Land Use Controls

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Land Use Controls Powered By Docstoc
					                                              Land Use Controls
     A. Introduction
             a. An oil refinery is built next to a house—why is it there? Presumably, it makes economic good
                 sense. There must be some positive virtue for society to have the refinery there. However, there
                 are also costs to it being there.
                       i. How do you adjust to varying uses of land as to minimize costs and maximize benefits?
                      ii. How do you bring in a plot of land to achieve the most efficient land use?
     B. General Strategies
             a. Determinable Estates.
                              i.   FS determinable—terminates estate upon commercial use of the property
                          ii. FS on condition subsequent—gives right of entry when condition is met1
                b.    Natural Rights. Rights inherited with the land.
                              i.   Nuisance. Owner of land has certain rights attached to the land. Part of the bundle of rights you get is freedom
                                   from nuisance,
                             ii.   Trespass. Right to eject others from your property (ius excludendi).
                            iii.   Support. Lateral; subjacent.
                c.    Servitudes. Type of contract. Between private parties.
                              i.   real & equitable
                          ii. negative easement—no commercial building
                d.    Zoning. Local government decides uses by statute
                e.    Regulations and Takings. Regulating particular actions taken by people on the property



                                                         INTENTIONAL                                  UNINTENTIONAL


                                               BALANCING                  THRESHOLD                         RECKLESS
                 TRESPASS                                                                              ULTRAHAZARDOUS

                                             Would payment put
                                             ∆ out of business?
               NO LIABILITY

                                       Yes                        No

 e.g., if used for commercial purposes then O has right of entry. Maybe by a later year it would be beneficial for land to be used commercially
and then O can sell right of entry and not use his power of termination and move to Florida.
          a. The extent of one’s property rights are determined, to an important extent, by the effects that the
              exercise of one’s rights have on others.
          b. Whether a property interest will be legally recognized is contingent on the effects of exercising
              that right on others.
                    i. “A nuisance may be merely a right thing in the wrong place”
          c. Most land conflicts are regulated by nuisance law
   B. Trespass vs. Nuisance
                                    Trespass                                   Nuisance

Ius                  Excludendi—right to exclusive possession      Utendi—right to use and enjoyment

Components           Blatant, direct physical invasion             Offensive, nontrespassory interference
                     Harm—not an element                           Substantial harm
                     Intent—not an element                         Intent
Rationale            Stops adverse possession or prescriptive      The need to protect the ability of owners to
                     easement.                                     derive benefit from their own property without
                                                                   undue interference by others justifies limiting
                                                                   free use and development
Filters              None—can sue for nominal damages              Yes—intrusion is only actionable above some
                                                                   level or quality of harm.
Remedies             Actual Damages                                Temporary Damages
                     Nominal Damages                               Permanent Damages
                     Self-Help                                     Injunction
Examples             Personal, Rocks                               Noise, Odor, Smoke, Dust, Flies

             a.    Privileged non-permissive entries:
                         i. Departing tenant, licensees have reasonable time to return for their possessions
                        ii. Right to retrieve in some circumstances
               b. Trespass on the Case:
                         i. Indirect injury (like reputation)
                        ii. Injury to reversionary or nonpossessory interest
                                 1. Like AP trespassing against your tenant, as landlord can’t kick him out until
                                      tenancy is up
                                 2. Elements: harm, breach of some legal std (willfulness or negligence)
    C. Nuisance Law
               a. Sic Utere Tuo Ut Alienum Non Laedes.
                         i. Translation: Use your land in a way that it doesn’t injure someone else.
Per se                                                    Per accidens
 Activity that is always a nuisance no matter how        Nuisance in fact—unreasonable under particular
  reasonable.                                             circumstance.
 No defense                                                Intentional: liability if conduct is U/R
 Operationally—∏ doesn’t have to show                      Unintentional: liability for neg, reck, or ADA
  anything further.
 Note: Almost always statutorily-defined nuisance
Private                                                   Public
 Interference with ius utile of an individual             Interference with general community interest
 Person bringing suit must have a property interest  Usually brought by DA or public official
  that is affected or must allege bodily harm.             To have standing to sue, private party need not
                                                              own any affected land, but must show special
                                                              injury different from the public at large.
                                                           POLICY: want to avoid excessive lawsuits
                                                              seeking to enforce a public right.

      D. Restatements
                 If the utility of the conduct is greater than the gravity of the harm, OR
                 If the harm caused by the conduct is serious and the financial burden of compensating for this and
                 similar harm to others would not make the continuation of the conduct not feasible.
                       i. So, basically, you got to pay unless paying puts you out of business.
     E. Proving the Elements
            a. Substantial Interference—it has to be substantial in quantifiable terms (i.e., money) not merely that
                 people don’t like it.
                       i. Depreciation of property value: not enough by itself to constitute nuisance but
                                an imp factor
                                    1. Psychological Nuisance (cemeteries, funeral home): depreciation of
                                        neighboring property values an underlying, controlling factor
                            ii. Discomfort: serious discomfort & inconvenience an imp factor
                                    1. Like objectionable noise, odors, smoke
                                    2. Measured by sensibilities of TARP
                                    3. Sunlight: Cutting off sunlight not a nuisance, but blocking solar
                                        collectors may be
                           iii. Fear of harm: if the use is a dangerous one that puts adjoining neighbors in fear of
                                harm, it’s a significant factor.
                                    1. Reasonableness of fear tested by general community beliefs & extrinsic
                                         evidence based on experience.
                                    2. But may be permitted because it has a high social value (e.g., halfway home)
                           iv. Character of neighborhood: great importance to determining nuisance
                                    1. Residential neighborhoods given preferred status
                                    2. Zoning ordinance is admissible to show community policy w/ respect to
                                         desirable land use w/in neighborhood, but not controlling. 2
                            v. Social value of the conflicting uses:
                                       1. Primary objective of nuisance is to avoid more serious harm and not to
                                          resolve conflicts in way to make society poorer
                                       2. If conduct has great social value, Ct reluctant to enjoin it
                                       3. If harm is serious & payment of damages doesn’t shut down plant, Ct
                                          may order payment of damages for nuisance & refuse to enjoin activity.3
                       vi. Coming to the Nuisance:
                                 1. Def: If ∆’s use came first in time, ∏ came to the nuisance
                                 2. Not an absolute bar to recovery. 4 But Court might say that it’s unfair for
                                    someone to sue in damages when they move in knowingly where a refinery is.
                                 3. POLICY: ∏ would have paid a price that took into account living next to a
                                    refinery and cannot now sue to remove it having paid less.
               b. Intentionality
                        i. Once ∆ has been notified of nuisance then she is acting intentionally.
                                 1. by the time you get to litigation, ∆ has been warned and now continues to
                                    operate nuisance intentionally.
                       ii. Unintentional nuisance is rare5
               c. Determining Unreasonableness
     F.    Reasonable & Unreasonable
               a. Economically reasonable.
                        i. Marginal Benefits. Abatement of odors, particles, noxious fumes is a marginal matter—
                           you may not get rid of them all. The marginal benefit of their reduction goes down as
                           abatement is reduced.

   Boomer v Atlantic—zoning ordinance permitted use generally, but specific use was done so it was UR interf w/ adjoining prop
   Boomer v Atlantic Cement—Co. invests $45 Mil & employs many while damage to ∏ is $185 K. Order to pay $185K—no inj.
  Spur v Del Webb—∏ built residential community, purchasing agricultural land for cheap, after ∆ had established feeding lot. ∏ came to the
nuisance--∆ was ordered to stop, ∏ was ordered to pay costs of abatement.
   Ex.—build refinery and it blows up and noxious fumes spread across the neighborhood; if it’s just fumes and odors it’s not trespass; and ∏
would have to show negligence, recklessness or ultrahazardous (and probably would be able to); but it’s clearly unintentional.
                      ii. Marginal Costs. The more you get rid of the more it costs to do it.
                 Optimal point: where marginal costs intersect marginal benefits.
                       i. Underdeterrence. Benefits of reduction are greater than the costs
                      ii. Overdeterrence. You cannot have too little pollution—but the costs are higher than the
              c. Problems.
                       i. We don’t know the data or how to measure it
              d. Analyzing Unreasonableness
                       i. Threshold—the relevant inquiry is the level of interference that results from the conduct. 6
                               1. the value of the ∆’s operation is irrelevant.
                      ii. Balancing the equities—does gravity of harm outweigh the utility of conduct:
                               1. Social value of use/enjoyment invaded
                               2. Suitability of use invaded to the locality
                               3. Impracticality of preventing or avoiding intrusion
                               4. effect of compensation on ∆’s business
                                         a. ∆’s activity no longer feasible—no payment
                                         b. ∆’s activity still feasible—payment
       G. Other Methods of Regulation
              a. Command and Control—
                       i. Government steps in and forces specified activities—
                               1. government may be wrong—technology may not be best thing; some may rather
                                    leave it to the court system
                      ii. Mandates best available technology
                     iii. Specifies allowable outputs or inputs
              b. Incentive systems—
                       i. regulator estimates efficient level of emissions given damages of pollution v cost of
                          abatement & then:
                               1. Gives fee (tax, fine) when polluting, or
                               2. Gives permits which you must purchase to pollute Make people who pollute pay
                                    a tax: have tax equal to damages
              c. Tradable Permits—
                       i. Set up markets for permits of pollution
                               1. e.g., 1000 tons/day—for a city as a whole
                      ii. How do you decide which company gets the permits?
                               1. assign different polluters a certain right to pollute (based on historical use) and
                                    allow them to trade
                               2. companies will sell to those who want to pollute more
                               3. arrivee at efficient use

   A. Generally
         a. Purpose: to make those damaged whole—
                  i. objective (economic) value vs. subjective (sentimental) values
         b. Liability Rules:
                  i. State protects owner by making transgressor or converter pay market value of damages
                 ii. Criticism: damages paid are not how owner values but how market values it
         c. Property Rules:
                  i. People can be irrational with their property—in other words, they can do things with
                      their property that aren’t necessarily economically optimal
                 ii. State guarantees assigned rights through
                           1. Injunction, OR
                           2. Fine higher than expected value to transgressor
                iii. Entitlement cannot be taken by one willing simply to pay market price.
                iv. Note: equity only when there is no adequate remedy in law (damages are not sufficient)

    Jost v. Dairyland Power Coop.
                d.    Ari Weinberg Hypo:
                             i.   Ari has a lemon tree on the land—there for ornamental purposes. Stone says it’s a suboptimal use of land and
                                  wants to tear it down and bring it to his land…
                                       1. Liability Rule: Stone pays market value of tree.
                                       2. Property Rule: Stone not allowed—Ari can have tree for whatever purpose he wants—regardless of
                                              its social benefit.
     B. Types
           a.   Damages
                      i. Temporary—
                     ii. Permanent—compensation for present and future harm. Polluter pays for a servitude to
                         the land to allow for continued pollution.
                              1. Criticism: There could be changes or improvements in research and costs of
                                   nuisance would be reduced or eliminated. Giving permanent damages would
                                   stifle research—there would be no incentive to research or invest in new
             b. Injunction
                      i. ∏ can extract from the ∆ what it’s worth to the ∆ to have the injunction released.
                              1. ∆ wants to avoid this: will argue for damages over injunction.
     C. Entitlement
             a. Different rules establishing who is entitled to:
                      i. pollute
                     ii. be free from pollution
             b. Breakdown

                        Recipient(R)—R entitled to be free from pollution          Polluter (P)—P has right to pollute
Property Rule            R gets injunction                                        No injunction—R must pay whatever P
                         R can make P pay higher than market                      demands to stop
                          value for damages to R8
Liability Rule           P can pollute but must pay R damages                     P can pollute unless R pays polluter’s court-
                         Criticism: no incentive to pollute less—                 determined
                          e.g. license to pollute9                                 Damages=P’s costs in abating pollution. 10

                c.    Implications
                           i. Property rule for Rs—
                                   1. Enjoin the factory: the have to pay off each person to eliminate inj. there are so
                                        many people any one of them can outdo the whole thing
                                             a. if there’s one person who’s irrational, who doesn’t agree to settle at
                                                  any price then the injunction will be maintained
                                   2. Criticism:
                                             a. holdout—some people may hold out and maintain injunction
                                             b. free-rider—some people will not agree unless they’re given more
                          ii. Liability rule for Rs—
                                   1. Give damages to each person:
                                             a. Equated to a cement company going to ∏’s backyard which had a lot of
                                                  sand, and taking the sand to put it to a higher use
                                   2. Awarding damages is the same as allowing them to take the resident’s property
                                        for their own use.

  Hypo: Suppose the EPA steps in and asks factory to cut their emissions in half. Company is forced to cut down and if they gave residents a
lump sum they would have overpaid them. They paid for the right to pollute at the level they were polluting.

  Schultz v. Estancias--∏’s get injunction against ∆ who installed noisy A/C tower right by their home. Given power to bargain (or not bargain at
all) with injunction up to the ∆’s costs of installation of individual A/C units in each apartment
   Boomer v. Atlantic Cement—∆ ran $45M cement company; damages to ∏ were $185K. After balancing the equities, ∆ was only made to pay
damages—no injunction given. Dissent: equated liability rule with giving power of condemnation to a private firm because only government
should be able to take things at market price.
    Spur v. Del Webb--∏ can’t collect damages if he came to the nuisance—he is ordered to pay ∆’s cost of abatement.
                              3.   forcing someone to take damages is like giving the power of eminent domain—
                                   power to condemn land and pay market price (damages)—which is limited to
                                   the government
                                        a. if the government takes a servitude on your land due process says they
                                            have to compensate you.
                                        b. Allows private party to avoid constitutional responsibility of due
            d.   Bargaining
                      i. ∏ wins the injunctionholds the right; negotiating with ∆
                             1. Willing To Pay (WTP)—bargaining ceiling—what ∆ is willing to pay for ∏ to
                                  remove injunction.
                             2. Need To Receive (NTR)—bargaining floor—what ∏ needs to receive, at
                                  minimum, to remove the injunction.
            e.   Examples
                      i. Numbers
                             1. ∏’s damages suffered: $20K.
                             2. ∆’s cost of pollution filter: $200K.
                             3. ∏’s value of nuisance-free residence: $300K
                     ii. Recipient
                             1. Liability rule—WTP is $20K. WTP isn’t higher because liability rule limits
                                  amount to damages.
                             2. Property rule—WTP of ∆ shoots up to $200,000. Though actual damages are
                                  only $20K and if ∏ was irrational about it they could bargain for $200K—i.e.,
                                  they value peace and quiet more than mere damages will cover.
                                       a. If they value it at $300K—then they’ll never sell injunction. Because
                                           there NTR would be higher than the WTP
                    iii. Polluter
                             1. Liability rule—∏’s WTP $300K—but would only have to pay $200K because
                                  that’s what it would cost ∆ to abate pollution
                             2. Property rule—∏’s would have to pay whatever ∆’s wanted—so ∆’s could
                                  bargain up to the ∏’s WTP.
                                       a. If ∆’s value pollution beyond ∏’s WTP—they will not stop their

   A. Efficiency Criterions
           a. Kaldor-Hicks Criterion—a change is efficient if there is enough gain that the person made better
               off could (by payments) make those disadvantaged no less well off.
                     i. It may be too expensive to locate those who lose money—if the gains to the winners are
                        large enough that they could have paid the losers then that is efficient.
                     ii. If Gains to gainers exceed losses to losers societal net gain
                    iii. Injunctions may not give as high a social net gain
            b. Pareto Criterion—a change is efficient if at least someone comes off better and no ones comes
                 off worse.
                   i. Activities that satisfy K-H may not be Pareto efficient
                          1. Pareto efficiency not often found so just try to reach K-H
                  ii. Since it requires compensation of those who lose it becomes very costly to
                      arrange wealth transfers from beneficiaries to losers.
                 iii. Hard if legislature or judges can’t pass any law that doesn’t pass this test
    B. Coase Theorem—market will move to its highest valued use assuming there are no transaction
           a. No transaction costs is an unreasonable assumption—the more parties involved, the
              higher then transaction costs
            b.   If transaction costs are negligible—it doesn’t matter to society who wins or loses. They will get
                 the same mix of land uses for societies point of view.
                 i. The use of the land isn’t affected by who wins or loses, however, because of the
                    negotiations involved the profits of the owners will be affected.
       c. When there’s damage there’s no good or bad guy—the activity is just not beneficial to both of
                 i. Legal fortuity—if ∆ has a refinery and ∏ has a residence and wind happens to blow
                    smoke in ∏’s way; ∆ is in no way acting wrongfully.
C. Transaction Costs:
         a. Behavioral Problems:
                  i. Hold Out: Each person has incentive to hold out for exorbitant price, which
                     may ruin it for everyone else who is willing to settle for less
                 ii. Free Rider: Tendency to let others do it instead
                iii. Strategic Behavior: ↑ transaction costs
         b. Harder to win injunction because of balancing of equities.
         c. Injunction reduces transaction costs of having to repeatedly go to Ct to get damages
         d. Transaction costs may be so high (because of large community) that if you don’t have an
            injunction, things don’t get cleaned up & people won’t get together for anything short of
            an injunction
                   i. why not join the class of all affected by people—
                         1. when it gets time to release the injunction you’ll have HIGH transaction costs
                         1. maybe other people didn’t mind
         e.With high transaction costs, paying off all owners may be too much & may deplete any
           social gain
D. Fairness
       a. Wealth distribution
       b. Minimum guaranteed healthy environment
       c. Set up preferred activities as done in cumulative zoning
E. Inconsistent Land Uses
         a.   Rationale: from the point of legal system you don’t jump in and say that one guy is bad and the
              other is good. You balance the value of the activities.
                   i. there has to be some next best use to the land—opportunity costs
         b.   Inquiry: look at what would happen if one person owned both parcels and how a single owner
              optimize the use of the land
                   i. This will result in the socially-efficient use
         c.   Hypo: Keeble v. Hickeringill
                    i.   Land Use options:
                              1. H: Shooting Range, $200; Bed and Breakfast, $100.
                              2. K: Duck pond, $120; Rice growing, $110.
                              3. Socially Optimal: Rang ($200) + Rice ($110) = $310.
                   ii.   Possible Outcomes
                              1. If H loses: H can’t operate shooting range. H’s lawyer talks to K’s lawyer and has $100 to bargain
                                   with to release the injunction on H, meaning K needs to drop down from ducks to the next best use.
                                         a.    Then H pays K (any amount over $10 is worth it), K dissolves injunction—and we get
                                               the optimal, socially-efficient solution.
                              2. If K loses: K only has $10 to bargain with—and H would never accept that because he’s making
                                   $100 extra with the shooting range.
                                         a.    So again, H gets to operate his shooting range, K grows rice and we have our optimal,
                                               socially-efficient solution.
                  iii.   The guy who wins the suit shifts the dynamics of the negotiation
                              1. H would rather win and not have to bargain—
                              2. But even if he loses he’ll still get to run the range, he’ll just make less money
         d.   Note—this is only when transaction/negotiation costs are negligible and parties are rational
              (meaning—motivated by profit and not by a love for ducks)
F.   Distributing Added Wealth
         a. Neighborhood Effects
                    i. Greenacre and Blueacre—adjacent plots, single family houses, value= $1M
                   ii. Greenacre introduces polluting use (factory):
                           1. increases their value by $6K
                                2. decrease value of blue by $2K
             b.   Entitlement
                        i. P has entitlement to pollute—then P will continue to pollute
                                1. Not-Pareto efficient—
                                2. Is Kaldor-Hicks—the society as a whole is doing better
                       ii. If R gets damages
                                1. that is Pareto efficient—cuz P will pay damages to R
                      iii. If R gets injunction
                                1. net gain of $4K but now R can participate in the bargaining
             c.   Nash solution—
                        i. If you have a rich bargainer and a poor bargainer—the rich person will come out with the
                           lion’s share of the money.
                       ii. Suppose that a rich uncle leaves to people A & B 50K if they can agree how to divide, if
                           they can’t agree—it goes to USC
                                1. suppose A is rich and B is poor and more desperate.
                                2. rich guy doesn’t value the money as much and would be willing to pass on the
                                     money but B who’s desperate is willing to take $7K and the other guy will take
                                3. the utility to A is less than that to B…
                      iii. APPLICATION—
                                1. in injunction negotiation, richer party will probably get more than the poorer
                                     party… (??)

   A. Biparty—
          a. 1 recipient (R) and 1 polluter (P)--$15,000 for damages
          b. Assume liability rule for R
                    i. $10K for Filters—the threat of $15K would lead to company getting the filter—because
                       it’s cheaper
                   ii. if it’s $100K for Filters—then threat of $15K lawsuit wouldn’t result in installation of
                       filters—lawsuit is cheaper
          c. Assume property rule for R
                    i. $10K for Filters—company would put in filter: that way injunction can’t be enforced
                       because the nuisance is eliminated
                   ii. $100K for Filters—R can then bargain for up to $100K for the company to pay off to
                       remove the injunction
          d. Assume property rule for P
                    i. R has to pay P to stop—P may only require $10K, which is the cost of the filter, OR he
                       may bargain up to $14,999, right up to what damages would otherwise be to R.
   B. Community—
          a. 15 Rs—each damaged $1000; Filter can be put in for $10,000
                    i. the efficient thing to do is put in the filter—it’s causing $15K worth of damage but it can
                       be solved for $10,000
                   ii. for any one R to bring a suit it would require hiring a lawyer, or they can get a class
                       action—but there’s transaction costs: getting lawyers, negotiation costs
          b. if there are transactional costs then it does make a difference who has the injunction and how the
              case ends up.