Podcast Episode: Property Rights
Our PILOT EPISODE! Join Dr. Eran Kaplinsky and Dr. Dave Poulton as they dive into a discussion on property rights, what rights landowners have and what powers government's have in creating public policy governing private land use.
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Thank you, Dave Poulton and Eran Kaplinsky, for making this episode possible.
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TRANSCRIPT:
Host: Welcome to Land Use Radio brought to you by the Alberta Land Institute. This is episode one: What are property rights? Your hosts week are Dave Poulton and Eran Kaplinsky, directors at the Alberta Land Institute. For more information, you can visit our website albertalandinstitute.ca.
Dave: Hello and welcome to the inaugural episode of the Land Use Podcast. My name is Dave Poulton. I'm director of the Alberta Land Institute. And today we're speaking to you from Edmonton, Alberta, Canada. It's February 14th, Valentine's Day.
This podcast is presented to you by the Alberta Land Institute. We're a group of people based out of the University of Alberta who are passionate about public policy surrounding issues of land management. That means if you're a landowner, involved in industry, a conservationist, an environmentalist, or involved in urban planning, we are home for you.
Our research, online at albertalandinstitute.ca, talks about urban growth, agricultural land, wetland conservation, environmental offsets, property rights and balancing the needs between economic growth and the environment, and that list continues to grow. Our aim is to conduct research and connect it with public policy here in the province of Alberta. But this podcast and the things we hope to discuss, won't be constrained within our province’s borders. Land use is, after all, an issue discussed internationally where we can learn lessons from other governments and from research around the world, and we hope that our experience here will be of interest to others as well.
Now, hopefully that has whet your appetite. To kick us off on this pilot episode, I have my friend and colleague Dr. Eran Kaplinsky with me today. Eran is our director of research here at the ALI and also an associate professor in the Faculty of Law at the University of Alberta. Thanks for being with us today, Eran.
Eran: Thanks, Dave. Very excited to be here.
Dave: So Eran, several years ago you co-authored a guide to property rights in Alberta for the Institute. What prompted you to write that?
Eran: Back in 2009, the government had introduced the Alberta Land Stewardship Act, or ALSA as it is commonly known, which supports the development of regional plans and integrated planning in the province. One section of that act provided that no compensation will be payable to land owners who are affected by a regional plan, and that caused quite a stir. There were those who claimed that the new legislation had taken away their property rights. And so, together with my colleague, David Percy, we wrote a guide to set the record straight, so to speak, and to inform the public debate over property rights in Alberta.
Dave: Okay. Well, let's take a step back. What do we mean when we talk about property and property rights?
Eran: Well, these are two very difficult and loaded terms. I think that a useful way of thinking about property and property rights is in terms of whether your expectations, with respect to land and other valuable things, are protected by the legal system.
Dave: Protected from who?
Eran: Well, from the state and also from neighbours and strangers. For example, as a landowner, I have a right to prevent anyone from trespassing on my property, and that includes the government. But that right is not unlimited. As an owner, I also have a right to occupy my land and use it and enjoy it as I see fit, but, again, that right is not unlimited.
Dave: So on those limitations, in the guide, you refer to parliamentary sovereignty and contrast it with the constitutional protection of property rights. Can you elaborate on that?
Eran: Sure, every society has a tension between the need for collective action to promote the public interest on the one hand, and private interests and expectations on the other hand. In many countries, the balance between those competing demands is entrenched in some constitutional document that protects private property from the reach of the majority, usually by requiring that any taking of private property by the state meets some public use tests and be accompanied by compensation to the owner. Canada does not offer such constitutional protection of private property.
Dave: So to just be clear on that point then, property rights are not included in the Canadian Charter of Rights of Freedoms or otherwise in the Canadian Constitution?
Eran: No, property rights were left out.
Dave: Okay, so where would we find it in other documents that have been foundational in our law?
Eran: Well, sometimes I get questions about the Bill of Rights or even the Magna Carta of 1215. None of these documents prevent a federal or provincial legislature from enacting laws that affect property.
Dave: So that's what you mean by parliamentary or legislative sovereignty, right? It says that the legislature can pass any laws within its jurisdiction.
Eran: That's right. We inherited this principle from the British tradition, and it means, in practice, that checks and balances over the legislature are political in nature. The government can do anything authorized by the legislation, and an owner has the right to compensation only insofar as provided by statute.
Dave: So that means that property rights are not a static concept, and they are overhauled from time to time, or at least evolve, as time goes by?
Eran: Absolutely. Property is, in my view, a social institution. It exists to promote needs that evolved from time to time in our society. And then it needs to respond, therefore, to changing social values, economic developments, technological developments, etc.
Dave: So for example, thinking of changing social concerns and technologies, the last couple of decades, we've seen a very high level of concern around the management of carbon, and we've seen new sorts of property rights come out to deal with carbon credits and the right to carbon sequestration as well, right? Is that the type of thing you mean?
Eran: Yeah, that's a great example, actually. As a result of technological developments, and also as a result of the need to sequester carbon, it turned out that we have a valuable resource in the province, and that is the pore space in which carbon can be sequestered. And, therefore, it becomes necessary for the law or for the legal system to change and define property rights to facilitate those sorts of programs.
Dave: Yeah. And, I guess, another area that we think of, we're rapidly moving progress is in the area of biosciences and genetics, and property rights has to deal with that as well.
Eran: That's right. It would have been absurd to ask 200 years ago who owns the rights to a genetically modified animal, for example. And these are questions that are, very much, germane nowadays.
Dave: So one of the perennial sources of tension on the Alberta landscape is the relationship of rights to the surface of the land and rights to subsurface minerals. Why is that such a difficult issue, and how do we handle it?
Eran: Well, many settlers in what is now the province of Alberta acquired property rights above and below the surface, but not necessarily the mineral rights. In many, in fact, most of the grants, the mineral rights were reserved by the province and are still the property of the Crown, or were conferred on some other entity, usually an energy operator. And that creates tensions between the surface owners, who want to control access to their property, and the mineral rights holders, who want to exploit those rights.
Dave: Okay, so how do we handle that?
Eran: Right. So Dave, at common law, the holder of the mineral rights is entitled to access the surface, provided that they don't damage it, or repair it if they do damage it. But the legal situation in Alberta is different. The holder of the mineral rights must negotiate with the surface owner for access, and if the two parties cannot come to an agreement, then the operator or the holder of the mineral rights can petition the Surface Rights Board for a right of entry, and the surface Rights board can provide such an order, but then must provide for compensation to the surface owner.
Dave: Eran, it's almost a cliche that there are no rights without obligation. So when we're talking about property rights, are we also talking about a set of obligations that the land owner takes on?
Eran: That's a great question. I'm not sure I have the answers to that one, but you know, I can pose an interesting problem. Suppose, for example, that I acquired a very valuable, very important work of art. Am I allowed to destroy that piece of art? Can I place it in storage and hide it from the public for 50 years? These are questions that the legal system is still grappling with.
Dave: Okay, so if I can try and wrestle that analogy down to a land situation, is the analogy that a landowner may or may not have some duty of environmental stewardship to protect the ecosystem on the land, to protect soil quality, and the other things that are of interest to the community? Is that the essence of what you’re saying?
Eran: So these are all very interesting philosophical questions. At common law, there are no environmental responsibilities, and this is exactly why legislation is needed, to set out the responsibilities of the landowner.
Dave: So a lot of those aspects of public interest are now taken care of through land use planning, either at the municipal level or, increasingly here in Alberta, from the provincial level. And how does that process of land use planning fit with our concept of private ownership of land?
Eran: So I would say that regulation of private property goes back to the middle of the 19th century, where you see fire and building codes and standards introduced in the name of the public interest. Then, early in the 20th century, we see land use regulations, zoning codes and things that we have now come to expect. And then later on, environmental concerns lead to further regulations.
Dave: So one of the subjects that there's a lot of public interest in these days is the environment, and, in particular, the role that private landowners can play in either protecting or degrading the environment. So do landowners have any obligation of environmental stewardship in the way that they treat their land?
Eran: So the obligations of landowners are set by legislation, and it is quite easy to restrict landowners from doing certain things that are harmful to the public interest. It's more difficult to impose positive obligations on land owners, and usually the government’s response is by possibly incentivizing good behaviour.
Dave: And that's with economic incentives and arranging for people that do the right thing to be rewarded, and those that engage in less desirable behaviour to be penalized in some way, but not in a legal sanction, but through some incentive structure.
Eran: And I think that's probably the future of stewardship, trying to understand the costs and benefits of alternative decisions, and putting in place the right incentives for individuals, as well as for the government, to sort of do the right thing.
Dave: Yeah, no doubt we'll be talking about that in a future podcast, because it's a major concern here at the ALI, major point of interest.
I want to talk about wetlands, because it's a fairly high priority issue now in Alberta and something that's of quite high importance. Now, according to our Public Lands Act, the province owns all naturally occurring permanent water bodies, which includes wetlands, but there is an awful lot of rural landowners that have wetlands in their fields, and feel some right to make use of that land according to their wishes. Can you talk a little bit about that conflict and the tension that it's creating?
Eran: Right. So the benefits of wetlands have only recently come to be understood more fully, and now we're struggling to conserve and protect them. And one of the issues is that wetlands are often on private property. And it becomes a question of public policy. How should the burden of conservation be distributed? I mean, it's not my fault that there is a huge wetland on my property and my neighbor doesn't, so why aren't our obligations distributed more fairly? And I think that applies more broadly to the burden of conservation and environmental stewardship. How does the government adjust the rights and responsibilities so that they are equitable and perceived to be equitable.
Dave: But that situation is complicated by the fact that the wetland may be situated on somebody's property, but it is not part of their property. It is specifically exempted out by law. A lot of people don't know that.
Eran: Yes. But wetlands is just one example. Protected species are another example, whether your property also happens to be habitat for a protected species.
Dave: So to get back to our earlier discussion, these are all things for our legislators to deal with, and to make laws to clarify those obligations.
Eran: That's right. And doing that in a way that meets private expectations is not an easy thing to do.
Dave: No, but it does raise this question, I know that you hear this term from time to time about takings and so on, which I believe is something that is imported from American law, although not into Canadian law, can you talk about that and the rights of compensation Canadians have when government –
ran: – interferes with private property.
Dave: Yeah.
Eran: So to go back to our early conversation, a government can only do what it is authorized to do by statute, and that can be a taking of property, or as we call it here, expropriation, but it can also be regulation. And we have an unusual situation in Canada whereby there is a statute that provides an explicit right of compensation when the government takes your property, legally becomes the owner, you got a letter saying your land is now the property –
Dave: – our land
Eran: – our land. Yes. Here's the compensation that will be payable to you. And there's a process in place to ensure that expropriation is expedient, and a process in place to make sure that the property owner is duly compensated. But if the government imposes severe regulations on property, what then? Should the property owner be compensated then?
Dave: You're talking about if the government doesn't actually take ownership, just heavily regulates.
Eran: That's right. That's right. Now in other jurisdictions, if the regulation goes too far, the property owner is entitled to compensation. But that is not the situation in Canada as the Supreme Court of Canada interpreted it but, rather, there needs to be a denial of all private uses, in addition to something else, to entitle the property owner to compensation. To put it plainly, the threshold for compensation for regulation in Canada is very high, and there have been very, very few cases in which an owner succeeded in claiming compensation because of mere regulations, ones that did not involve the actual taking of title by the government.
Dave: Right. So to give a concrete example of that, if I own a ranch, let's make it a really dramatic example. Say the ranch has been in my family for five generations, and we consider ourselves to be cattlemen. But the province – and that this is only a hypothetical example, all you ranchers out there – but if we're to pass a regulation saying that we could no longer run cattle on our land but could do other things, we would have to accept that and adapt. We wouldn't be entitled to compensation.
Eran: Well, Dave, I'm not allowed to give legal advice here, but generally speaking, the court would have to try and produce a list of the reasonable private uses of the land. And only if it finds that you have been left with none of these reasonable private uses, only then, and that would be just the minimum threshold, only then could you potentially succeed in claiming compensation.
Dave: “I've got other plans,” that's not determinative of the issue by any means.
Eran: No.
Dave: So as co-author of The Guide to Property Rights, that is available, by the way, on the Alberta Land Institute website. And you've had occasion to talk to a lot of people who might not have had any previous exposure to this notion. And you're also, I know you teach a first year property rights class at the University of Alberta here in law school.
Eran: That's one of my many sins.
Dave: Yes. And I remember, with great pain, my first exposure to property rights. But through those two venues, you've got a lot of experience in talking to people and breaking misconceptions and educating them about property rights and I wonder, what do you find are the most common misconceptions that you hear?
Eran: I'd have to say, the most common misconception about property is about what property rights are and where they are derived from. There is a misunderstanding of the constitutional system in Canada and this notion that the government is, somehow, precluded from doing some of the things that it has been doing.
Dave: Okay. So we, kind of, danced around a question here that's been debated in the public a fair amount. A lot of people think that it would be an advance for us to include property rights in the Canadian constitution, specifically in the Charter. Do you think that would be a step forward?
Eran: Well, and it may or may not be too late or feasible, but the question is, what is to be achieved by constitutionalized property rights? In some sense, I think Albertans are fairly secure in their property rights. I mean, if the big, bad government comes tomorrow and takes your property, the statute guarantees your compensation. And it's true that the legislature can take away that right if they choose to, but the reality is that they haven't.
In terms of regulation, I'd have to say that there are some instances of regulation in Canada where property owners are not compensated where they would be in other jurisdictions, but these are fairly rare. Typically, when you suffer the most egregious forms of interference with property rights, you will be duly compensated.
Dave: And I think it's important to look at these questions also in the context of our actual experience, right? We know that the government is not running roughshod over people's property, that, in fact, most Albertans live very secure lives on very secure property.
Eran: I think that experience has shown that the political checks and balances have been sufficient to protect property rights, and Albertans can feel very secure in their property rights, for the most part. But it is true that there are some intrusions that are tolerated in Canada that would not be tolerated elsewhere, and the question is, is that acceptable?
Dave: So that raises a question about whether or not the ownership of land, in particular, is something that can be properly compensated for in money. There's a lot of characteristics about land that people feel very attached to. It's their home, it's part of their community, it may be where they were raised, and the prospect that – and they may have built their life’s dreams around a piece of land – and then the prospect that that may be taken away from them in return for a check, even a big check, leaves a lot of people feeling unsettled.
Eran: The common law used to measure compensation in the following way: What would the owner pay rather than suffer the loss of the property? So that's very subjective and it's proven somewhat difficult to apply. And so we've –
Dave: Because there's no way to know it, right? You ask him what he would pay, and they're gonna name an outrageous figure.
Eran: Well, you don't ask the owner, but the court has to engage in this exercise. What do we think this particular owner would pay rather than suffer the loss? And we would have to take into account all of those things that you mentioned, you know, how long they've owned the property, the kind of personal relationship they have with it, etcetera, etcetera. But again, that system is a little more costly and, therefore, our legislation calls for market value compensation, so what the property would be worth in the market if sold by a willing seller to a willing buyer?
Dave: So the land, then, is treated as a market commodity and all those individual’s subjective memories, sentiments, hopes and dreams, they kind of get washed away in that process.
Eran: To some degree, but they're – in addition to the market value, the owner would get disturbance damages, you know, for costs of relocating business or other things that are meant to emulate the subjective values, but don't get quite as close, not perfectly.
Dave: So before we wrap up, Eran, if you could deliver one message to the Alberta legislature, to Alberta landowners – that doesn't have to be the same message to the two of them – what would that message be?
Eran: Wow, what a great question. To the legislators, I'd have to remind that compensation serves not just a purpose of equity, but also of accountability. It really forces the decision-maker to confront the full costs, as well as the benefits, of their policy choices. And to Albertans, I have to say, given that the checks and balances are political in nature, how important it is to take an active part in public debate over environmental measures, social programs, etcetera, and of course to vote in the next elections.
Dave: A great reminder of all our duty as citizens. So with that, I think we'll wrap up this podcast. Thank you to everyone for listening. We hope you found this episode interesting and that you'll be tuning in again in the future.
We hope to release this new podcast on a monthly basis. You can find us at the Apple Store, on SoundCloud, at our website at albertalandinstitute.ca, that's all one word. And we will be posting videos of our podcasts online over at YouTube. If you're listening, don't forget to give us a rating and leave your comments. If there's an issue you think we should dive into, or a speaker we should bring in, you can e-mail us at albertalandinstitute@ualberta.ca. Thanks so much for listening. We'll talk to you again soon.