I got something in my mail today that was forwarded to me by the Flood Coalition of Houston. The Flood Coalition if Houston is a property rights group that campaigns against the Houston City Council’s retroactive efforts to regulate who can build what where 20 years ago. Anyway, the thing that was sent to me went on and on at great length about a new bill being offered in the state legislature that would restrict regulatory takings. Today on The Blog of a Secular Conservative is another installment of Ask Janus. Today’s question: What are regulatory takings?

In short, regulatory takings represent a loop hole in eminent domain law.

The Constitution guarantees the government the right of eminent domain. The right of eminent domain gives government the power to seize land at it’s own discretion without the consent of the owner. The Fifth Amendment to the Constitution limited the right of eminent domain by requiring that the land taken by the federal government be for public use and that the owner be fairly compensated. The right is further limited by the Fourteenth Amendment which holds states to the same legal standards as the federal government. Thus, if the government needs the land your house is built upon to make a new freeway, or to put in a water pumping station, or to build a new prison, or to build an airport, or to expand an army base, or whatever, they can take it as long as they pay you a fair price for it. Eminent domain has something of a checkered reputation, but most people would agree that, when not abused, it’s something of a good and necessary tool to have for the government to be able to actually get things done.

The government also has the right to regulate things for the public good. They can zone property to restrict who can build what where. They can pass laws to restrict certain building features, such as in New York where the buildings used to be required to be setback so that sunlight could reach the ground level. They can pass laws to prevent building on wetlands to preserve wildlife and water drainage. They can pass laws to prevent you from burning trash in your yard or parking cars on your lawn.

All of these regulations are perfectly legal and all of them restrict your rights as a property owner to do whatever you’d like on your own property. After a while, however, government begins to regulate property to the point where it loses value. If the government says you can’t build a giant polluting widget factory, the giant polluting widget factory demand goes away. If the government says you can’t build in the middle of a swamp, all the people who really want to have alligators in their font yard have to go elsewhere. Normally, it isn’t that big of a deal.

Sometimes, however, it is.

Let’s say, for example, you’re going to retire, and it’s always been your dream to live out your twilight years in a beach house. In pursuit of that goal, several years ago you bought a nice plot of land on the shore, but since then the government has decided that it wants to create a “sea kitten protection zone” which will prevent any construction next to the beach and requires a permit to go sun bathing on. Realizing that you won’t be able to build your dream home there, you go to sell the land and move someplace else, only to find out that no one really wants a plot of useless sand they can’t build on. Your once prime real estate, while there’s nothing really wrong with it, is now worth next to nothing.

In our example, the government has destroyed all use and value of your property without compensating you for it. In effect, they’ve seized your assets without having to deal with all the restrictions placed upon them for use and compensation placed upon them by the Constitution.

This is what we refer to as “regulatory takings.”

Regulatory takings are things which the government doesn’t technically take from you, but which they have regulated to the point where they are of little or no value. Naturally, this type of situation results in a large number of very pissed off people who feel that the government has quite literally stolen their property from them. Whether their claims are true or someone’s just crying wolf depends on the exact regulation and property, but the mere existence of such a loophole in our system is outrage enough.

I hope that explains what regulatory takings are. As always, if you have a question you’d like to ask, send me an email, drop me a comment, hit me up on twitter, or shoot me an IM and I’ll be happy to answer.