Exclusion and Property Rules in the Law of Nuisance

Abstract:     
This Article offers a theory of nuisance law based on information costs. Like trespass, much of the law of nuisance relies on a strategy of exclusion in which rights are defined using low-cost signals like boundary crossings that are only indirectly tied to particular uses. Nuisance law also supplements and fine-tunes this Blackstonian package of entitlements by means of a governance strategy, which relies on signals more directly tailored to particular uses. The information-cost advantage of strategies close to the exclusion end of the spectrum helps explain why, despite repeated calls for more balancing, nuisance law focuses on who caused invasions of whose land. Also consistent with an exclusion strategy are the staying power of traditional nonreciprocal notions of causation and the virtual nonexistence in nuisance of Rule 4 liability rules, under which plaintiffs would be permitted to invoke the law to force the polluter either to abate or shut down upon payment of the polluter's damages. Applying Hohfeldian analysis, the Article shows that the common law gives polluters at most a privilege to pollute and that Rule 4 does not refine the basic exclusion regime but rather undermines it. The general question becomes when to soften exclusion with governance and the Article concludes by arguing that, in situations such as oil and gas fields and Boomer-style pollution cases with numerous victims, only small judicial governance-style safety valves are necessary, especially if legislative and administrative solutions are forthcoming. More generally, the information-cost theory of nuisance brings the utilitarian and corrective justice approaches to nuisance closer together. Nuisance law is not a mess or mystery but does contain within it the inflection point between exclusion and governance.

Number of Pages in PDF File: 69

Keywords: nuisance, information costs, trespass, property, liability rules, oil and gas

JEL Classification: D23, D62, K11, K13

Accepted Paper Series