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can be put.6 So from a dynamic or ex ante perspective, it would seem that property rule protection should remain the norm, and liability rules the exception.
• Tort Liability: Nuisance
One way the law seeks to control externalities is through tort liability. The tort of trespass to land plays a role here, insofar as some access issues or negative externalities may give rise to an action for trespass. For example, if A engages in blasting that causes rocks to block B’s driveway, or if A engages in slant drilling to extract oil from underneath B’s land, these activities would give rise to a claim for trespass. By far the most important form of tort liability for regulating neighborhood effects or externalities, however, is nuisance.
Two different types of legal action bear the name “nuisance”: public nuisance and private nuisance. The Restatement of the Law Second, Torts classifies both as a type of tort. It is not clear that this is correct. Torts are typically interferences with some private right, such as bodily integrity, reputation, or property. A public nuisance is defined as an unreasonable interference with a right common to the public as a whole. A public nuisance is thus perhaps more accurately regarded as a public action, akin to a criminal prosecution or an action to enforce the public trust doctrine (discussed in Chapter 3), rather than a tort.
The classic example of a public nuisance is blocking a public highway or a navigable waterway. Public nuisance actions are usually brought by public authorities, such as the state attorney general or the county prosecutor. The relief sought is usually an order of abatement—in effect, an injunction requiring the defendant to cease interfering with the public right. Sometimes, however, private parties are allowed to bring public nuisance actions, if they can
6. Henry E. Smith, Property and Property Rules, 79 N.Y.U. L. Rev. 1719 (2004).
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show that they have suffered “special injury” from the interference with the public right. An example would be a landowner who has been barred from reaching his or her home by the blockage of a public highway. Here, the landowner is allowed to act as a “private attorney general,” seeking to vindicate the public right, which will also redress the special injury suffered by the landowner.
Private nuisance clearly is a form of tort liability. A private nuisance is defined as an unreasonable interference with a private right: the use and enjoyment of land. Nuisance differs from trespass in that nuisance protects use and enjoyment rather than possession. Thus, trespass applies when there has been an intrusion by an object large enough to interfere with some portion of a person’s right to possession of land. An intrusion by another person, a vehicle, a building, an animal, or a body of standing water would be examples. Nuisance applies to any thing that affects the use and enjoyment of land. Thus, intrusions of the sort covered by trespass can be claimed as a nuisance insofar as they too impair the use and enjoyment of land. (The actions are not mutually exclusive with respect to these intrusions, although some definitions of nuisance exclude anything that could be a trespass.) In addition, however, nuisance covers all sorts of others kinds of intrusions that cannot be said to displace a person from possession of land but nevertheless can be annoying or debilitating: smoke, odors, vibrations, sound waves, pollution of streams, radiation, beams of light—all these things are potentially subject to liability as nuisances.
An intentional trespass—one that the defendant knew or should have known would occur—is governed by a standard of strict liability. Liability attaches whether or not the intruder exercised reasonable care. And liability attaches whether or not the intrusion caused harm. Thus, a person who can establish an intentional trespass by the defendant is always entitled to an award of nominal damages, even if the plaintiff cannot prove actual damages. And if there is a likelihood that the intrusion will continue or will be repeated in the future, the court may enjoin the trespass, even if actual harm cannot be shown.
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In sharp contrast to trespass, the standard of care for determining when an intrusion will give rise to nuisance liability is difficult to define or pin down. An intentional nuisance—an intrusion that the defendant knew or should have known would interfere with the plaintiff ’s use and enjoyment—is subject to liability only if the intrusion causes “substantial” harm and is “unreasonable.” Exactly what these terms mean, and how they will be applied in any particular circumstance, is difficult to say. About the only safe generalization is that nuisance liability is very context-dependent and is determined in a case-by-case fashion.
The requirement of substantial harm is generally understood to eliminate liability for what English courts called “trifling inconveniences.” Smoke from your neighbors’ backyard barbecue and the yelps from their dog may irritate you, but a court is not likely to find that these sorts of intrusions reach the “substantial harm” threshold. Context is clearly relevant here. Erecting a huge neon sign does not impose substantial harm in Times Square, but it very likely might in a residential neighborhood.
In addition to imposing substantial harm, the intrusion must be unreasonable. What this means is even more elusive. The
Restatement of the Law Second, Torts says that unreasonableness is determined by a balancing test: One asks whether the “the gravity of the harm outweighs the utility of the actor’s conduct.”7 This suggests a kind of back-of-the-envelope cost-benefit analysis. Courts do not seem very comfortable with this suggestion, however. At least it is hard to find many decisions that engage in an explicit balancing of harms and benefits in determining whether particular intrusions are reasonable or unreasonable.
Several other factors seem to play a role in guiding courts in nuisance cases. Invasiveness is one. The Restatement’s cost-benefit definition of unreasonableness suggests that anything done on neighboring property that will affect the use and enjoyment of the
7. Restatement of the Law Second, Torts § 826(a) (1979).
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plaintiff ’s property can give rise to a nuisance claim. But courts seem uncomfortable with claims that aesthetic blight by itself can constitute a nuisance. Garish paint jobs, junked cars, or poorly kept lawns will usually escape liability. Courts are much more likely to find a nuisance when the defendant is responsible for some invasion of the plaintiff ’s column of space, as by air pollution, water pollution, or loud noise. In this sense, nuisance seems to reflect the structure of trespass, where a physical invasion is required.8 But there are exceptions to this generalization. Funeral homes and halfway houses for paroled prisoners and recovering drug addicts are often challenged as nuisances, with some success. And if the defendant does something on the defendant’s land for the specific purpose of irritating a neighbor, such as erecting a “spite fence,” there is a high probability that courts will find this to be a nuisance, at least if the action has no obvious utilitarian purpose other than imposing harm.
The nature of the locality is another important contextual factor. As the Supreme Court once stated, “A nuisance may be merely a right thing in the wrong place, like a pig in the parlor instead of the barnyard.”9 Thus, a smoky factory is less likely to be found to be an unreasonable use of land in a district comprised of smoky factories, than it would be in a residential neighborhood. Nuisance law in this regard functions like zoning, encouraging different uses of property to be clustered together in different neighborhoods, where spillover effects are less likely to impose substantial harm on neighbors.
Temporal priority is yet another factor, although somewhat weaker than invasiveness or the nature of the locality. Courts naturally look more skeptically on a defendant who seeks to
8.See Richard A. Epstein, Nuisance Law: Corrective Justice and Its Utilitarian Constraints, J. Legal Stud. (1979); Henry E. Smith, Exclusion and Property Rules in the Law of Nuisance, 90 Va. L. Rev. 965 (2004).
9.Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 388 (1926).
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introduce a new and unsettling use into an established neighborhood, than they do when long-established uses are challenged by those who want to upgrade the area. Nevertheless, “coming to the nuisance” is usually rejected as an affirmative defense. Temporal priority is a factor to consider in the balance, but is not decisive, especially because, as we saw in Chapter 2, encouraging a race to be the first is quite undesirable in some contexts. A strong coming to the nuisance defense would encourage people to use their parcels as intensively and as early as possible, in order to establish the right to engage in such activities in the face of a new more sensitive use. The result would be like a prescriptive easement (see below) without the necessity of meeting the requirements for acquiring rights by prescription. Likewise under a strong version of coming to the nuisance, someone with a sensitive use in mind would also want to engage in it earlier than may be optimal, in order not to lose to someone else with an inconsistent use.
The question of remedy, and in particular the debate over the propriety of property rules versus liability rules, also looms large in nuisance cases. The discussion here is often framed in terms of the New York Court of Appeals decision in Boomer v. Atlantic Cement Co.10 In Boomer, a cement plant located near Albany emitted dirt, smoke, and vibrations, and the trial court found this conduct was a nuisance to a group of neighboring property owners. The sole question on appeal was whether the court should issue an injunction against the nuisance, or should instead order some other relief, such as temporary or permanent damages. Enjoining the nuisance would in effect recognize a property rule: The cement plant would then have to purchase the consent of the neighbors to continue operating. An award of permanent damages would protect the neighbors with a liability rule: The cement plant could acquire their rights in a compelled exchange in return for the payment of damages.
10. 257 N.E. 2d 870 (N.Y. 1970).
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The court acknowledged that prior New York decisions indicated an almost automatic presumption in favor of injunctive relief to protect the subjective values associated with property ownership. But it decided that an injunction should be denied, provided the cement company agreed to pay permanent damages to the property owners. The court was clearly concerned that an injunction might result in shutting down the plant, which cost $45 million to build and employed more than 300 people. It regarded this as an unacceptable cost to the community. The dissent pointed out that this was the functional equivalent of giving the cement company a private right of eminent domain to condemn a permanent easement to commit a nuisance.
The analysis in Boomer is entirely ex post. The court took the decision to build the cement plant in a neighborhood with many residents as a given, and balanced the benefits to the plaintiffs of being free of the nuisance against the investment and jobs that might be lost if the nuisance were abated. Adopting a liability rule, which allowed the cement company to coerce an exchange of entitlements, seems correct from this perspective. If we view the problem from an ex ante perspective, however, it is much less clear that this is right. Perhaps we want cement plants to take greater care in determining where they locate, assuring that they leave enough space between the plant and neighboring property owners to minimize negative spillover effects. Adopting a property rule, that is, awarding an injunction against the nuisance, would have provided a powerful incentive for cement plants in the future to acquire the necessary rights to prevent such problems from arising. Alternatively, the dire ex post situation could be avoided and the residents given more protection, if the cement company had to justify its choice of prospective location for the plant in a proceeding at which the residents had notice and an opportunity to be heard. Such requirements are commonly built into environmental statutes and requests for variances or special exceptions to zoning regulations (considered below). They are also a feature of statutes providing for private eminent domain for easements of road access and to water.
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In a sense, what is at stake between the cement plant and the residents is an easement allowing the plant to create a nuisance, another land use device to which we will soon turn.
The Boomer situation is prime grist for analysis of property rules versus liability rules, and there is another sense in which the Calabresi and Melamed perspective is ex post: its view of the nature of entitlements. To Calabresi and Melamed, a collective decision over who gets the entitlement—polluter or resident—intersects with the question of how it is protected—property rule or liability rule. This gives four logical possibilities. Under Rule 1, the resident has the entitlement to be free from pollution, and the polluter must bargain in a consensual transaction with the resident or residents who hold this entitlement. Under Rule 2, the resident still has the entitlement, but the remedy is an award of damages. So if the polluter causes $100 of damage a day, the resident can sue multiple times to collect $100 a day or once to collect the discounted stream of daily $100 payments from now on, called “permanent damages.” But under Rule 2, the resident cannot stop the pollution: The polluter can keep on polluting as long as the officially determined damages are paid. In effect, the polluter can take an easement for the “price” of the permanent damages. When there are many residents, any one of whom might hold out, there is a tendency, as in Boomer itself, to consider Rule 2 protection.
As for Rules 3 and 4, Calabresi and Melamed apply a twist on the Coasean notion that causation is reciprocal: If the harmful interaction is caused either by the polluter or the resident, either one in principle could have “the entitlement” to prevail in the situation of conflict. So under Rule 3, the polluter has the entitlement to pollute, protected by a property rule, in the sense that the resident is going to have to bribe the polluter to stop if that is to be the result. Finally, under Rule 4 the polluter has the entitlement to pollute, but the resident can take this entitlement—and shut the pollution down—upon payment of officially determined damages. Strikingly, at around the same time as Calabresi and Melamed’s article came out, in Spur Industries, Inc. v. Del E. Webb Development Co., the
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Arizona Supreme Court, facing a case in which a retirement community had expanded close to a cattle feedlot, allowed the developer to obtain an injunction upon payment of the damages to the feedlot for the costs of shutting down.11
Spur is virtually the only nuisance case in which this “Rule 4” approach has been adopted. Why? For one thing, from the point of view of property, the symmetry between Rules 1 and 2 on the one hand and Rules 3 and 4 on the other, is illusory.12 Consider Rule 3. When does a polluter have the “right” to pollute? This is controversial enough in the first place, but a closer look reveals that the common law provides for rights to pollute in only very narrow circumstances. One can have an easement to pollute either by grant or prescription—we will return to easements in the next section. But the common law emphatically does not include a right to pollute in the basic package of rights associated with fee simple ownership. Owning Blackacre gives the right to be free from a wide range of intrusions—not all spelled out in advance—but not the right to commit invasions. In the Rule 3 scenario as envisioned by theorists like Calabresi and Melamed, the polluter, on closer inspection, may not have such a right at all. Imagine the resident erecting a giant fan to blow the pollution back onto the factory grounds. If the polluter cannot get an injunction against the fan, this suggests that the polluter may have been able to get away with pollution but did not have the right to commit it. This understanding is very important when the polluter becomes subject to environmental regulation: Such regulation is not regarded as a taking of any preexisting right. More generally, the need for a simple, lumpy package of rights against sundry invasions breaks the symmetry. We are not writing on the Coasean blank slate assumed by the Calabresi and
11.494 P.2d 700, 708 (Ariz. 1972) (en banc).
12.See Henry E. Smith, Self-Help and the Nature of Property, 1 J.L. Econ. & Pol’y 69, 70–76 (2005). Also, courts may be less likely to require a payment if the residents rather than the developer are asking for an injunction.