Alabama Supreme Court Undermines Property Rights

By Cameron Smith, Alabama Policy Institute

At the end of 2012, while Alabama families were focused on the holidays, the Alabama Supreme Court issued an opinion that undermined private property rights in Alabama and created a significant deterrent to economic investment in the state.

In 2003 and 2004, M&N Materials, Inc. purchased property in an unincorporated area of Madison County with the intention of operating a quarry. Because the M&N property was adjacent to but outside of the corporate limits of the town of Gurley, residents who opposed the quarry could not stop M&N from using their private property in a manner consistent with their business.

One of the residents of Gurley, Stan Simpson, lived only a mile away from the M&N property. Simpson, who would later become Mayor of Gurley, was determined to prevent M&N from operating their business, so he enlisted the help of State Senator Lowell Barron and State Representative Albert Hall to stop the quarry.

During the 2004 session, the Legislature passed a relatively discreet act that permitted the annexation of M&N’s property “if approved by a majority of the qualified electors residing in the existing corporate limits of the municipality of Gurley.” The Alabama Supreme Court noted, “According to Simpson, the purpose of the annexation was to give the Town control over the use of the property.”

Not surprisingly, the annexation proposal passed by a vote of 101-23.

Shortly thereafter, Gurley denied a business license to M&N while they “conduct[ed] a study to determine the best use for the land.” Ultimately M&N sold the property, retaining certain mining royalties, to Vulcan Lands for almost $3 million dollars less than a previously agreed option price. On January 18, 2005, Vulcan Lands applied for a quarrying license on the property now annexed into the Town of Gurley. The same night, Mayor Simpson led the Town council to rezone the property as agricultural, effectively ending the possibility of mining the property and preventing royalty payments to M&N.

As a result of the annexation and subsequent zoning shift, M&N sued the Town of Gurley, and the case made its way to the Alabama Supreme Court. The court ultimately found that “Alabama does not recognize as compensable a regulatory ‘taking'” under the Alabama Constitution.

In a state with such negative feelings about government intrusion onto private property, Alabamians should be shocked that the popularly-elected Supreme Court would issue an opinion permitting state and local government to intentionally restrict and devalue private property without any financial responsibility to the property owner.

Many other state constitutions with provisions similar to the Alabama Constitution and the U.S. Constitution have been interpreted to require compensation for such regulatory takings.

Essentially, the Alabama Supreme Court has sent a message that, absent a physical damage or confiscation, Alabama does not protect its citizens from government injury to their property. This does not mean that Alabama’s state and local governments should be prevented from re-zoning or even condemning property. Rather, property owners should have the legal recourse to ensure that they are justly compensated for such actions.

Private property rights are not limited to mere possession. Alabamians should reasonably expect the right to include the ability to enjoy and transfer their property as they see fit without fear of total financial loss from the government devaluing or limiting the use of that property.

One of the cornerstones of America’s free market system and a virtual requirement for economic growth is the continued preservation of strong property rights. By undercutting those rights, the Alabama Supreme Court has both removed an important safeguard to the personal liberties of Alabamians and placed the state at a significant economic disadvantage to sister states with stronger property protections.

If the Alabama Supreme Court does not reconsider its opinion, the State Legislature must afford Alabamians an opportunity to reclaim their property rights with a constitutional amendment requiring Alabama’s state and local governments to provide reasonable compensation for the impacts of their administrative and regulatory decisions on private property.

Cameron Smith is Policy Director and General Counsel for the Alabama Policy Institute, an independent, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.