOMICS 73-84 (1983); POSNER, supra note 27, at 220-22;
252. Gary S. Becker, Crime and Punishment: An Economic Approach, 76 J. POL. ECON. 169, 170-80 (1968);
253. Colin S. Diver, The Assessment and Mitigation of Civil Money Penalties by Federal Administrative Agencies, 79 COLUM. L. REV. 1435, 1466-68 (1979);
254. William M. Landes, Optimal Sanctions for Antitrust Violations, 50 U. CHI. L. REV. 652, 655 (1983);
255. A. Mitchell Polinsky & Steven Shavell, The Optimal Tradeoff Between the Probability and Magnitude of Fines, 69 AM. ECON. REV. 880, 880 (1979);
256. George J. Stigler, The Optimum Enforcement of Laws, 78 J. POL. ECON. 526 (1970).
257. The distinction between a taking and a penalty has been recognized since the days of Grotius. HUGO GROTIUS, THE LAW OF WAR AND PEACE bk. II, ch. XIV, § VII, at 385 (Francis W. Kelsey trans., Oxford Univ. Press 1925) (1625).
258. See infra Section IV.B.
259. See, e.g., United States v. Bajakajian, 524 U.S. 321 (1998) (holding that a large civil forfeiture may constitute an excessive fine); Austin v. United States, 509 U.S. 602 (1993) (same). In our system the treatment of penalties and prizes is not entirely symmetrical, in that excessive prizes are not completely
260. Cf. EPSTEIN, supra note 3.
261. Levmore, supra note 66, at 1348 ("Compensation for a governmental intervention will be required when a politically unprotected loser is singled out and when there is a close substitute in the form of a private purchase."); see also Bell & Parchomovsky, supra note 8, at 315 (noting that "few have systematically explored the idea that when the burden of a government action falls on a sufficiently broad public in roughly equal proportions, the action is better characterized as a tax than as a taking").
262. See Levmore, supra note 66, at 1348.
263. Obviously, many actions lie on the continuum between the paradigmatic giving to a single individual and a giving to the public at large. We discuss these cases after examining the two extreme scenarios of singling out and benefiting the public at large.
264. Sometimes, the relative equality will have to be equal treatment with regard to economic circumstances rather than equal per capita treatment. An example of such treatment is provided by the progressive income tax. The givings analogue is welfare payments to the indigent.
265. The Yazoo land frauds provide an apt example of this. See supra notes 135-136 and accompanying text.
266. Cf. Donald J. Kochan, "Public Use" and the Independent Judiciary: Condemnation in an Interest-Group Perspective, 3 TEX. REV. L. & POL. 49 (1998) (calling for a reinterpretation of the Takings Clause to reduce private rent-seeking).
267. 364 U.S. 40, 49 (1960); supra Section III.A.
268. Supra Section III.A.
269. To provide a complete picture, there is also a third possibility of rent-seeking: rent-seeking by bureaucrats. We seek to curb this type of rent-seeking by matching givings with takings. See infra Section IV.C.
270. See Kochan, supra note 213, at 76-78.
271. See, e.g., Anne O. Krueger, The Political Economy of the Rent-Seeking Society, 64 AM. ECON. REV. 291, 295-96 (1974) (analyzing the efficiency effects of political lobbying);
272. Richard A. Posner, The Social Costs of Monopoly and Regulation, 83 J. POL. ECON. 807, 809 (1975) (same).
273. See FISCHEL, supra note 4, at 233.
274. 620 F. Supp. 609 (N.D. Cal. 1985), rev'd on other grounds, 818 F.2d 1449 (9th Cir.), amended, 830 F.2d 968 (9th Cir. 1987).
275. E.g., FISCHEL, supra note 4, at 233; CHARLES M. HAAR, SUBURBS UNDER SIEGE (1996);
276. Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681, 695 (1973).
277. See infra Section IV.C.
278. See supra Section III.C.
279. Donald G. Hagman & Dean J. Misczynski, Recommendations, in WINDFALLS FOR WIPEOUTS, supra note 3, at 26, 31.
280. See generally supra Section II.C (documenting the relationship between givings and takings).
281. 260 U.S. 22, 30 (1922).
282. 260 U.S. 393, 415 (1922). For a historical review of the concept, see Oswald, supra note 89, at 1490-510.
283. See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).
284. 467 U.S. 229 (1984).
285. The benefit-offset principle allowed the government to reduce the compensation to property owners claiming a taking by the amount of the benefit that the taking conferred on the owners' remaining property. Supra note 37. For a discussion of the benefit-offset principle, see FISCHEL, supra note 1, at 80-84.
286. Id. at 80-89.
287. See Coletta, supra note 38, at 321.
288. Id. at 356.
289. As Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), had not yet recognized regulatory takings, it is not surprising that the benefit-offset principle was not applied in that context.
290. See FISCHEL, supra note 1, at 85-89.
291. Cf. Bell & Parchomovsky, supra note 8, at 290 n.52 (discussing the distortion arising from failure to take into account full costs and benefits).
292. FISCHEL, supra note 1, at 82-83; supra Subsection II.C.2. Other commentators criticized the benefit-offset principle on the ground that it unfairly subsidized railroads. See, e.g., Scheiber, supra note 37, at 364-68. This would have been true only if there were other uncompensated takings that outweighed the uncharged givings, or if the actual values of the givings and takings were measured inaccurately. Although the former explanation is belied by the historical evidence, the latter is a real possibility. The accurate measurement of values enhanced or diminished by givings or takings is of obvious importance for the proper functioning of the law. See FISCHEL, supra note 1, at 80-89. Issues of the adequacy of the yardsticks for measuring takings (and, by implication, givings) are beyond the scope of this Article. See infra Section V.B.
293. E.g., Bookman v. N.Y. Elevated R.R., 41 N.E. 705 (N.Y. 1895); Bohm v. Metro. Elevated Ry., 29 N.E. 802 (N.Y. 1892); Newman v. Metro. Elevated Ry., 23 N.E. 901 (N.Y. 1890); see also Charles M. Haar & Barbara Hering, The Determination of Benefits in Land Acquisition, 51 CAL. L. REV. 833 (1963) (discussing the use of benefit-offset to finance highway construction).
294. We assume here that the taking and giving are properly aggregated into a single transaction. Daryl Levinson argues that the boundaries of "transactions" are difficult to identify and that a course of interactions between individuals and the government that takes place over an extended period of time ought nevertheless to be viewed as a single transaction in many contexts. Daryl J. Levinson, Framing Transactions in Constitutional Law, 111 YALE L.J. (forthcoming 2002).
295. 304 N.W.2d 455 (Mich. 1981).
296. A private taking, also known as a private condemnation, is "the taking of private property by a private individual for a public use." Kent M. Brown, Casenote, Cohen v. Larson: The Idaho Constitution and the Right of Eminent Domain, 31 IDAHO L. REV. 623, 624 (1995); supra note 36 and accompanying text.
297. 467 U.S. 229 (1984).
298. FISCHEL, supra note 1, at 80-89.
299. While there is no single universally accepted definition of corrective justice, in a recent article, Gregory Keating characterized it as follows: "First, it applies to human agency, not, say, to natural misfortunes. Second, it is concerned with repair or rectification. Third, it is concerned with rectifying some kind of wrongdoing - with 'wrongful losses' in Coleman's case. Fourth, it involves correlativity." Gregory C. Keating, Distributive and Corrective Justice in the Tort Law of Accidents, 74 S. CAL. L. REV. 193, 197 (2000)
300. (citing Jules L. Coleman, The Practice of Corrective Justice, in PHILOSOPHICAL FOUNDATIONS OF TORT LAW 53, 66-67 (David G. Owen ed., 1995)).
301. Given this list, it is not surprising that tort law has captured the attention of corrective justice theorists. Notable accounts grounding tort law in principles of corrective justice include JULES L. COLEMAN, RISKS AND WRONGS 303-28 (1992);
302. ARTHUR RIPSTEIN, EQUALITY, RESPONSIBILITY, AND THE LAW 24 (1999);
303. ERNEST J. WEINRIB, THE IDEA OF PRIVATE LAW 56-83 (1995);
304. Richard A. Epstein, A Theory of Strict Liability, 2 J. LEGAL STUD. 151 (1973);
305. George P. Fletcher, Fairness and Utility in Torts Theory, 85 HARV. L. REV. 537 (1972).
306. For a critical review of the attempts to base tort law on corrective justice, see Benjamin Zipursky, Civil Recourse, Not Corrective Justice (2000) (unpublished manuscript, on file with authors).
307. COLEMAN, supra note 244, at 332 ("Corrective justice imposes the duty to repair wrongful losses.").
308. Id. ("Wrongs are actions contrary to rights.").
309. Property-rule protection confers upon the entitlement-holder the exclusive power to determine the price nonholders would have to pay for using the protected asset or right. Thus, all transfers of entitlements protected by a property rule must be consensual; all attempts to transfer the entitlement nonconsensually would be met with an injunction. Liability rule protection, by contrast, gives the nonholder the power to take the entitlement without the consent of the entitlement-holder and pay a price to be determined by a third party, typically a court or the legislature. The entitlement-holder would not be able to enjoin third parties from taking her entitlement; instead, she would have to settle for damages. Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972).
310. Paul Wangerin argues: Defendants who are the recipients of gifts, for example, clearly are enriched. However, that enrichment is clearly not unjust. . . . The same thing is true regarding "volunteers." If a person voluntarily provides something to another, the other may well be enriched. But, because of the voluntariness, the enrichment is not unjust. Paul T. Wangerin, The Strategic Value of Restitutionary Remedies, 75 NEB. L. REV. 255, 272 (1996).
311. Wendy J. Gordon, On Owning Information: Intellectual Property and the Restitutionary Impulse, 78 VA. L. REV. 149, 202 (1992) ("Because restitution defendants are usually passive rather than active recipients of others' actions, courts are reluctant to impose liability upon them. . . . [T]he very paradigm of corrective justice is best described as a relationship between 'doer' and 'sufferer.' Imposing liability on a nondoer requires special justification.").
312. See IMMANUEL KANT, GROUNDWORK OF THE METAPHYSICS OF MORALS 62-66, 93-95 (H.J. Paton trans., Harper Torchbooks 1948) (1785).
313. We are indebted to Ian Ayres for this insight.
314. See Ian Ayres, Protecting Property with Puts, 32 VAL. U. L. REV. 793 (1998) (discussing and evaluating protection of properly rights with put and call options).
315. Coniston Corp. v. Vill. of Hoffman Estates, 844 F.2d 461, 464 (7th Cir. 1988) (Posner, J.).
316. Presumably, it is the polity of which the owners are a part that has empowered the government to give and take.
317. As we noted earlier, public choice theory disputes the Pigouvian view of government and requires the discipline of the Takings Clause to prevent excess use of the power of eminent domain. Supra Section III.C.
318. Realization is the conversion of property into money. BLACK'S LAW DICTIONARY, supra note 102, at 1271.
319. Our rule would function in a manner not dissimilar to realization rules for taxes of capital gains. See Comm'r v. Gillette Motor Transp., Inc., 364 U.S. 130 (1960).
320. For a discussion of the holdout problem in the context of takings, see Carol M. Rose, The Comedy of the Commons: Custom, Commerce, and Inherently Public Property, 53 U. CHI. L. REV. 711, 749-61 (1986).
321. EPSTEIN, supra note 1, at 164-66.
322. See supra Section IV.B.
323. See supra Section IV.A.
324. See infra Section V.C.
325. Ian Ayres & Paul M. Goldbart, Optimal Delegation and Decoupling in the Design of Liability Rules, 100 MICH. L. REV. (forthcoming 2001) (discussing the possibility of "dual chooser rules," which allow either party to a transaction to veto the transfer of an entitlement).
326. Of course, the government can spread the cost of obtaining the appraisal over the group of beneficiaries.
327. For a discussion of the assessment system and its drawbacks, see Saul Levmore, Self-Assessed Valuation Systems for Tort and Other Law, 68 VA. L. REV. 771, 771-75 (1982).
328. See Bell & Parchomovsky, supra note 8, at 300-04.
329. See generally JAMES J. FREEDLAND ET AL., FUNDAMENTALS OF FEDERAL INCOME TAXATION 962-85 (11th ed. 2000) (surveying the self-assessment, auditing, and penalty procedures in the federal income tax apparatus);
330. James Andreoni et al., Tax Compliance, 36 J. ECON. LITERATURE 818 (1998) (citing various studies relevant to the income tax enforcement apparatus).
331. Levmore, supra note 265, at 779.
332. Hagman & Misczynski, supra note 224, at 31, 52.
333. In Windfalls for Wipeouts, Frederik Jacobsen and Craig McHenry identify exactions as a possible source of "windfall recapture," but ultimately reject exactions as an inappropriate device for that purpose. Frederik Jacobsen & Craig McHenry, Exactions on Development Permission, in WINDFALLS FOR WIPEOUTS, supra note 3, at 342, 342-43, 364-66.
334. See supra notes 102, 110.
335. In a 1991 article, Vicki Been reported that eighty-nine percent of all communities require dedications and that fifty-eight percent demand some sort of fees. Vicki Been, "Exit" as a Constraint on Land Use Exactions: Rethinking the Unconstitutional Conditions Doctrine, 91 COLUM. L. REV. 473, 481 n.42 (1991).
336. Reclamation law recapture is an analogous technique in which lands are seized based on excess value created by reclamation projects. See Paul Lowenberg, Betterment Recapture Under Reclamation Law, in WINDFALLS FOR WIPEOUTS, supra note 3, at 336, 336.
337. See JOHN P. DWYER & PETER S. MENELL, PROPERTY LAW AND POLICY 1032 (1998). State courts characteristically uphold impact fees if there is adequate proportionality between the fee and the additional burden imposed on the community as a result of the development, id. at 1035.
338. Been, supra note 272, at 482. Been points out that shifting the cost to the developer is desirable for several reasons.
339. Jacobsen and McHenry present a different set of objections to the use of exactions for charging givings: The existing body of exactions law would make courts resistant to changing it to conform to the needs of charging for givings; municipalities generally prefer to levy fees; and the timing of exactions is too early in the municipal approval process. Jacobsen & McHenry, supra note 270, at 365.
340. Julian C. Juergensmeyer & Robert M. Blake, Impact Fees: An Answer to Local Governments' Capital Funding Dilemma, 9 FLA. ST. U. L. REV. 415, 417 (1981);
341. James C. Nicholas, Impact Exactions: Economic Theory, Practice, and Incidence, 50 LAW & CONTEMP. PROBS. 85, 88 (1987).
342. Juergensmeyer & Blake, supra note 277.
343. We assume here that the value of the zoning benefits in the hands of the municipality is $50 million. We make no assumption concerning the value of the benefits in the hands of the recipient.
344. 483 U.S. 825 (1987).
345. 512 U.S. 374 (1994).
346. See supra notes 58-61 and accompanying text.
347. See EPSTEIN, supra note 3, at 11; Fennell, supra note 61, at 9-11; cf. City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702-03 (1999) (holding that Dolan's rough proportionality rule is inapplicable to a takings claim based on denial of a development permit).
348. David Replogle, The Uthwatt Proposal, in WINDFALLS FOR WIPEOUTS, supra note 3, at 422 (discussing the Final Report of the Expert Committee on Compensation and Betterment, otherwise known as the Uthwatt Proposal).
349. Madelyn Glickfeld & Donald G. Hagman, Special Capital and Real Estate Windfalls Taxes (SCREWTS), in WINDFALLS FOR WIPEOUTS, supra note 3, at 437.
350. EPSTEIN, supra note 1, at 3-31; Myrl L. Duncan, Property as a Public Conversation. Not a Lockean Soliloquy: A Role for Intellectual and Legal History in Takings Analysis, 26 ENVTL. L. 1095, 1147 & n.310 (1996).
351. Richard E. Levy, Escaping Lochner's Shadow: Toward a Coherent Jurisprudence of Economic Rights, 73 N.C. L. REV. 329, 392-93 (1995);
352. Cass R. Sunstein, Lochner's Legacy, 87 COLUM. L. REV. 873, 874 (1987).
353. As Andrea Petersen has noted, the baseline understanding of property has also been the source of some confusion in takings jurisprudence. Peterson, supra note 62, at 57.
354. A closely related technique is zoning by special assessment financed eminent domain, which finances the compensation paid for zoning regulations by levying special assessments on owners benefiting from the derivative givings created by the regulatory takings. Donald G. Hagman, Zoning by Special Assessment Financed Eminent Domain (ZSAFED), in WINDFALLS FOR WIPEOUTS, supra note 3, at 517, 517-18.
355. See Madelyn Glickfeld, Sale of Development Permission: Zoning on the Auction Block, in WINDFALLS FOR WIPEOUTS, supra note 3, at 376;
356. see also David E. Ervin & James B. Fitch, Evaluating Alternative Compensation and Recapture Techniques for Expanded Public Control of Land Use, 19 NAT. RESOURCES J. 21, 29-33 (1979) (discussing both zoning by auction and zoning by eminent domain and their possible connection to a scheme of "windfalls for wipeouts").
357. See Glickfeld, supra note 290, at 385.
358. One court has explained: Compensation [for takings] in the constitutional sense is therefore not full compensation, for market value is not the value that every owner of property attaches to his property but merely the value that the marginal owner attaches to his property. Many owners are "intramarginal," meaning that because of relocation costs, sentimental attachments, or the special suitability of the property for their particular (perhaps idiosyncratic) needs, they value their property at more than its market value (i.e., it is not "for sale"). Coniston Corp. v. Vill. of Hoffman Estates, 844 F.2d 461, 464 (7th Cir. 1988); see also JESSE DUKEMINIER & JAMES E. KRIER, PROPERTY 1121-23 (4th ed. 1998); MICELI, supra note 159, at 138.
359. Hagman & Misczynski, supra note 224, at 31.
360. Cf. Michael A. Heller & James E. Krier, Deterrence and Distribution in the Law of Takings, 112 HARV. L. REV. 997, 1008-09 (1999) (calling for the introduction of a "de minimis" exception into takings doctrine, and explaining why such an exception is desirable).
361. Hagman and Misczynski suggest an exemption for givings or takings of less than ten percent of the value of the property prior to the government action, although it is not clear how their rule would work when the giving consists of entirely new property. Hagman & Misczynski, supra note 224, at 60.
362. Cf. I.R.C. § 63(c) (2000) (establishing a standard deduction for the income tax).
363. 260 U.S. 393 (1922) (voiding the Kohler Act).
364. See Michael J. Cremonese, Comment, Building New Stadiums with Your Money Whether You Like It or Not: The Pennsylvania Constitution Does Not Prohibit the Use of Public Funds To Construct New Stadiums, 37 DUQ. L. REV. 423, 434 n.118, 436 n.140 (1999).
365. WASH. CONST. art. VIII, § 7.
366. Brandes v. City of Deerfield Beach, 186 So. 2d 6, 12 (Fla. 1966) (concluding that building a sports stadium for leasing to a private sports club is not a "municipal purpose").
367. See, e.g., Bd. of Educ. of Kiryas Joel Vill. Sch. Dist. v. Grumet, 512 U.S. 687 (1994) (striking down a law drawn for the benefit of a religious sect).
368. See Robert I. McMurry, Comment, Just Compensation or Just Invalidation: The Availability of a Damages Remedy in Challenging Land Use Regulations, 29 UCLA L. REV. 711 (1982);
369. E.F. Roberts, Mining with Mr. Justice Holmes, 39 VAND. L. REV. 287, 292 (1986).
370. But see Richard F. Babcock et al., The White River Junction Manifesto, 9 VT. L. REV. 193, 211-12 (1984) (arguing that overzealous regulations are invalid rather than compensable);
371. cf. Thomas E. Schnur, Note, Compensation and Valuation for Regulatory Takings, 35 DEPAUL L. REV. 931 (1986) (describing the controversy as a debate over whether takings are struck down as exceeding the police power, or for failure to pay compensation for the exercise of eminent domain).
372. 450 U.S. 621, 636 (1981) (Brennan, J., dissenting). In this case involving open-spcce zoning, a five-Justice majority decided to dismiss the appeal on the ground that it was premature. In an important dissent, Justice Brennan, joined by three Justices, opined that the case was not premature, and that if the challenged zoning regulation worked a taking, compensation was the right remedy.
373. 482 U.S. 304 (1987) (holding that compensation is the remedy mandated by the Constitution when a land use regulation works a taking).
374. See supra Section IV.A.
375. Guido Calabresi, The Pointlessness of Pareto: Carrying Coase Funher, 100 YALE L.J. 1211, 1217 (1991);
376. Ronald H. Coase, The Problem of Social Cost, 3 J.L. & ECON. 1 (1960).
377. For discussion of courts' construction of state constitutions' public gifts provisions, see Cremonese, supra note 298; and David D. Martin, Comment, Washington State Constitutional Limitations on Gifting of Funds to Private Enterprise: A Need for Reform, 20 SEATTLE U. L. REV. 199 (1996).
378. Cf. Dale F. Rubin, The Public Pays, The Corporation Profits: The Emasculation of the Public Purpose Doctrine and a Not-for-Profit Solution, 28 U. RICH. L. REV. 1311 (1994) (arguing for invalidating many givings on the ground of the lack of a "public purpose").