Dim Prospects for Property Rights

 

By David Hogberg

 

Above: Oregon ’s Klamath Basin in 2000; Below: The

Klamath Basin in 2001. A last-minute decision by the

Clinton administration to bar area farmers from

using area water for irrigation left the land parched.

 

Summary: This spring the U.S. Senate is expected to consider the Threatened and Endangered Species Recovery Act of 2005, a bill passed by the House in September to overcome the abuses of private property caused by the 1973 Endangered Species Act (ESA). But Senator Lincoln Chafee (R-Rhode Island), chairman of the Subcommittee on Fisheries, Wildlife, and Water, says he won’t consider the bill until he receives a report from a “working group” set up by Colorado’s Keystone Center to review the ESA. Will the report seek to water down the bill’s reforms?

 

 

Bill Kennedy manages the Lost River Ranch in Klamath Falls , Oregon . In 2001 the federal government, enforcing an eleventh hour Clinton administration decision, cut off the water from the Klamath River Basin to much of his farmland. Kennedy was lucky—his ranch survived. But many farmers who relied on water from the Klamath Basin were not as fortunate.

 

Why would the Clinton Administration declare the rivers and lakes in the Klamath

Basin off limits to farmers, who use its waters to irrigate 200,000 acres of farmland? The answer is that irrigation harmed the sucker fish and the coho salmon, which are protected by the Endangered Species Act (ESA).

 

The Administration’s decision dried up about 700 acres of Kennedy’s land, part of which he had converted into a wildlife refuge in 1975.  According to Kennedy, the lack of water harmed nesting birds and waterfowl—green heads and cinnamon teals. And the effect of the Administration’s action on the wider economy was devastating: the local farm bureau estimated the cost to be $450 million.

 

The Endangered Species Act was first passed in 1973 by a bipartisan vote (355 to 4 in the House and a voice vote in the Senate) and signed into law by President Nixon. Rep. John Dingell (D-MI), an original sponsor, explained in an op-ed on the bill’s thirtieth anniversary: “Ours was the first nation to say that only natural extinction is part of the natural order and that extinction caused by human neglect and interference should be prevented to the maximum extent possible.”

 

Ironically, however, the Act has had more effect on property rights than on the species it was meant to protect. Thirty years after its enactment, only ten of 1304 listed endangered North American species are considered to be recovered, according to the U.S. Fish and Wildlife Service—a less than one percent rate of success. And many of those recoveries are unrelated to the ESA.

 

But the Endangered Species Act has harmed property owners.

 

Farmers and ranchers complain bitterly that the Act has deprived them of the use of their own land, denied them access to water for irrigation and land for grazing, and imperiled their livelihoods.

 

Relief appears to be on the horizon.

 

Last September, the House passed the Threatened and Endangered Species Recovery Act of 2005.  This is an effort by Resources Committee chairman Rep. Richard Pombo (R-CA) to add sensible private property protections to the ESA. The bill has gone to the Senate, where it is in the Fisheries, Wildlife and Water Subcommittee, chaired by Sen. Lincoln Chafee (R-RI). But Sen. Chafee says he will not take up the bill until he receives a report from a council of experts called the “ESA Working Group.”

 

What can we expect from the group’s report, and will it recommend private property

protections?

 

The ESA Working Group is the creation of a Colorado-based science and environmental group called the Keystone Center . The list of its participants includes environmental groups, government officials, attorneys, and industry representatives, most of whom are not known for their concern for private property rights. Indeed, with the exception of the American Farm Bureau, most seem downright hostile to property rights. The chances are slim that the Keystone Center report will endorse the Pombo bill and provide relief to Bill Kennedy and his neighbors.

 

The Pombo Reforms

 

The Pombo bill makes two important changes to the ESA that would protect private

property owners. First, it limits the amount of time the Fish and Wildlife Service

has to rule on an “incidental take” permit. An incidental take permit gives a property owner whose land is regulated by the ESA permission to make use of it. The owner is required to file a permit application with the Interior Department’s U.S. Fish and Wildlife Service (FWS), which has been notoriously slow to rule on these requests. Delays effectively deprive property owners of the use of their land. Under Pombo’s bill, FWS would have 180 days to reach a decision. If it failed to do so, the property owner would receive a default ruling in his favor.

 

If FWS denies the permit request, then Pombo’s bill instructs the Secretary of the

Interior to provide compensation to the property owner. Owners must apply for compensation within six months of an adverse ruling.  The amount of compensation would be based not on the fair market value of the land as it is currently used, but on the value of the “forgone use” of the land. In other words, if a property owner had plans to build on the land, he must be reimbursed for the estimated fair market value of his planned development.

 

The bill stipulates, “Ambiguities regarding fair market value shall be resolved in favor of the property owner.” 

 

It seems unlikely that these provisions will receive favorable treatment in the Keystone Center’s report. The Center, which specializes in dispute resolution among businesses, government, and activist groups, claims to work to achieve “consensus” on such policy issues as the environment, energy, agriculture, and health. Founded in 1975 by commercial cattle rancher and industrial consultant Robert Craig, in 2004 it reported revenue of $4.5 million—$2.4 million of which comes from government grants.

 

Keystone also receives grants from private philanthropies like the William and Flora Hewlett, Energy, and Ford foundations. However, the bulk of its funding comes from corporate foundations such as the General Electric Foundation and the Dow Chemical Company Foundation. According to its website, funding for the ESA Working Group comes from the (Ted) Turner Foundation and from industry groups.

 

Déjà Vu All Over Again

 

The Keystone Center has been down this road before. Some ten years ago Rhode Island Senator John Chafee ( Lincoln ’s father) commissioned a report from the Center entitled “The Keystone Dialogue on Incentives for Private Landowners to Protect Endangered Species.” As the title suggests, the report focused on providing incentives—tax credits and deductions—to encourage property owners to protect endangered species.  However, it said little about what could be done to protect their property rights.

 

Many of the same groups and individuals participating in the 1995 report are involved in drafting this year’s recommendations. They include environmental groups like Environmental Defense, the Nature Conservancy, Defenders of Wildlife, and the National Wildlife Federation.

 

Individual who contributed to both reports include Jamie Clark (who represented the U.S. Fish and Wildlife Service in 1995 and now works for Defenders of Wildlife), Jimmy Bullock (previously representing Union Camp Corporation and now representing International Paper), Robert Olszewski (a Georgia-Pacific Corporation official now with Plum Creek Timber Company), and Michael Bean (who represented Environmental Defense on both occasions).

 

The Keystone Center website section on the ESA Working Group throws cold water on the group’s prospects for protecting private property. It reports that at its first meeting last November:

 

It was broadly agreed that any new proposals, in order to be successful, must accomplish three objectives: (a) do a better job biologically of protecting and conserving listed species; (b) reduce the concerns and uncertainties regulated communities face; and (3) lessen the transaction costs all interested groups incur as the ESA is implemented.

 

At a second meeting in December, “the group reviewed those principles in more detail, focused its attention on the effective ness of the current habitat provisions, and began exploring alternative strategies that potentially would improve the prospects for protection of habitat that listed species need to recover.” Clearly, the participants are focused on preserving habitat and reducing the uncertainties of ESA regulation, not on protecting the rights of affected landowners.

 

The chances are slim that the Keystone Center report will endorse the Pombo bill and provide relief to Bill Kennedy and his neighbors. None of the groups acknowledge that the effect of the current law is to impose heavy financial penalties on landowners by forbidding them the use of their land.

 

 

In an interview with CRC, Peter Adler, the president of the Keystone Center , said as much. Asked about the direction of recent meetings, he said, “There is general agreement that the Act does not do enough for species to recover.” He noted that participants in ESA Working Groups are “worried about getting the job done biologically, litigation and delay costs, and the burdens government faces in implementing the act.”

 

But when directly asked about ESA’s impact on property rights, Adler said only that some members of the working group working with the “regulated community”—i.e. the timber industry and the homebuilders—had raised property rights concerns.

 

The Working Group contains no groups that focus on landowner concerns, such as

Defenders of Property Rights or the American Land Rights Association. When asked why not, Adler replied, “It was not an intentional exclusion. It was a matter of keeping the group at a workable size.” That argument rings hollow. The 1995 report was the product of thirty-two experts. This time only twenty-three persons are involved. Two or three representatives from the property-rights perspective might have been added had Keystone cared to give everyone with a stake in the issue a place at the table.

 

The Environmental Groups

 

It’s no secret that modern environmental groups seldom champion the interests of property and the rights of private property owners. The responses to property concerns inside the ESA Working Group run the gamut—from indifference to active hostility.

 

Perhaps the group most sympathetic to the landowner is the Wildlife Management

Institute. It was established in 1911 to promote the restoration and improved management of wildlife in America . Its 2004 tax returns showed that the Institute had over $2.3 million in revenues and about $428,000 in assets. Bob Davison, the Institute’s Oregon field representative, is the Wildlife Management Institute’s representative on the ESA Working Group. Last autumn he testified before the Senate Environment and Public Works Committee about the Endangered Species Act and made this astute assessment:

 

“Too many private landowners continue to distrust and fear any application of the ESA to their lands or activities. These private landowners may actively work to ensure that listed or candidate species are not attracted to their lands or that those species already present do not remain. At the very least, they may be unwilling or reluctant to undertake actions that would benefit listed or candidate species.”

 

Davison understands the problem—landowners fear intrusive government. When they discover a federally-protected species on their property their defensive reaction is what is commonly known as “shoot, shovel and shut up.” Unfortunately, Davison’s solution is not to protect private property.  Rather, he suggests, “State and Federal land management financial and technical assistance should be expanded to assist landowners who undertake actions that contribute to [species] recovery” and that such assistance be made “more accessible to small landowners.” In other words, there needs to be more government funding and increased regulation.

 

Other groups in the ESA Working Group are more strident. For instance, Defenders of Wildlife funds a website called “Pombo In Their  Pocket”   (http://www.pombointheirpocket.org/) that claims Rep. Pombo is in the pocket of land developers. The website features a television ad that tries to link Pombo to Tom DeLay’s legal troubles and it invites readers to contribute $25 to send Pombo a Christmas Card reading “Only a Grinch Would Sell Out Our Wildlife.” Defenders of Wildlife also cynically laments that the bill “requires the federal government to use taxpayer dollars to pay developers for complying with the law.”

 

Likewise, Environmental Defense complains that the Pombo bill forces “the government to use Interior Department moneys (earmarked for other purposes) to pay people for not carrying out activities that would kill or harm endangered wildlife.” And the National Wildlife Federation calls the bill a sop to developers, warning that it will result in the “writing [of] large checks to pay developers to comply with the law.”

 

None of the groups acknowledge that the effect of the current law is to impose heavy

financial penalties on landowners by forbidding them the use of their land. Monetary

compensation is an appropriate resolution.

 

But not according to the Natural Resources Defense Council: It says, “Those who hold extreme views of private property rights argue that the government should pay private landowners to comply with environmental, health and safety laws” (emphasis added).

 

Environmental Defense and the National Wildlife Federation claim Pombo’s bill will

impose too many “bureaucratic hurdles” on government agencies. Heaven forbid.

 

Perhaps the most dishonest remark is by Paul Hansen, executive director of the Izaak Walton League:

 

“We think that Congressman Pombo’s bill would weaken the ESA by not

helping private landowners.”

 

Hansen doesn’t quite explain how a bill that compensateslandowners and speeds up the application process for takings permits fails to help them.

 

The real reason the environmental groups oppose the bill’s effort to compensate landowners is revealed in this statement by the National Wildlife Federation:

 

[T]he Pombo bill would force wildlife agencies to choose between abandoning enforcement of the Endangered Species Act’s prohibition against taking endangered species—the provision that has given rise to collaborative habitat conservation planning across the country—or writing large checks to pay developers to comply with the law.

 

That’s another way of saying that environmental groups would rather use the existing law to shift the cost of “collaborative” conservation planning—i.e., “Do it our way”—to landowners rather than pay them a just financial compensation.

 

Environmental groups also sense that ESA reform might endanger their fundraising. For instance, in 2001-2002 the California chapter of Environmental Defense received two grants from the Peninsula Community Foundation “to encourage and help private California landowners improve conditions on their properties for endangered species.”

 

Defenders of Wildlife received $25,000 from the Park Foundation in 2003 “to protect and restore imperiled species in the U.S. ”

 

A reformed ESA spurring more voluntary compliance by landowners would undercut environmental group grant applications to the foundation world.

 

One group in particular benefits by keeping private property protections out of the Endangered Species Act. The Nature Conservancy claims to protect wildlife by purchasing private land and putting it off limits to development. But when the FWS preemptively rules that private land cannot be used for development because it is the habitat of an endangered species, then the value of the land is unlikely to increase. That gives the upper hand to the buyer. The Nature Conservancy can then purchase land from property owners for much less than it might otherwise be worth.  Indeed, it is not uncommon for landowners whose options are reduced by government land policies to sell out to an outfit like the Nature Conservancy.

 

Consider the case of Margaret Rogers. Ron Arnold of the Center for the Defense of Free Enterprise relates her story in his 2004 report, “Feeding at the Trough”: 

 

Using the Natural Heritage Program data bank, [the Nature Conservancy] was able to inform the U.S. Fish & Wildlife Service that 81-year-old Margaret Rogers was clearing brush from a fence line on her ranch near Austin . The brush was potential habitat for the endangered golden-cheeked warbler, so the U.S. Fish & Wildlife Service threatened Mrs. Rogers with a $50,000 fine and a year in federal prison if she continued to clear her fence line. Unable to keep the brush from destroying her fence and letting her cattle loose, Mrs. Rogers found herself faced with U.S. Fish & Wildlife Service and TNC representatives routinely reminding her that if she should ever decide to sell her land, TNC would make her the best offer.

 

The environmental groups participating in the ESA Working Group have used these sorts of cynical tactics and phony rhetoric to attack private property protections. That’s because they have a vested interest in keeping the Endangered Species Act as it is. And they are counting on the Keystone report to protect those interests.

 

Industry Groups

 

But what about the industry groups in the ESA Working Group? Businesses depend upon laws to secure their property rights, and surely timber companies and homebuilders want legal protections against government restrictions on private land. Why wouldn’t the industry groups on the Keystone project—International Paper, Plum Creek Timber, Weyerhaeuser, and the National Association of Homebuilders—be aggressive advocates for property rights?

 

Regrettably, large timber companies have grown increasingly cozy with parts of the

environmental movement. For instance, the Weyerhaeuser Company, a major timber producer, is a longtime supporter of the Nature Conservancy. Since 2000 the Weyerhaeuser Company Foundation has given more than $250,000 to Nature Conservancy chapters. In 2000-2001, it also gave $10,000 to the Izaak Walton League. Since 1999, the International Paper Foundation has given $129,000 to the Nature Conservancy and $35,000 to the Izaak Walton League. International Paper also signed the 1995 Keystone report on the ESA, as did Georgia-Pacific Corporation (timber products), Santa Fe Pacific Gold (mining), and the Union Camp Corporation (timber products). That report contained no recommendations for private property protection.

 

Rather than defend private property rights, these big businesses use selective grant making and involve themselves in “working groups” like Keystone’s to reach an accommodation on public policy with environmental groups. Their focus is primarily on reducing their own regulatory burdens and avoiding legal costs.

 

As Peter Adler of the Keystone Center told CRC:

 

Private industry—which he referred to as the “regulated community”—is “worried about litigation and delay costs.”

 

This attitude is apparent in a Seattle Post-Intelligencer letter to the editor from the

president of the National Association of Homebuilders. Referring to the “Habitat Conservation Plans” (HCPs) formulated when private land is brought under ESA regulation, David F. Wilson states,

 

“Privately owned land is home to a large majority of species listed

under the Endangered Species Act, and HCPs are one of the few

ways that government, environmentalists and landowners can

partner to protect them. The certainty provided by HCPs and the

no-surprises rule helps keep regulatory costs—and, by extension,

home prices—in check.”

 

Wilson says the “program can be improved” and warns against fixes that are

“unworkable and too costly.” But he never suggests that the ESA be changed because it violates the rights of private property owners.

 

Weyerhaeuser takes a similar approach.  It chose the path of least resistance in the early 1990s when the Clinton Administration put the spotted owl on the Endangered Species list and put millions of acres of timberland off-limits to logging in Washington , Oregon , and California . The Administration’s purported compromise plan, called “Option 9,” prohibited logging on state and federal lands within 70 acres of an owl-nesting site and designated ten “special emphasis” areas —including privately-owned land—that had to maintain at least a forty percent tree cover. The federal government said it would relax the restrictions on private landowners only if they came up with acceptable plans to  conserve owl habitat, which Weyerhaeuser did.   Its plan applied to 100,000 acres of company land in southwest Washington .

 

 

Regrettably, large timber companies have grown increasingly cozy with parts of the environmental movement. For instance, the Weyerhaeuser Company is a supporter of the Nature Conservancy.

 

 

Weyerhaeuser vice president Charlie Bingham called Plan 9 “an excellent first step” that would “free up more private timber for domestic processing …and help restore confidence of private landowners to make long term investments in private forestry.”  Weyerhaeuser certainly had enough resources to restore its own confidence. After all, it could always buy more land outside the Pacific Northwest to replace revenue lost to the spotted owl. But local timber companies and sawmills weren’t so lucky. Indeed, by endorsing Option 9, Weyerhaeuser shifted the regulatory burden onto its small competitors.  Local businesses were forced to shut their doors, costing the Pacific Northwest economy an estimated 100,000 jobs.

 

And what about the American Farm Bureau, which is also on the ESA Working Group? It is a long-time member of a coalition called the National Endangered Species Act Reform Coalition (NESARC), and one might expect it to defend the rights of private property on behalf of farmers who depend on the land for their livelihood. However, its record is spotty. While one part of its website congratulated House members on passing the Pombo Bill, another portion calling for reform makes no reference to compensating landowners or preventing government delays in issuing takings permits (see http://www.nesarc.org/NESARConepager.pdf). In 1997 NESARC supported a bill by Sen. Dirk Kempthorne (R-ID) that contained no compensation for landowners.

 

Individuals

 

The ESA Working Group includes individuals with no direct affiliation to industry or environmental groups. But most have career backgrounds in environmental policy, not in landownership. They have the kinds of policy expertise more suited to negotiating species preservation agreements rather than upholding the individual rights of landowners.

 

Don Bauer, for instance, is an attorney for the Washington, D.C.-based law firm of Perkins Coie. Bauer practices natural resources law and has served as an outside legal advisor for the World Wildlife Fund.  Weyerhaeuser is one of Perkins Coie’s clients.  The firm’s website puts a focus on regulatory land-use issues: “We advise businesses on planning, development and permitting strategies, help them prepare and defend environmental impact statements and reports under federal and state law. We represent them before hearing examiners, planning commissions, city and county councils, administrative hearing boards, and in court.”

 

Most individuals involved in the Working Group have career backgrounds in environmental policy, not in landownership.

Paul Conry is a Wildlife Program Manager for the Hawaii Department of Forestry.

and Wildlife. There is nothing to suggest that Conry is hostile to property rights—

indeed, he supports state cooperation with landowners and hunters—but his job is species preservation, not property rights advocacy.  Hawaii has arguably the most restrictive state endangered species act of any state in the nation. Conry is an outspoken supporter of “ Safe Harbor ” programs, a policy in which landowners reach agreements with environmental groups and government agencies to preserve endangered species in exchange for reduced government restrictions.

 

J.B. Ruhl, a professor of property law at Florida State University , is an exception. He has a background in property rights. In an article for the free-market James Madison Institute, Florida ’s state based think-tank, he criticized the recent Supreme Court ruling in Kelo vs. New London, Connecticut that upheld the city’s abuse of the power of eminent domain. However, Ruhl writes jargon-laden scholarly articles on the “co-evolution of sustainable development and environmental justice,” arguing that “a complex adaptive system driven by the goal of multi-trait optimization, sustainable development will relate to environmental justice through strategies of cooperation, competition, and conflict.”

 

By contrast, John Leshy, a law professor at the University of California ’s Hastings School of Law, has extensive experience in the world of practical policymaking. He has been critical of Bush Administration environmental policies and Rep. Pombo’s support for public lands use. Leshy was previously a special counsel to the House Natural Resources Committee when its chairman was liberal California Rep. George Miller, and he was the Interior Department’s solicitor general in the Clinton Administration. In the 1970s Leshy was an attorney for the Natural Resources Defense Council, arguably the most aggressive of the major environmental groups. He is on the advisory board of EarthWorks, an environmental groups dedicated to “protecting communities and the environment from the impacts of mining, digging, and drilling.”

 

Conclusion

 

As in 1995, it is likely that the Keystone report will attempt to devise government incentive programs —tax credits and subsidies—to induce landowners to protect species that agency officials—advised by environmental groups—want to put on the endangered species list. Incentive programs are just the kind of proposal one can expect from “policy experts.” But what if the alternative to participating in an incentive program is the loss of individual rights to own and determine the use of one’s property? Then the incentive program is little more than camouflage for coercion.

 

The groups and individuals laboring over the Keystone working group report should ensure that property owners are not stripped of their rights. That’s what the current Endangered Species Act produces and what any reform of the ESA should correct.

 

David Hogberg edits CRC online research programs “Education Watch” and “Greenwatch.” He also co-hosts “Organization Watch,” CRC’s monthly radio

program.

 

 

Mr. Bean’s Hypocrisy   5 February 2006   The opposition of Environmental Defense to the Pombo Bill seems particularly hypocritical given that its president, Michael Bean, has admitted that the ESA as it stands doesn’t work. In a speech at a U.S. Fish and Wildlife Service training seminar in 1994, Bean said the following about the ESA’s effect on the endangered red-cockaded woodpecker:   “Because…red-cockaded woodpeckers tend to prefer…longleaf pine over other species, landowners thinking about what species to plant after harvest or on former forest land, any of them I think regard the choice of planting long-leaf as a foolish choice because of the greater potential for having woodpecker problems in the future.   “And because the Fish and Wildlife Service does not apportion foraging habitat requirements among adjacent landowners when an active colony of woodpeckers occurs near a property boundary, landowners have an incentive to be the first to liquidate their share of the available habitat before the Fish and Wildlife Service’s minimum threshold of remaining habitat is reached.   “Now it’s important to recognize that all of these actions that landowners are either taking or threatening to take are not the result of malice toward the redcockaded woodpecker, not the result of malice toward the environment. Rather, they’re fairly rational decisions motivated by a desire to avoid potentially significant economic constraints. In short, they’re really nothing more than a predictable response to the familiar perverse incentives that sometimes accompany regulatory programs, not just the endangered species program but others.   “What is clear to me after close to 20 years of trying to make ESA work, is that—from the outside, in deference to you trying to do it from the inside—is that on private lands at least, we don’t have very much to show for our efforts other than a lot of political headaches. And so some new approaches, I think, desperately need to be tried because they’re not going to do much worse than the existing approaches.”