Read an Excerpt

Entitlement

Yale University Press

Chapter One

It was easier to make a revolution than to write 600 to 800 laws to create a market economy. -Jiri Dienstbier

It would be as absurd to argue that the distribution of property must never be modified by law as it would be to argue that the distribution of political power must never be changed. -Morris Cohen

Water is a valuable resource in Texas. Between 1964 and 1971 the Friendswood Development Company dug wells on its property in Harris County and began to withdraw "vast quantities of underground water" from those wells for sale to industrial users. Neighboring property owners began to complain that Friendswood was drawing water from underneath their land, as well as its own. The neighbors depended on the water contained in the underlying aquifers to help support the surface of their land. In 1973 those neighbors sued Friendswood and its corporate parent, Exxon, for undermining the subjacent support for their land. They argued that if Friendswood did not stop withdrawing so much water, their homes and businesses would sink into the earth. Their property would become either completely unusable or extremely expensive to fix and redevelop. According to the plaintiffs, even if it was generally lawful to withdraw water from wells on one's own land, an owner like Friendswood had no right to do so in a manner that would destroy the property rights of everyone else in the county.

Friendswood regretted the harm to its neighbors but pointed out that it was merely using its own property in a lawful manner. It had the right to withdraw water from beneath its own land, and no existing regulation limited its freedom to do so. On the contrary, prior court decisions in Texas clearly provided that owners had the power to withdraw as much water as they liked from their own land, even if this had the effect of pulling water away from neighboring land. Friendswood claimed that it had reasonably relied on this prior case law in investing in its property and that it would be unfairly surprised if the court retroactively limited its privilege to withdraw water freely from its land. The neighbors responded that they had property rights too. Whatever property right Friendswood had to withdraw water from beneath its land did not go so far as to include the power to destroy everyone else's property with impunity. The case eventually reached the Texas Supreme Court for resolution. What was to be done?

Let us assume that one of the judges deciding the case strongly supports property rights and believes in limiting government regulation of property as much as possible. In her view, infringements on property rights are as oppressive as infringements on liberty interests such as free speech or privacy. In fact, this judge views unwarranted limitations on property rights as a substantial interference with liberty because they prevent owners from using their property as they like. Liberty includes the ability to live your life on your own terms. If the only place you can live is in someone else's house, then you are subject to the control of the owner, who may evict you from the property. Only if you own property yourself can you be sure that you can do what you like. Property is thus necessary to liberty, and restraints on property can directly inhibit liberty. Such limitations also constitute a form of theft because they result in expropriation of property rights without compensation. Limiting an owner's land use for the benefit of others, if done without adequate justification, uses some people for the benefit of others; it therefore treats individuals as means rather than as ends in themselves. It also counts the interests of some to be more worthy of protection than the interests of those whose liberty is restricted. Protection of property rights is thus directly related to individual interests in autonomy, equality, and dignity. How will this judge analyze the case?

She will have a problem. The case presents a conflict of property rights-Friendswood's and the neighbors'. Here the interests in free use conflict with interests in security. One way the judge might resolve the conflict is to rely on her libertarian instincts and take the side of free use and "deregulation." She might rule in favor of Friendswood because she believes land owners should have the freedom to use their land as they wish unless a legitimate preexisting regulation clearly prohibits them from doing so. No statute or regulation limits Friendswood's ability to withdraw the water. Nor is its action clearly prohibited by any preexisting common law doctrine. In fact, as Friendswood pointed out in its brief, prior cases in Texas regarding water use supported its claim.

The judge might further conclude that this result is not unfair to the neighbors because they, like Friendswood, are equally free to use their property as they wish. She might even conclude that the neighbors acted negligently in building homes in an area that was prone to flooding or to sinkholes. If they want to prevent Friendswood from using its land as it wishes, they are free to bargain with Friendswood to induce it to stop its lawful activities. If they are unable or unwilling to come to offer Friendswood enough money to induce it to give up its property rights, then Friendswood has the same right to use its property as they have to use theirs.

Another possibility is that a strong supporter of property rights like our judge just might side with the neighbors. After all, by withdrawing water from underneath neighboring land, Friendswood has caused direct physical harm to its neighbors' land. It does not matter that all of Friendswood's activities took place on its own land. An owner who sends noxious fumes to neighboring land both physically invades that land and substantially interferes with the use and enjoyment of the neighbors' property. Such actions are prohibited by the common law doctrine of "nuisance." Moreover, under trespass doctrine, Friendswood has no right physically to enter its neighbors' land against their will, and it certainly has no right to destroy it. Friendswood, by its actions on its own land, has caused physical harm to its neighbors' property even if it has not physically entered their land. Recognition of property rights necessarily requires the government to act affirmatively to prevent such harms to property.

Does it make a difference that the destructive action is itself a use of someone else's property? The owner of a gun does not thereby acquire the legal right to kill other people. A real estate developer has no legal right to use explosives to demolish a building on her own land in a way that will harm neighboring structures. Although it is true that restricting Friendswood's withdrawal of water would infringe on its liberty interests (and, arguably, its property rights), the failure to protect the neighbors would constitute an abdication of the government's responsibility to protect the property rights of the neighbors. Regulation of Friendswood's land use does not unfairly restrict its property rights; rather, it prevents Friendswood from invading and destroying the property of others.

What about those prior Texas cases in which the courts held that owners have the right to withdraw as much water as they like even if their actions dry up their neighbors' wells? Friendswood claims that it relied on this case law when it invested in the equipment and infrastructure necessary to withdraw the water and market it. In response the judge might argue that the right to dry up a neighbor's well does not necessarily mean that one has the right to destroy the land in which the well sits.

This is because Friendswood's withdrawal of water benefits society by making water available for use on the market. Nor has Friendswood interfered with any property rights that the neighbors may have in the water itself, because before the water is pulled to the surface, they have no claim to ownership of it. Only by withdrawing the water from below can a land owner actually possess it and claim full ownership rights in it. Friendswood's withdrawal of water from beneath the neighbors' land therefore does not deprive them of legitimate, preexisting property rights.

Destruction of the land, in contrast, harms both society and the neighbors by destroying scarce and valuable real estate that is impossible or expensive to replace. It also infringes on the neighbors' preexisting property rights in the land. Thus, it was unreasonable for Friendswood to interpret prior Texas cases affirming the right to withdraw water and reduce it to possession as encompassing a right to do so in a way that would destroy others' property rights in their land. The Friendswood case involves the wholesale destruction of a county; no prior case that authorized the free withdrawal of groundwater comes close to allowing injury on such a scale.

In the Friendswood case, then, the judge faces a fundamental conflict between two distinct property rights-the right to use one's property as one sees fit and the right not to have one's property physically invaded or destroyed by others (including by other owners). In this situation, protection of property rights may provide an argument in favor of "government regulation" to prevent one owner from using her property to destroy the property of others.

Our judge, as a libertarian who believes that government should both provide strong protection for property and minimize interference with individual liberty, faces an acute dilemma. The liberty interest of one owner, Friendswood, conflicts with the security interest of other owners, the neighbors. The libertarian impulse favors deregulation to free owners from restrictions on their liberty, but the propertarian impulse suggests that this is an appropriate case to use government power to limit the freedom of individuals to seize or destroy property rightfully owned by others. This judge's political and moral commitments arguably create a conflict between liberty and property.

Would our judge be in any better shape if she adopted liberal views favoring government regulation of property? Yes and no. Adoption of a pro-regulation position would allow the judge to acknowledge that regulation of property is essential to prevent owners from using their property so as to inflict harm on others-including other property owners. But the advocate of regulation cannot get off so easily. After all, regulating Friendswood's use of its property not only prevents harm to the neighbors but also inflicts harm on Friendswood. Regulation has the effect of protecting the neighbors' property rights at the expense of Friendswood's freedom to use its land. Such a restraint on Friendswood's liberty arguably infringes on a preexisting property use-the production of water-a use that was thought to be socially beneficial before it started undermining the support for neighboring land.

Although liberals are more accepting of the need for regulation of private property than conservatives are, it is not obvious how to determine when regulation is legitimate and when it is oppressive. After all, liberals are as interested in individual liberty as are conservatives. Although they do not often associate liberty with the ownership of property, it is not clear why they do not do so. It is true, from the liberal perspective, that use of one's property may be oppressive to others by constituting an exercise of undue power over them; at the same time, it is not the case that all uses of property are oppressive. Some property uses are necessary to provide a setting within which individuals can exercise liberties that liberals care about, such as free speech, religious activity, and private family life, without undue government interference. For this reason, regulatory limits on property should concern liberals as much as conservatives.

Regulation of an owner's use of her property to prevent harm to neighbors inflicts harm on the one who is regulated by depriving her of the freedom to use her own property as she desires. If we are as concerned with liberty as we are with property, we must figure out what to do when these principles conflict. When these principles are attached to property claims, as they are in this case, the regulator must determine which property right should prevail.

There is no easy resolution to this conflict. One possibility is Richard Epstein's suggestion that "each person can do with his own land what he pleases as long as he does not physically invade the land of another." Would this principle apply in the Friendswood case? In one sense, Friendswood has not physically invaded the neighbors' land; all its actions take place on its own land. It has not entered or sent any physical objects onto the neighbors' land, as it would if it spewed noxious fumes onto their property, for example. On the other hand, it has physically affected the neighbors' land by drawing water away from underneath the neighbors' property. This physical effect might well be viewed as akin to a physical invasion.

A second possible solution to the conflict is to adopt a principle that owners have no right to harm their neighbors' property, whether or not they have physically invaded it. As John Stuart Mill wrote, "The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others." But this principle also is hard to apply here. After all, it cannot be the case that all harms are prohibited. If property rights were protected absolutely from interference by neighbors, then an owner who first established a business in a community could claim a monopolistic right to be protected against competition. Home owners who built first in an area near the shore would be able to prevent their neighbors from building on adjacent lots if their homes would block the first home owners' view of the ocean. Thus a legal rule that protected owners against all conceivable harms would be unacceptable because it would interfere too much with the liberty interests of other owners. It is necessary, then, to determine which harms should be prohibited and which should be allowed.

Both advocates and opponents of government regulation face a problem here. They agree that we should protect property and liberty. But when various property rights conflict, and when liberty interests conflict with security interests, one must choose between the conflicting claims. One cannot solve this dilemma by voicing a strong allegiance to property rights; nor does a commitment to liberty from unwarranted regulation solve the problem. Conversely, support for regulation does not provide a solution.

Continues...

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Excerpted from Entitlement by Joseph William Singer Copyright © 2000 by Yale University. Excerpted by permission.
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