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Case Study: Creating a Canadian-based Property Rights Index
Wednesday, April 4, 2012 1:28 pm | By Joseph Quesnel, Frontier Centre for Public Policy

The following is cross-posted from www.internationalpropertyrightsindex.org

Background

The Frontier Centre for Public Policy is an independent, Western Canada-based think tank. Our mission is to develop and popularize policy choices that will help Canada's prairie region live up to its vast but unrealized economic potential. Part of that mission is the protection of an enforceable and predictable property rights regime. For the last few years, the Frontier Centre has partnered with the Washington, D.C.-based Property Rights Alliance in its release of the International Property Rights Index (IPRI). In 2010 the Frontier Centre contributed a study about how expropriation powers in the Canadian province of Manitoba were being abused. In one rural community, a local municipality was attempting to expropriate large tracts of ranch land to develop a historic site. Expropriation in several Canadian provinces is allowed for vaguely defined reasons of economic development. The following year the Frontier Centre contributed a case study on the Nisga’a Nation, an indigenous community in the province of British Columbia where the government was attempting to create the first system of fee simple property ownership on an indigenous community in Canada.

For the 2011 IPRI release, the Frontier Centre unveiled the Canadian rankings in Lethbridge, Alberta. Joseph Quesnel, the Frontier Centre’s lead researcher on property rights, noticed that local media were very interested in how the rankings were broken down provincially and territorially. Unable to provide an adequate answer at the present time, the idea for a Canadian-style Property Rights Index was born. At the time, the province of Alberta was engaged in an important debate about property rights when a series of bills in the Alberta Legislature -- known collectively as the “Land bills” – were being generating controversy. Many believed the bills adversely affected rights to compensation, unduly centralized land use planning in the provincial Cabinet, and limited access to courts. These interpretations of the bills are contested, but it was noted that Alberta was interested in property rights. Before these debates, a politician in Canada’s federal House of Commons and another in Ontario’s provincial legislature unveiled private members’ bills to amend Canada’s Constitution to include a right to compensation. Canada at present does not have constitutional protection for property rights, and constitutional scholars tell us that was the original intention. In Canada, property rights are very much part of the unwritten tradition and common law, although they do not flow from written documents.

Thus, the idea of a property rights index for Canada took shape. After receiving funding from donors, research for the project pressed forward. This will be the first comprehensive measure of property rights protection in Canada.

In Canada, provinces and territories have constitutional authority over property rights. So, it was decided that the Index would focus on property rights regimes across provinces and territories. Although the Canadian index takes inspiration from the IPRI, it was decided to exclude intellectual property. Intellectual property in Canada is a federal concern. Also, many within Canada who advocate for property rights are divided on how to place intellectual property rights, with some even asserting they do not exist. This project, however, does not take that position, but avoids wading into it altogether.

Indicators

Much of the thinking involved in creating this Index has concentrated on what indicators to used to “measure” property rights protection. The intention is to use indicators that were distinct enough between Canadian provinces and territories to actually capture differences that could be ranked, but also to use indicators that are universal and could be comparable with jurisdictions outside Canada. These indicators are expropriation, civil forfeiture, as well as other areas yet to be finalized including cultural/heritage property laws, endangered species, and land use planning. The area of transfer of estates is also being considered as an indicator.

Expropriation

The right of expropriation – called eminent domain in the United States – is probably the most direct way governments seize property legally that they cannot acquire easily from a willing seller. Expropriation is also comparable across most national jurisdictions because most nation-states have expropriation laws. In Canadian provinces and territories, the procedural and substantive powers of expropriation are defined in statutes. Our development of this indicator has involved contracting legal experts in expropriations to assist us in the evaluation of procedures across all 13 provinces and territories and to identify how procedures and grounds for expropriation differ, how they offer protection to property owners.

Civil Forfeiture

The power of the government to acquire title to property used – or believed to be used – in criminal activity is a major way to affect property rights. In many Canadian provinces, the forfeiture procedure is handled through civil courts where the legal burden of proof is lower than in criminal cases. Here too we have benefitted from the assistance of legal experts on civil forfeiture. Although forfeiture regimes are broadly similar, there are subtle nuances and procedural differences between the various provincial and territorial statutes.

Other areas to be explored

Our lead property rights researcher is finalizing the last criteria. Here are the areas:

1) Heritage/Cultural Property laws- Many Canadian provinces and territories have statutes that affect designation of some properties as cultural landmarks. The issue of whether property owners are compensated is crucial.

2) Endangered Species- Canadian provinces and territories have well-intentioned laws designed to protect endangered species. However, often these laws adversely affect the property rights of private land owners, including their rights to compensation.

3) Land use planning- This is a very wide area in Canadian provincial and territorial law. There are many ways in which land use designations affect property rights. This indicator would need to be developed. Exactly which aspect of land use planning would be measured is yet to be determined.

4) Transfer of estates- This pertains to provincial/territorial laws on estates and inheritance where the concern is to what extent the state takes control over a deceased person’s estate where a will does not exist.

Rankings and Output

Each province and territory will be ranked on an ordinal scale in each indicator area. How each province and territory performs in each indicator area will then determine how they perform overall in the broad area of property rights protection, which will be measured in the form of a raw numerical score.

From this, it will be possible to determine which provinces and territories have better property rights protection. It would also be possible to cluster different provinces and territories into different levels of property rights protection from high protection to moderate to low.

Finally, a useful venture would be to correlate how each province performs on the property rights index with measures such as provincial/territorial GDP, economic growth, and rates of investment. This would allow us to test the hypothesis about the positive economic effects of strong property rights protection. This idea originated with the IPRI and its useful correlation graphs.

Output for the project is a final report with all the rankings and the statistical graphs. We would expect extensive media reporting across the country as the rankings would be relevant to all regions in Canada.

Goals

The main goal of the Index is to elevate public consciousness and fister discussion about property rights across all regions of Canada. Ordinary citizens are often unaware of how precarious property rights could be in the country. Although the common law protects rights to compensation for expropriation, these rights can be taken away by legislatures given that Canada lacks national constitutional property rights protection. Many Canadians are not directly affected by topics like expropriation, civil forfeiture, endangered species, or land use planning, so they do not look into these areas. So, the intention is educate Canadians about the levels of protection enjoyed in their particular province or territory. Ideally, our Index will help to change public perceptions and influence the public policy debate and property legislation.
 

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IPEC's Good Ideas
Friday, March 30, 2012 3:34 pm | By Paul Petrick

On March 30, Victoria Espinel, the U.S. Intellectual Property Enforcement Coordinator (IPEC), submitted to Congress the 2011 Annual Report on Intellectual Property Enforcement. As demonstrated by the recently released 2012 International Property Rights Index, the United States has experienced a mild deterioration in intellectual property rights since 2007. This has contributed to an even steeper decline in the United States’ overall IPRI score over the same period. As President Obama’s top intellectual property advisor, Ms. Espinel is tasked with reversing those statistics. The following are the highlights of her report.


• IPEC has persuaded major credit card companies and online vendors to form voluntary associations to reduce the sale of pirated pharmaceuticals, music, motion pictures, and other goods. IPEC believes that these associations will significantly curtail access to pirated goods.


• On the recommendations of IPEC, the National Defense Reauthorization Act of 2012 included provisions to “increase penalties for infringing goods that are sold to, or are for use by, the military, law enforcement, critical infrastructure or national security applications and to provide DHS with the explicit authority to give rightholders more information that will help them in determining whether suspected fake products are genuine or not.”


• IPEC developed a national strategy to combat the importation and sale of counterfeit pharmaceuticals. These recommendations were submitted to both Congress and the Vice President.


• American law enforcement agencies have increased seizures of counterfeit pharmaceuticals by nearly 200% as well as fake safety and critical technological goods by 44%. This contributed to an overall increase in seizures of 24% compared to Fiscal Year 2010.


• ICE Homeland Security investigations are up 17%, arrests are up by 57%, and convictions are up by 71% over FY 2010.


• New trade secret cases conducted by the Federal Bureau of Investigation are up by 29% in addition to an 87% increase in health and safety investigations.


• The Obama Administration’s trade apparatus has continued to pressure China into strengthening its intellectual property protections. As a result, China has agreed to form a new bureaucracy to coordinate intellectual property enforcement countrywide.


As the global economic recovery continues at a numbingly slow pace, all nations should be seeking to secure the rights of innovators to their own labors. In total, these recommendations represent a step in the right direction.
 

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SCOTUS Sacks Case Against the Sacketts
Friday, March 30, 2012 3:17 pm | By Paul Petrick

 

Last January, the United States Supreme Court heard oral arguments in the case of Sackett v. EPA, involving two Idaho property-owners with a .63 acre parcel near idyllic Priest Lake. The case centered on whether or not the Environmental Protection Agency (EPA) could issue a non-reviewable compliance order mandating that Michael and Chantell Sackett reverse construction on their home and obtain a multi-thousand dollar permit or face a fine of up to $75,000 per day. Last week, the Court’s nine jurists rendered their judgment on the EPA’s conduct.
 
In a unanimous decision, the Supreme Court ruled that property owners may challenge EPA compliance orders in court. This conclusion was telegraphed by the justices’ scathing criticism of the Obama Administration’s arguments before the Court in January. While certainly welcome news for America’s property owners, the Sacketts are not quite out of the woods. 
 
Like much of the EPA’s harassment of property-owners, this action stems from provisions of the Clean Water Act (CWA). Under the CWA, the discharge of pollutants into navigable waters absent a permit is prohibited. However, the EPA’s definition of navigable waters includes wetlands adjacent to navigable waters. While one would find it difficult to pilot a boat across the Sackett’s yard, the EPA insists on labeling their property as navigable water.
 
Thanks to the Supreme Court, the EPA will now be forced to justify their actions in court. In the meantime, a cadre of senators is seeking a legislative remedy to the problem. The Defense of Environment and Property Act of 2012 was introduced by Sen. Rand Paul (R-KY) last month. This bill would define navigable waters as bodies of water that are “navigable in fact” or “permanent, standing, or continuously flowing bodies of water that form geographical features commonly known as streams, oceans, rivers, and lakes that are connected to waters that are navigable-in-fact.” For the last seven years, the Sacketts have had to bear the cost of lost time and treasure from their rendezvous with the EPA. Despite their recent legal victory, the right to build a house on their own property continues to elude Michael and Chantell Sackett.

 

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