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Government on the Take

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The Calgary Herald Governments regulate the use of property. Sometimes that regulation has a minor effect on the uses to which a property owner can put that property. Sometimes the regulation has a more severe effect. And, sometimes the regulation is so severe as to effectively strip all uses. In that last instance, it is said to effect a “regulatory taking” — also known as a “constructive” taking, or a “de facto expropriation” — meaning that it effectively achieves a taking-by-regulation.
A regulatory taking, therefore, occurs where government, rather than expropriating and paying compensation, instead by way of regulation strips away all uses to which the property can be put.

Canada is rare in the Western world for its lack of constitutionally entrenched property rights. The individual protections under the Charter of Rights and Freedoms do not include a right to property or any significant protections for property holders. While statutory protections exist in respect of expropriation (which entails the actual taking of title), and while common law protections have been recognized and affirmed by the Supreme Court of Canada which provide that compensation is payable absent express legislative language directing otherwise, Canada’s legal regime for the protection of property rights remains deficient. This is because there is no liability in Canadian law for governments to compensate for regulated property use, even where the regulation is so extensive as to amount to a regulatory taking.

While compensation has never been payable in the event of regulated property use falling short of a regulatory taking, this extension of government immunity in cases of regulatory takings is a recent development in the law. Prior to the 2006 decision of the Supreme Court of Canada in Canadian Pacific Railway (CPR) v. Vancouver, the common law rule regarding compensation described above — that is, the rule requiring the payment of compensation absent express legislative language directing that there be no compensation paid — was widely understood as applying to regulatory takings. In this case, CPR invited the City of Vancouver to purchase or expropriate with compensation some land it had ceased to use. Instead, the City simply designated the former railway corridor as a public thoroughfare for transportation and “greenways” such as heritage walks, thereby precluding any other form of development. Thus, the CPR was statutorily prohibited from developing its own land for alternate purposes, including residential or commercial. The Supreme Court of Canada upheld Vancouver’s actions and declined to award compensation to the CPR.

As a result of the CPR case, it now seems reasonable to conclude that property-holders in Canada enjoy no protection from regulatory takings. In light of this, the Canadian Constitution Foundation undertook a study entitled, Regulation of Property Use and Regulatory Takings in Alberta, to analyze the extent of regulated land use, including regulatory takings, in just one Canadian province: Alberta.

This study, written by Russell Brown and Graham Purse, sought to identify every latent regulatory taking authorized by Alberta law. Every general deprivation or potential restriction on the use of private property was identified and documented. As regulatory themes emerged, categories were assigned. Then the regulations of use were ranked according to severity, from a low of one to a high of three.

This study demonstrates how frequently the features of an efficient private property regime — namely, exclusivity, transferability and enforceability — are compromised by Canadian provinces such as Alberta — and often severely. Whether by way of restrictions on the use of property, seizure of property, easements, property searches without a warrant, or various interferences in market activities affecting land owners, Albertans are subject to a vast array of regulations upon use.

This study found that Albertans are subject to 944 such regulations, including regulatory takings, with many legislative or regulatory provisions containing multiple types of such regulated uses — in some particularly broadly constructed statutory provisions, four or more categories of regulated uses were found.

The three most severe restrictions on private property in Alberta exist under legislation authorizing property search (with or without warrant), seizure of property, and taxation of property. There are 42 statutory provisions that authorize property searches in Alberta, 36 statutory provisions that authorize seizure of property, and 16 that authorize taxation of property.

The most common category of regulations, found in 192 provisions, was a restriction on the use of private property. Next were 147 restrictions on the power of property owners to exclude others from their property. Third most common were the 123 provisions limiting the disposition of property.
Private property is essential for the preservation of individual freedom. It is integral to the ability of Canadians to exercise various freedoms, including freedom of speech, because the exercise of freedoms requires the use of property. As such, one of the main roles of the state is to protect private property. However, today, the political process is constantly being substituted for the market process and for private property. Far from discharging its role as a protector of private property, therefore, the state has used its regulatory powers to undermine property rights.

As a first study of its kind, the results of this study demonstrate the breadth and varying severity of regulatory restrictions upon property rights that exist within the laws of just one Canadian province.