Briefing Report: The Public Trust Doctrine

Condemnation Without Compensation
Wednesday, May 18, 2011

Introduction

The public trust doctrine is a longstanding feature of American property law protecting public access to navigable waterways. Since the onset of the modern environmental movement, the doctrine has been transformed into a potentially far-reaching legal concept that seeks to redefine the status of private property. The brainchild of liberal theorists and activist courts in search of a judicial theory to reallocate property to government and away from uses deemed undesirable, the "public trust" has been defined to encompass a broader range of public interests. Advocates seek further expansion of its reach and frequency of its application. Today in California the public trust doctrine is seeping its way into legislative and administrative policymaking, which may pose a more serious threat to water and property rights.

Background

The public trust doctrine is something of a veiled figure in public policy. It is not found in the state constitution, nor is it defined in state law. Rather, the doctrine emerged from English common law, which the United States adopted upon its Founding. For centuries, English law generally guaranteed a public right of access to navigable waterways. Access to commerce was recognized as an inalienable public good, regardless of the ownership of lands underlying or adjacent to the waterway.

In America, the doctrine stood relatively intact until the early 1970s when University of Michigan Professor Joseph Sax theorized that the doctrine could have applications beyond commercial navigation. Sax believed the doctrine provided a tool "for citizens seeking to develop a comprehensive legal approach to resource management problems" and called for "active judicial intervention" on behalf of natural resource and environmental interests.1 Sax believed the public trust doctrine established a "public right" to private property where the public value of the property outweighed that of the private owner.

Under this view, where a court deems the practice or use of property to be inconsistent with public needs, it has the authority and duty to truncate private property rights and convey the newly-discovered public rights to the government. Consistent with the nature of judicial activism, the value that the public -- or an unelected magistrate representing said public -- places on such resources can "evolve" over time. But because all property at one time was in the public sphere, in that it was not yet privately owned, the doctrine grants the government the right to re-decide its historic "allocation" of the resource.

This can be done without regard to the impact on private owners. Unlike takings of property that are due just compensation under the Fifth Amendment, the public trust doctrine holds that there is never a private right to the public trust. In other words, there was never a private right in the first place, and therefore the landowner is not due compensation. As the California Supreme Court stated in the landmark National Audubon Society v. Superior Court (1983), the public trust doctrine "precludes anyone from acquiring a vested right to harm the public trust, and imposes a continuing duty on the state to take such uses into account."2

Soon after publication of his theory in the Michigan Law Review, Sax got his wish. In Marks v. Whitney (1971) the California Supreme Court found the public trust doctrine applied to wildlife habitat, recreation, and ecological study. The court found that the doctrine was "sufficiently flexible to encompass changing public needs."3 That decision formed the foundation for Audubon, also known as the "Mono Lake" decision, which for the first time extended the public trust to water resources and water rights. Ultimately the City of Los Angeles lost most of its right to pump water from the Mono Basin for a period of twenty years.4

The Public Trust Doctrine and Water Rights

The Audubon decision certainly emboldened Sax and his followers. He declared in 1989 that cases like Mono Lake, "portend major changes in the status of water rights… the holders of existing water rights are in deep trouble." Yet, in the 28 years since Mono Lake, the extent of that trouble has not quite been forthcoming. One theory propounded by economists is that the costs of judicial enforcement have proven to be too cumbersome. Facing the potential loss of property without compensation, property owners tend to refuse settlement offers and fight proceedings to the bitter end. Also, a public trust proceeding grants legal standing to any member of the public, creating a litany of often conflicting claims that drag out the legal process. And those litigants are encouraged to make as extreme a claim as possible, since there is no consideration of cost as with a water transfer. The Mono Lake case itself is an example: after the Supreme Court's decision, it took another eleven years to reach a final remedy, as new claimants filed numerous suits against Los Angeles, each raising the ante against the city's water rights.5

Another problem for public trust advocates could be the limits placed by the judiciary itself. In one noteworthy case, a superior court refused to order the defendant to alter its point of diversion to benefit fish downstream. Instead, the court interpreted the Audubon ruling as a mandate to "balance and accommodate all legitimate competing interests in a body of water."6

The public trust doctrine is still being actively used by plaintiffs, but advocates are also discovering new venues. As California struggles with increasing environmental and urban demands for water, some are calling on the state's water bureaucracy to invoke the public trust to reallocate water rights on a staggering scale. In 2008, the Office of the Attorney General advised the Delta Blue-Ribbon Panel that the public trust doctrine may be used in manner well beyond that prescribed by Audubon. It could be used to take water rights on a watershed scale, regardless of seniority, any link between users and ecological degradation, and without any consideration and weighing of the costs and benefits as required by Audubon.

If implemented, this proposed "streamlining" of the public trust doctrine could cripple the existing water rights system. In the case of Delta restoration, the State Water Board (SWRCB) would be theoretically authorized to take millions of acre-feet of water rights from private users in the Delta watershed. Not surprisingly, the same Blue-Ribbon Panel that clamored for greater "authority" to re-engineer the Delta also called for the public trust doctrine to be a foundational principle of water management.

The Legislature and the Public Trust

In 2009, the Legislature enacted a series of bills to guide restoration of Delta conveyance and the ecosystem. As the Delta Vision report suggested, the Delta Reform Act stated that the doctrines of public trust and reasonable use "shall be the foundation of state water management policy…." Water users were not left unprotected, however. In fact the very next section of the bill reiterated protections for existing water rights from anything in the Act that might be read to diminish or impair them. Likewise, the Act also defined and limited other key actions, such as the SWRCB's evaluation of instream flow needs.

In the session's most crucial battle over the future application of the public trust doctrine, the Senate defeated SBx7 5 (Steinberg). Among other provisions, the bill proposed an explicit funding stream for the SWRCB to initiate its own investigations of water rights pursuant to the public trust. Thus, the cost factors limiting enforcement of the doctrine would have been removed. Under SBx7 5, water rights holders themselves would have been responsible for funding the prosecution of their own water rights.

Advocates remain undaunted. A recent report by the Public Policy Institute of California (PPIC) claims that the doctrine's "overriding constraints" on water rights "are central to the effective functioning and adaptation of California's water rights system." Despite a number of recent cases finding that the infringement of water rights under the Endangered Species Act is a compensable takings under the Fifth Amendment, PPIC notes hopefully that these cases "failed to consider the limitations that the reasonable use and public trust doctrines place on water rights and derivative rights to water use in California."7

Other academic theorists have grander designs for the public trust. Their targets include beach access, intellectual property, the electromagnetic spectrum, expanding the National Wildlife Refuge system, and addressing perceived economic inequities resulting from gas development, among others.8

Conclusion

In 1989, Professor Sax declared, "The new era is one of reallocation. The direction is changing from agricultural to urban uses and in-stream flows for water quality, recreation, and ecosystem protection… No private property claims are going to halt this transformation." Contrary to that claim, water rights do not necessarily stand in the way of redistributing water resources, and in fact can facilitate it. A strong water rights system encourages those with rights to sell or transfer them to more valuable uses, as determined by a negotiated price.

On the other hand, an expanded public trust doctrine promises a different sort of water future for California, where allocations are centralized under the control of government planners. Private rights that can be subsumed by so-called public rights, which themselves are subject to constant redefinition, are effectively non-existent. Without certainty in their water rights, users have little or no incentive to invest in infrastructure or seek exchanges to maximize the value of their rights. No recipient will agree to a water transfer if the right to transferred water is subject to government takeover.

Nor does this scenario portend well for other conservation purposes. The history of resource management shows that private ownership of resources tends to extend their value, while public ownership discourages proper stewardship leading to the "tragedy of the commons" scenario with which park visitors and freeway users are all too familiar. A weakened system of property rights will likely deter property owners from managing their property for habitat purposes if it invites economic risk.

One of the harshest lessons of the 20th Century was the extent to which the freedom, prosperity, and ultimate survival of a society is intertwined with the private ownership of property. In the long term, the public trust doctrine promises a less free and less prosperous future for California and the nation.

 

For more information on this report or other Natural Resources & Water issues , contact Steve McCarthy, Senate Republican Office of Policy at 916/651-1501 or Steve.McCarthy@sen.ca.gov

1 Sax, via Simmons, Randy: "Property and the Public Trust Doctrine." Property and Environment Research Center, April 2007, p. 11.
2 National Audubon Society v. Superior Court, 33 Cal. 3d 419, 658 P.2d 709, 189 Cal. Rptr. 346, 1983 Cal. As cited in Simmons, 2007.
3 Stevens, Jan S. "Applying the Public Trust Doctrine to River Protection." California Water Plan, Update 2005, p. 2.
4 Libecap, Gary D. "The Economic Implications of the Public Trust Doctrine." UC Santa Barbara, October 2006, p. 21-22.
5 Brewer, Jedidiah, and Libecap, Gary D. "The Costs of the Public Trust Doctrine in Environmental Protection and Natural Resource Conservation." July 2007, p. 26-28.
6 Stevens, p. 4.
7 PPIC, Managing California's Water, p. 322.
8 Huffman, James L. "Speaking of Inconvenient Truths - a history of the Public Trust Doctrine." Lewis and Clark Law School, March 2007, p. 2.