Playing by Different Rules?

In this paper, Richard A. Epstein examines the similarities and differences between the law of land and water in both private and constitutional law. He notes that the nature of the two resources differs such that exclusive rights for occupation usually constitute the best framework for analyzing land use disputes, while a system of shared, correlative duties work best for water. Once these baselines are established, an accurate rendition of the constitutional issues requires the proper articulation of private law rules of adjudication to explain which government actions result simply in a “mere” loss of economic value and which government actions generate loses that require compensation. Epstein offers a two-step process for dealing with the private law issues: (1) developing principles of parity between private claimants, to the extent physically possible; and (2) picking the set of rules that maximizes the overall utility of all parties concerned, subject to the parity constraint. However, this system must yield to reasonableness considerations when the conditions of physical parity cannot be satisfied, as in all disputes between upper and lower owners of land, as well as upstream and downstream riparians.

In such cases, the objective should be to create, when possible, rules that treat the last element of loss to one party as equal to the last element of gain of the next. Epstein argues that using these natural law baselines would produce, by and large, efficient results in private disputes, while their rejection in the takings context in both land and water cases would concede far too much power to state authorities in both land and water cases. He concludes that rationalizing both areas of law requires that the constitutional protection of private property start with the definitions of private property that have worked well in practice under the natural law traditions of private law.

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 11 of the book Property in Land and Other Resources, edited by Daniel H. Cole and Elinor Ostrom.