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Business-Managed Democracy

“Business-managed democracies are those in which the political and cultural arrangements are managed in the interests of business”

Sharon Beder

Business-Managed Environment

Regulatory Takings


Property rights advocates cite the Fifth Amendment of the US Constitution to support their claim that they should be compensated for any restriction on use of their land caused by environmental regulations. This amendment includes a clause that says that private property taken for public use should not be taken by the government without just compensation.


private property sign Property rights advocates infer from this that government regulations that restrict their use of their property are ‘takings’. Rather than seeing regulation as an attempt to balance conflicting rights, property rights activists see property rights as absolute and any restriction put in place to protect the public interest as an unjust imposition: “In effect, government is making private property owners provide a public good—the protection of wetlands—at private expense without compensation.”


It has however been recognised by the US Supreme Court, that property rights are limited by the requirement that the property owner not use their property in a way that harms the rights of others.


From the 1980s property rights advocates fought to have legal definitions of “government takings” expanded to cover regulations which inhibit all sorts of development from mining to filling in wetlands on private land and by the end of 1992 they managed to get such legislation introduced in 27 states. The purpose of this expanded definition is to force the government to compensate a developer for profits they might have made had they been able to develop the land in the way they wanted. The effect of this would be to make the implementation of environmental regulations ridiculously expensive. “A single lost takings case could bankrupt most state regulatory agencies. The takings movement would, if successful, effectively end environmental protection in the United States.”


The Private Property Protection Act, passed in Arizona in 1992, requires state agencies to “identify government actions that have any impact on private property. The attorney general can prohibit that action if it has such impacts. State agencies may not take action based upon potential threats, such as suspected carcinogens, but only upon proven threats.” Even undue delays in decision making, for example those caused by public hearings, may be considered a taking under the legislation. This has had the effect of deterring government agencies from implementing health, safety and environmental regulations and the government from introducing new ones.


It seems that the agenda behind the push for takings legislation is to achieve deregulation by making it too expensive to regulate. Using the “takings” argument, opponents of environmental regulations can claim the moral high ground by arguing that they are not opposed to environmental protection but they are just ensuring that regulation is fairly paid for by the taxpayer rather than the poor, burdened property owner. 


It was claimed in the 1990s that “almost all of the ‘takings’ bills that were proposed in state legislatures around the county are written by a little right-wing think tank, the American Legislative Exchange Council, funded by the usual long-lived cast of conservative businesses and foundations.”

The 2009 Cato Institute Handbook (chapter 34 - pdf), argued

when government acts not to secure rights but to provide the public with some good—wildlife habitat, for example, or a viewshed, or historic preservation—and in doing so prohibits or ‘‘takes’’ some otherwise legitimate use, then it is acting, in part, under the eminent domain power and it does have to compensate the owner for any financial losses he may suffer. The principle here is quite simple: the public has to pay for the goods it wants, just like any private person would have to.... In general, then, Congress should review the government’s many regulations to determine which are and are not authorized by the Constitution. If not authorized, they should be rescinded, which would end quickly a large body of regulatory takings now in place.... Congress should also enact a more general statute that specifies the constitutional rights of property owners under the Fifth Amendment’s Takings Clause, drawing upon common-law principles to do so...

The Heritage Foundation's opposition to National Heritage Areas (NHAs) is the impact they will have on property rights.


NHAs pose a threat to private property rights through the exercise of restrictive zoning that may severely limit the extent to which property owners can develop or use their property. Termed "regulatory takings," such zoning abuses are the most common form of property rights abuse today. They are also the most pernicious because they do not require any compensation to owners whose property values are reduced by the new zoning.

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