The October 3, 2012 argument before the Supreme Court in Arkansas Game & Fish Commission v. United States revealed a grumpy Supreme Court that was struggling with a long-standing tangle in its own takings jurisprudence: just where should it draw the elusive line between a tort and taking. To most people that question has a nonsensical quality, because many torts involve the taking of the property of another person, even if others do not.
To orient the discussion, it is best to see how this distinction plays out in private disputes. Where property has been taken by the defendant, the plaintiff can sue on a theory of restitution for compensation equal to the benefits that the wrongdoer has received, if that amount exceeds the dollar value of the plaintiff's harm. But if those benefits are not easily calculable, the plaintiff can always recover full damages for the property damage sustained.
The question is what happens when the government takes actions that could be described as torts, takings, or in some cases both. The easy answer under the Takings Clause should be that the government can never be required to compensate the aggrieved property owner for the benefit it received. After all, the whole purpose of the Takings Clause is to prevent any landowner from holding out for the benefits that otherwise accrue to the state. The proper approach thus always awards the aggrieved property owner a sum equal to its actual losses. At that point, all the incentives are in the right place. The requirement of compensation has two singular virtues. First, it means that no one person has to bear all the costs of government-sponsored projects intended to benefit the public at large. Second, by making the state pay the freight, it incentivizes the government not to go ahead with those projects whose social costs exceed their social benefits.
Unfortunately, Arkansas Game showed the fragility of the torts/takings distinction. The United States Army Corps of Engineers worked hard to manage the upstream waters in Missouri on the Black River that were held in check by the state's Clearwater Dam. Between 1993 and 2000, it periodically released large quantities of water that flooded the Commission's land some 115 miles downstream. Those intermittent releases resulted in the destruction of nearly 18 million board feet of timber over its 23,000-acre management area, causing about $5.6 million in damages. In speaking about this case, a confused New York Times editorial opined that the Court should not treat the case as a taking in order to preserve needed "flexibility" for dam management. But it then allowed that this decision would not "take away the Arkansas commission's right to sue the government for a form of trespass or on other grounds," which is all the Arkansas Commission sought anyhow.
What the Times editorial board seemed not to realize is that the only reason why the Court had to face the tort/takings distinction is that it is well-settled that the United States cannot be held liable in tort for the release of the water that flooded the Commission's land. Everyone agrees that under standard tort principles, any private party could be liable for the loss. The key point here is that under American law the doctrine of sovereign immunity protects the government against liability for "mere torts," unless it agrees to waive the immunity. The federal government's only general waiver of immunity is found in the Federal Torts Claim Act, which cuts out from its scope "discretionary functions" of the United States, which include decisions to raise and lower water levels behind public dams. But the federal government's insulation from tort liability in this context does not extend to takings: the doctrine of sovereign immunity does not protect the United States when it takes lands, because the FTCA does not protect the government from its constitutional obligation to compensate landowners whose property it takes.
The current received wisdom is that the government only takes lands that its waters "permanently" flood. A temporary or intermittent intrusion--even one that causes greater damage than some permanent invasion--does not count. In 1924, Justice Sutherland said in Sanguinetti v. United States that a government intrusion on land would only constitute a taking if the landowner's injury stemmed from a "direct result of the structure, and [if the government's action] constitute[d] an actual, permanent invasion of the land, amounting to an appropriation of and not merely an injury to the land." In 1947, in United States v. Dickinson, the Court refined this approach by adopting Justice Frankfurter's view that "Property is taken in the constitutional sense when inroads are made upon an owner's use of it to an extent that, as between private parties, a servitude has been acquired either by agreement or in course of time."
The challenge in Arkansas Game was where to slot actions when the temporary flooding caused permanent damages after the water receded. A restless Supreme Court was clearly troubled in oral argument by the evident unfairness of the government's position. With Chief Justice Roberts in the lead, the questions came thick and fast. Why should downstream damage escape compensation, when the upstream damage behind the dam does not? What difference does it make if the government kills the trees by taking an axe to them as opposed to using water to destroy the roots? Does it really matter that the Commission's property was not targeted by the Army Corps of Engineers when everyone knew that it would be flooded? In the end, my guess is that a clear majority of the Court will award compensation on the ground that permanent damage triggers the constitutional obligation, even in the absence of permanent flooding.
But it is all so terribly ad hoc. The correct systematic approach for takings always starts with the following propositions. The only things that the federal government can do without having to compensate are the kinds of things that private parties can do without having to pay compensation. But once it becomes clear that the private party has committed a tort, then the federal government should be bound by the same rules. Its power to take property for public use lets it resist an injunction routinely available against a private defendant. But it should never be allowed to escape its torts scot-free.
The key point here is that the real need for government immunity arises when it performs essential government functions like prosecuting, judging cases, conducting inspections, or granting permits, where an absolute immunity is normally essential for orderly government functions. But this logic does not extend to property torts, and government should not be immune in this context any more than private property owners, who gets no free pass for damaging or destroying the property of another on the rationale that the injury was "necessary" to the private landowners' management of their own property. The basic insight here is captured in the old law of charitable immunity, which always extended to the patients of a charitable hospital, but never insulated the charity from liability for its torts to strangers.
The Constitution and public policy are both ill-served when the bottom line fatuously is: benefit by taking a servitude, and you pay, but benefit by reducing the costs of your own operations, and you get a free pass. The Supreme Court in Arkansas Game & Fish granted certiorari in the right case for the wrong reason. It should stop playing games with the supposed distinction between torts and takings. It should turn over a new leaf by making it clear that all torts are takings whenever they result from government action that causes physical harm to a stranger that is applicable under well-accepted common law principles. Once more, simple and clear beats cluttered and confused.
Richard A. Epstein is the Laurence A Tisch Professor Law at New York University, the Peter and Kirsten Senior Fellow at The Hoover Institution, and the James Parker Hall Distinguished Service Professor of Law and senior lecturer at the University of Chicago, as well as a visiting scholar with the Manhattan Institute's Center for Legal Policy.