Property Creation by Regulation

In this paper, Daniel H. Cole argues that, contrary to both the suppositions of some legal scholars and the theoretical underpinnings of regulatory takings doctrine, government regulations not only impose on existing private property rights but also vindicate and sometimes even create public, private, and/or common property rights. After examining conflicting common-law and Roman law rules relating to property rights in the atmosphere, Cole focuses on how assertions of state sovereignty and regulations combine to create Hohfeldian rights and duties respecting the atmosphere, where rights and duties were previously unclear or nonexistent. Cole’s claim is supported by evidence from both civil aviation regulation and air pollution control. Cole also addresses how regulations have created private property rights to pollute in emissions-trading programs (regardless of congressional assertions to the contrary).

In some cases, assertions of public property via acts of sovereignty are a prerequisite for the allocation of private property rights, not just in the atmosphere, but also in other natural resources, such as marine fisheries. The paper concludes with a discussion of normative implications for property theory generally and regulatory takings doctrine in particular. A more dignified treatment of public regulations that are designed to protect public rights would raise a serious question about which set of property rights should prevail in the several regulatory takings cases where privately owned lands meet publicly owned waters. That question cannot reasonably be answered, however, until more work is done on a theory (or multiple theories) of public property to complement existing theories of private and common property.

This paper was presented at the Lincoln Institute’s conference entitled “Evolution of Property Rights Related to Land and Natural Resources” in 2010 and is Chapter 5 of the book Property in Land and Other Resources, edited by Daniel H. Cole and Elinor Ostrom.