Denial of Rights Through Regulations; Z and J. A. Klemmer

Zak Klemmer is a designer with M3 Engineering and Technology in Tucson, Arizona. Jo Anne Klemmer is the business manager of the Tucson Osteopathic Medical Foundation. This case made its way to the U.S. Su preme Court. In June 1992, Lucas received a six to two vote in his favor. In an opinion for the majority, Justice Antonin Scalia wrote, "Even if a regulation addresses a serious harm, the government must com pensate a property owner denied all eco nomically viable use of his land." Although the decision was favorable for Lucas, it appears that the U.S. Supreme Court's decision was narrowly drawn and did not adequately protect property rights destroyed by land use restrictions. "This was a golden opportunity to 'straighten out' the law on the government taking of prop erty .... The court 'blew' the opportunity ... It's impossible to tell what it does to a whole range of cases because its effect may be extremely limited," writes Roger Pilon of the Cato Institute.

What land use restrictions achieve is a weakening of our economy by obstructing commercial development. This is a direct and intended result of environmental ac tivism. An overly broad environmental agenda, enforced by expansive regulations with a sluggish legal system, can be as destructive to our economy as confiscatory taxation. The net effect of a regulatory taking of property, as illustrated by Lucas, is similar to that of a direct tax, in that it hinders (or in some cases prevents) the property owner's use of his livelihood, his rights. 204 Some twenty-five hundred miles away from David Lucas, Neil Simon of Tucson, Arizona, represents the Venture West Group (VWG). This is an investment group founded in Tucson in 1981. The VWG has successfully developed commercial real es tate in Phoenix, Denver, and California, as well as Tucson. Simon, like Lucas, is embroiled in a property regulatory nightmare with environ mental do-goodism at its core.

The property in consideration is a 7.1 acre site at Broadway and Houghton, on Tuc son's east side. This parcel has been zoned for shopping center use for the entire eleven years that VWG has owned it. Running through the middle of this parcel is a dry wash (approximately 3.2 acres), which traverses into an existing culvert under Broadway Boulevard. Many washes have been culverted along Broadway to accom modate commercial projects. As a pretext to save the remaining' 'prime riparian habitat areas" within the city limits of Tucson, no-growth activists lobbied the City Council to pass the Environment Re source Zone Ordinance (ERZ) in 1990. The ERZ Ordinance was intended to prevent the development of 53 miles of designated washes. The parcel at Broadway and Houghton fell under the ERZ. Because its 600-foot-long wash bisects it into two less valuable parcels, Simon sought a variance to allow development of the shopping center.

This process began in January 1991. By December 1991 the City Board of Adjustments unanimously approved the variance. This lengthy process included, among other things, public hearings. The variance, however, was subject to design considerations intended to mitigate the im pact of development on the wildlife habitat in the ERZ. These considerations attached additional costs to the project outside the control of the developers and their archi tects surpassing $100,000.In February 1992 the City Council of Tucson took up the issue and overturned the variance that had been granted by the City Board of Adjustments. "We want to build the shopping center. We don't want to file a lawsuit, " said Simon 205 in reply to the Council's reversal. "The Council's action amounts to an illegal 'tak ing' of property," declared Sy Shorr, Si mon's attorney. The.VWG has filed a law suit of $2.5 million against the city for the refusal to allow this proposed shopping center to be built over a culverted wash.

It seems as though government agencies have an endless supply of time and money to obstruct citizens who expect these agencies to respect and honor their constitutional right to own and use private property. One may ask: When does regulation become an obstacle to productivity and progress? And, what occurs when a regulation becomes an end in itself instead of the means to an end? When regulation becomes an end in itself, it perverts the law and usurps the economic freedom it is designed to protect, resulting in poverty and decline. The endless delays and regulations which haye been imposed on Simon's project have not only been finan cially prohibitive, but have detrimentally affected the economic health of. the local community by the loss of potential employ ment. More Regulation Means a Loss of Jobs Moving westward to California we locate still more examples of undue regulations brought on by environmental activism. The Council on California Competitiveness (CCC) reported in April 1992 that the grow ing regulatory burden has become a major hurdle to the state's economic recovery.

Since 1990, 700,000jobs have been lost in California; yet regulatory costs to employ ers persist. The once proud' 'Golden State" no longer creates jobs and wealth. It is creating burdensome regulations, exorbi tant state government employment, and def icits at record levels. According to the CCC, chaired by Peter Ueberroth, "Laws that were originally passed to protect our quality of life now are being used to thwart envi ronmentally sound economic growth with out balancing job impact with economic needs." Ball Glass Packaging Corporation has 206 THE FREEMAN • JUNE 1993 been producing glass jars in Santa Ana, California, for the past 60 years and has employed over 300people. Ball Corporation is closing its doors. Why? David Westmoreland, vice-president of Ball Corporation stated, "One of the prob lems we have in the South Coast Air Quality Management District (AQMD) is that we're always chasing a moving target." To be more specific, Westmoreland lamented, "[The Santa Ana plant] has a furnace which is the heart of the operation which by necessity of normal [economic] life will require major repairs next year. But, before that furnace can go through its next life cycle, new rules are passed that make it no longer in compliance. . . . You could put millions into a rebuild only to findout you've been regulated out of business. "

Besides the dilemma of financial feasibil ity, another problem with compliance is dealing with the regulatory agencies. Meet ing with enforcers who possess overlapping authority ·becomes time consuming and frus trating. "These agencies are really not in terested in hearing about your troubles. . . . And we've had people say, 'If you can't meet the rules, shut up and get out of here. ' Just like that, 'if you can't meet the damned rules, close down. We don't care!'" charged Francis Paladino, senior vice pres ident of operations for the Ball Corporation. Consequently, Ball Corporation will do just that-close down. Those companies who looked to Ball Corporation for their jars will now have to look elsewhere. And, again in California: At a time when South Central Los Angeles desperately needs jobs, one furniture manufacturer (who requests anonymity) said he had to move 500 jobs from Southern California to Mexico be cause of AQMD regulations governing wood paint. "The primary re~son for the move," he said, "was that the air quality rules were neither legitimate nor reasonable. We proved that what they were asking us to do was physically impossible and we demonstrated it, so they gave us a three-month variance."

"Why they thought we could comply in three months, I cannot say," he added. The furniture is still sold in Los Angeles so the manufacturer must now ship materials to Mexico and the finished product from Mex ico. This obviously adds to the traffic con gestion, tailpipe emissions, and equipment costs of this manufacturer. "We have now doubled our fleet of trucks so the amount of stuff we're putting into the air with [the added] trucks is probably more than we were putting into the air as manufacturers,',' he said. A 1990 Department of Commerce survey of manufacturers found that 62 percent of those surveyed cited" streamlining environ mental regulations" as an imperative policy goal. In Southern California alone there are 39 agencies with water quality authority, 38 with hazardous waste authority, 17 with air quality authority, and 14 with solid waste authority. Due to this glut of regulatory agencies, Southern California is losing state revenue and employment for its residents with the exodus of businesses. States like Colorado and Nevada have recruited busi nesses from California by streamlining the regulatory process.

The regulatory taking of property imple mented by the bureaucracy plunders the rights of property owners and produces a needless financial burden. The hidden cost of complying with these laws is measured by time lost in negotiating the nearly endless maze of local, state, and federal agencies in the permit process, through applying for variances and design changes, defending nuisance suits, and enduring delays in the legal process. All of this ,dramatically im pedes economic growth for each of us by raising the cost of housing and manufac tured products, thwarting production of new products, and eliminating employment op portunities. All law, including environmental regula tions, must be based solely on our individ ual rights to own and use private property. The greatest danger exists in subordinating our rights to the technocracy of the central planners. Communism may be dead or fad ing in Eastern Europe, but collectivism as a political philosophy is still alive and dangerous to everyone in the industrialized West. D THEFREEMAN IDEASON UBERTY A SUBTLE SEIZURE by Daniel F. McInnis T alk about birdbrained ideas. After Woodman, Wisconsin, resident Gene Luebker erected a birdhouse by his front window, local authorities objected. State legislators had designated Luebker's prop erty, along with 92 miles of nearby real estate, part of the protected Lower Wiscon sin Waterway. No new structures in view of the river would be tolerated, including bird houses.