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Regulation vs. Conservation

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Regulation vs. Conservation

For the past two decades, federal land-use control has been the primary means of protecting endangered species and ecologically-sensitive lands. Laws such as the Endangered Species Act and the Clean Water Act have been used to erect a Byzantine array of bureaucratic requirements that landowners must meet to make productive use of designated lands. As a result, all manner of activities have been effectively barred on private land, including the construction of homes, repairing of fences, planting of crops, and so on. In extreme instances, landowners have even been prevented from clearing firebreaks to protect their homes or repairing levies that protect lands from flooding.

Such federal regulation is extremely burdensome for private landowners, particularly those who own small parcels. A landowner who wakes up one morning to find that her land has been declared a wetland by the U.S. Army Corps of Engineers can face economic ruin as a result. When the use of property is encumbered by regulatory restrictions, its value falls. This is unfair to the majority of landowners who want to make use of their land in a nonharmful manner.

Many current environmental regulations also violate the clear intent of the Fifth Amendment to the Constitution, which holds ". . . nor shall private property be taken for public use without just compensation," the opinions of various federal courts notwithstanding. In Armstrong v. United States the Supreme Court held that the Constitutional prohibition on uncompensated takings "was designed to bar government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Thus when the federal government condemns a piece of private land to create a publicly-desired resource, such as a military base, road, or wildlife preserve, it pays the land's owner for the value of the property. However when the government regulates the use of the same private land for a similar purpose, it rarely pays a dime.

Many environmental lobbying organizations maintain that extensive federal land-use control is necessary to safeguard environmental values. If development near endangered species habitat or wetlands is not controlled by federal regulation, they argue, America will face ecological ruin. This is simply nonsense. Not only is federal land-use regulation not necessary for environmental protection, in many cases it is counterproductive.

By regulating those private lands deemed ecologically valuable, the government effectively penalizes private landowners for engaging in the sound stewardship of land. Sam Hamilton, former Fish and Wildlife Service administrator for the state of Texas explains this more fully: "The incentives are wrong here. If I have a rare metal on my property, its value goes up. But if a rare bird occupies the land, its value disappears."

This is what happened to Ben Cone, owner of 8,000 wooded acres in North Carolina. In the course of his selective logging operations, Cone carefully managed his land so as to attract wildlife. When the U.S. Fish and Wildlife Service (FWS) found endangered red-cockaded woodpeckers on part of his land, the agency placed it off limits to logging. As a result, the value of Cone's land dropped by over $1 million. Cone not only stopped making his land more hospitable to woodpeckers, he also filed suit against the federal government, alleging a violation of his Fifth Amendment rights.

Individuals have lost more than money due to environmental land-use controls. Maryland conservationist Bill Ellen ran afoul of federal wetlands regulations in the process of constructing two duck ponds and other wildlife habitat. For a technical violation of the law, which produced no documented environmental damage whatsoever, Ellen was sentenced to six months in jail.

This heavy-handed regulatory approach is no way to encourage conservation. Consider what would happen if the government were to declare a policy of "protecting" pretty houses by imposing a series of regulatory restrictions upon families living in any homes that met the federal definition of "pretty." Under such a regime, no rational homeowner would beautify his home, lest it fall prey to government regulation that could restrict his freedom in or near his home. Rather than preserve the stock of pretty houses in America today, such a policy would likely prevent the construction or restoration of pretty homes far into the future. If such an approach would not improve our neighborhoods, why would it safeguard environmental quality?

Some in Congress have proposed addressing this concern by forcing agencies to compensate landowners who are denied the reasonable use of their land by federal regulation. Paying compensation would help eliminate the perverse incentives that are produced by the existing laws. In the Senate, Majority Leader Robert Dole is the lead sponsor of the "Omnibus Property Rights Act" which would require compensation when regulations reduce the value of regulated properties by more than 33 percent. The House passed a bill last year, which only applies to a handful of federal laws and has a compensation threshold of 20 percent.

The Clinton Administration is unequivocally opposed to compensation proposals. On December 13, 1995, President Bill Clinton declared his "intention to veto" the Dole bill "or any similar compensation entitlement legislation." Moreover, Associate Attorney General John R. Schmidt expressed opposition to legislation that would merely codify existing Supreme Court precedent into law, as this might prevent federal courts from giving regulators even more latitude than they have today.

Rather than support compensation for regulatory takings, the Clinton Administration has issued a series of minor administrative reforms designed to lessen the impact of endangered species regulations on small landowners and those who are engaged in the creation of habitat. In promulgating these policies, the FWS acknowledged that imposing uncompensated land-use restrictions "actually generates disincentives for private landowner support for threatened species conservation." Yet the administration's proposed revisions are riddled with loopholes and do little for landowners. The exemption for small, residential landowners only applies to actions taken to protect "threatened" species, though most federal regulations are aimed at protecting "endangered" species. Moreover, this exemption only holds when it will not compromise the FWS' conservation objectives. The other reforms have similar loopholes, and are similarly inconsequential for landowners.

That federal regulatory agencies are so averse to relinquishing their grip on private land should come as no surprise. Accustomed to seizing land through bureaucratic edict at little to no cost, regulatory bureaucrats will doubtlessly find paying compensation to be more than a little inconvenient. Especially if compensation is paid directly from agency budgets, agencies will no longer view land-use regulation as the environmental measure of first resort.

If compensation is required, agencies seeking to regulate private land use will be forced to consider whether regulatory actions cause a taking, and, if so, whether the benefits of the proposed regulatory action are worth the costs of paying compensation. Land-use regulation will only be pursued when the benefits appear to justify the costs or when other options are impractical or more costly.

At present the federal government uses coercive land-use regulations to achieve environmental objectives even when other, more cost-effective, options are available. For example, the federal government currently spends millions of dollars each year administering the Section 404 program, which regulates the development of wetlands by private citizens. Small landowners are routinely prevented from building or expanding homes or modifying landscapes due to the presence of federally-designated wetlands. The total cost to public and private parties of protecting wetlands through Section 404 can reach $300,000 per wetland-acre. However, non-regulatory, incentive-based programs conserve wetlands at a fraction of the cost of regulatory edicts.

The costs of conserving wetlands of the nation's three most prominent incentive programs – the Wetlands Reserve Program, Partners for Wildlife, North American Wetlands Conservation Act, and the North American Waterfowl Management Plan – are consistently below $1,000 per acre. In fact, during the 1991 to 1995 period, the North American Waterfowl Management Plan conserved wetlands at a cost of only $254 per acre, and the average cost of conserving wetlands under the North American Wetlands Conservation Act was only $405 per acre.

Compare the costs of these programs with the cost of compensating landowners for the costs of regulations. In recent years the federal government has lost a handful of takings cases resulting from wetlands regulations (all of which, incidentally, filed by wealthy landowners or corporations – the only ones who can afford to file such claims under current law). In these cases, the cost of compensation alone, excluding interest, lawyers fees and court costs, has ranged from $30,000 to $230,000 per acre. As illustrated in the accompanying graph, there is no question which approach has been more cost-effective. Even if the cases cited are extreme examples, magnifying the cost of conservation-through-regulation by a factor of ten, non-regulatory programs are still more cost-effective. Indeed, for the amount of money spent by the federal government to compensate the owners of 35 acres of regulated wetlands, non-regulatory, incentive-based programs could have conserved over 700 acres of wetlands.

Compensating land owners is not anti-environment. If anything, it will encourage more effective conservation efforts by the federal government, and reduce the negative incentives facing the private sector. Government should learn to work with landowners, rather than against them.

Existing administrative requirements are insufficient to ensure that agencies consider the likely impacts of existing policy options. Many rules are enacted that produce minimal benefits while imposing extraordinary costs, at the expense of both environmental protection and Constitutionally-guaranteed protections. Only those with an unquestioning faith in the wisdom of regulatory bureaucracies would wish to leave this situation as it is.

--Jonathan H. Adler Contact Jonathan Adler at jadler@cei.org