How Pending “Trade” Deals Would Undermine Zoning and Local Land Use Rules

By Ben Ross, president of the for 15 years. His new book about the politics of urbanism and transit, , is published by Oxford University Press. Originally published at

A key principle of land use in the United States is that homeowners can often veto new buildings on nearby land that other people own. A trade agreement that’s currently in the works could have a huge impact on that long-established system of local control.

The is a trade pact that would change the rules for investments and trade among its signers. It’s currently in behind-closed-doors negotiation among 12 countries, including the United States, Australia, Canada, Japan, Mexico, and Singapore. Other countries could join later.

A draft of the TPP gives investors from member nations the right to sue when a decision by a local government “interferes with distinct, reasonable investment-backed expectations.”

Panels of private lawyers chosen by the investors and the federal government will meet to decide the suits. If the investors win, the federal government must reimburse them for the loss of future profits.

Critics of the TPP that it could gut environmental and health regulation. They point to the past history of trade agreements to back up that concern. The TPP’s backers, on the other hand, that the treaty only bans arbitrary or discriminatory actions.

No matter who turns out to be right about that, the pact is likely to undermine local oversight of land use.

The TPP Goes Against the Spirit of American Land Use Law

Homeowners’ power to influence development—what I call “suburban land tenure” in my book is an entitlement that most people in the United States take for granted. But it is just the sort of local decision-making the TPP seeks to curb.

Trade treaties aim for decision-making that is stable, predictable, and rational. US land use regulation, on the other hand, bends to meet the often capricious desires of the neighbors. Local officials turn to concepts like “compatibility” and “historic significance” to justify their responsiveness to constituents.

Whatever one thinks of this arrangement, its linguistic evasions are unlikely to satisfy panels of trade lawyers meeting thousands of miles away, under rules that don’t even guarantee the local government the right to speak.

Consider this hypothetical case, which is also utterly routine: A foreign landowner proposes a new city building. Neighbors petition for a “historic” designation for the house now standing on the property, and the preservation board approves, blocking new construction. Meanwhile, there are no petitions or designations for nearby houses similar in age and architecture. Is the landowner entitled to compensation?

Or let’s say the master plan for an area near a Maryland Metro station calls for 15-story buildings. The zoning allows such tall buildings only if the planning board approves the design; otherwise property owners are limited to three stories. A foreign landowner applies to build a 15-floor building, but neighbors protest against the height of the structures and the planning board cuts the size to nine floors. Will the landowner get the value of the square feet he wasn’t allowed to build?

A Lot depends on the Treaty’s Details, but We Aren’t Privy to Those

It’s hard to say exactly how the TPP would affect land use regulation in these and other cases. Wording for the agreement isn’t final yet, and that will certainly influence how arbitrators rule in the future. But if Congress gives trade negotiators “fast track” authority, the public will have no say in what follows. Negotiations will stay behind closed doors, and Congress won’t be able to change provisions it doesn’t like.

Once the pact goes into effect, amendments will require a unanimous agreement from all the countries that signed.

Even after the TPP passes, it will take years for the legal issues to play out. What will happen then if foreign landowners are winning large financial payments from the federal government? Will foreign developers refuse all compromise with local zoning boards, knowing that rejection wins them the same profits as approval? Will the federal government interfere with local zoning decisions that could provoke a large payout? Will domestic builders demand the same rights as foreigners?

You don’t have to be a fan of current land use practice to object to this transfer of power. All too often, zoning laws empower affluent minorities at the expense of the larger community. They outlaw the lively urban neighborhoods that more and more Americans want to live in.

The cure for these ills is more democracy, not less. Land use regulators should answer to the entire electorate, not to small groups of influential landowners and not to unaccountable tribunals that put the interests of big money ahead of the common good.

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56 comments

  1. scott

    Don’t foreign corporations know that all they have to do is bribe the city council/zoning commission to get what they want? It really doesn’t take that much money or time, especially if you can get a CRE developer in your pocket who knows the system.
    We have a local developer who buys old strip centers, gets them rezoned, then sells the land to Wal-Mart. Usually this happens so fast that none of the neighbors notices. In a recent case, though, the existing zoning had a 100,000 sqft limit on a parcel so WMT is building a 99,900 sq ft supercenter on a very small lot less than a mile from other grocery stores in 3 directions (and less than 3 miles from another supercenter to the West and another one to the North, also adjacent to a Sam’s). Makes me wonder what kind of tax giveaways convinced WMT to build a store where one absolutely isn’t needed.

    1. Steve H.

      If I understand correctly, that method is no longer necessary with TPP. Simply by submitting the plan and having it rejected, the case can be taken to the tribunal and local government forced to pay for lost (alleged) profits. Once the property is bought, not one more penny need be dumped into the local economy, via buildings or bribes or nuthin’.

      1. Steve H.

        I may have erred saying local government would have to pay. Wondering how it works when federal government has to pay for local planning decisions.

  2. Steve H.

    Just left a message for Congressman Todd Young’s D.C. office on fast track.
    Did not say bad words, but implied them.

  3. DanR

    The TPP may help in removing perceived capriciousness in American law. I think many foreign entities see American law as unduly vague and subjective. If these entities are in countries with corruption, they may project their experiences onto the American legal system and think that the complexity and subjectivity of American law invites corruption.

    1. Jeremy Grimm

      Huh? If you really want to play troll be a little less unduly vague and subjective with your comment.

      Interesting juxtaposition of “capriciousness” with “corruption”. I’ve encountered considerable caprice in bureaucracies without the least hint of corruption — at least for a person of my means. Of course, with greater means I doubt caprice is a necessary preclude to corruption.

      I doubt the foreign experience of bureaucracy differs greatly. I believe there is little caprice where there is corruption — outcomes tied to the depth of petitioner’s pockets are hardly capricious.

      A final query — is American law really so peculiar in its complexity and subjectivity? Those seem like natural attributes of all law and its enforcement.

    2. different clue

      Are there really foreigners who think that? I am so sorry to hear that. We are a very generous and welcoming people, and people who feel like that are generously welcome to stay away and not invest here.

    3. Knute Rife

      And the USSR refused to attend the 1984 Summer Olympics in LA because it alleged the security would be inadequate to protect its athletes. It was a straw man to justify a boycott retaliating against the US boycott of Moscow in 1980. This is a straw man, too. Other countries know developers have little trouble getting the majority of projects approved here, but they would rather have a treaty that turns the federal government into an ATM.

  4. TedWa

    UPDATE:
    The Wyden-Hatch-Ryan deal includes these provisions:

    –The final wording of the Trans-Pacific Partnership has to be made public at least 60 days before Obama signs any agreement. Congressional action likely would take another two months, which Wyden said gives the public and lawmakers plenty of time to understand and debate the provisions in the trade pact, which is still under final negotiations.

    –The partnership would have to include enforceable labor, environmental and human rights standards, the latter of which Wyden says has not been included before in a U.S. trade pact.

    –The partnership would be required to prevent local censorship of the Internet.

    –A bill to provide assistance to workers who lose their jobs because of trade agreements must move in tandem with the fast-track bill through Congress. Wyden said it would expand coverage to include not just manufacturing workers but those in service jobs as well.

    –Trade officials would have new enforcement measures aimed at cracking down more quickly on violations of the trade agreement.

    –A super-majority of 60 senators could decide to remove fast-track authority after they see the final terms of the partnership.

    1. TedWa

      Rebuke :
      But opponents argued that the provisions didn’t amount to much. Elizabeth Swager of the Oregon Fair Trade Campaign argued that it is too late to give public access to the Trans-Pacific Partnership agreement after negotiations are complete.

      Wyden has “signed off on legislation that would make transparency in trade negotiations qualitatively worse,” Swager said in a statement. “This is a betrayal of Oregon’s working families and of democratic policymaking, and Oregonians won’t stand for it.”

      Sen. Jeff Merkley, D-Ore., who has expressed skepticism about the trade pacts, said Thursday that he would wait to read the terms of the deal before drawing judgment on the legislation. But he did say that the provision allowing 60 senators to jettison the fast track wouldn’t provide much of a safeguard.

      “It’s not an off-switch if it takes 60 votes,” he said.

      AFL-CIO President Richard Trumka called the fast track bill “another bad deal that lowers wages and outsources jobs.” The labor federation announced it would began an ad campaign urging Oregon members of Congress to oppose the bill.

  5. dee preston

    Why doesn’t our govt officials get that if the ttp is passed we won’t need them anymore. This is stealing pure and simple. If this passes we’ve seen nothing yet. Why isn’t the mainstreet media reporting on this? We will all pay the price for their silence and the destruction of all we hold dear. Where is the america we all love and cherish? Where did she GO?? Only God knows!

    1. lakewoebegoner

      ” Why isn’t the mainstreet media reporting on this? ”

      Making people think about things—especially when it comes to numbers or legalese—hurts ratings. Just look at the dreck that fills the morning network news shows from 7:05am to 9:00am.

      Bread (or cheap corn syrup) and circuses (reality TV stars) for the win!

      1. lakewoebegoner

        I should also add that if you draw up a venn diagram of “the interests/passions of journalists and news editors” and “international trade law,” you ain’t going to see much overlap.

        …which is why pretty much the only people pounding the table about TPP/TTIP are in the blogosphere.

        1. jrs

          Ok so it’s boring and people arguably don’t like to think, but really WHO OWNS THE MEDIA. And isn’t that enough?

    2. different clue

      The MSM works for the social class which seeks TPP/ TPIP. Therefor they will not print or broadcast anything which would concern the social class they work for.

  6. Ivy

    TPP seems to include an unconstitutional element of taking private property rights away from citizens. How will Obama, Wyden, et al rationalize that?

    How much of TPP and TTIP is a blunt instrument to counteract perceived economic viability threats from China, disguised in other forms?

    1. crittermom

      How will they rationalize that?
      The same way they did the IFR & banksters: If you’re not part of the 1%, you just don’t matter & they don’t have to rationalize a damn thing.
      If you are, then money in your pocket seems to be reason enough.

      The TPP terrifies me. What hasn’t been stripped of our democracy & the America this country was founded on, will be with this.

      Seriously, can we afford yet another year of this so called leadership?
      I want my country back, dammit!!! Of the People, By the People, For the People. Hello?

    2. jrs

      “TPP seems to include an unconstitutional element of taking private property rights away from citizens. How will Obama, Wyden, et al rationalize that?”

      Well they can use eminent domain for private (not just public) interests already, this was the Supreme Court ruling on Kelo v. City of New London. So for large corporations if they wish. It is my understanding many of the pipelines like Keystone XL also take private property really, they take tribal land and so on. I’m not saying the TPP isn’t horrendous.

      “How much of TPP and TTIP is a blunt instrument to counteract perceived economic viability threats from China, disguised in other forms?”

      I think it’s the real and ultimate purpose, the corporate rule is just a bonus (get it while you can!) or what is perceived necessary to achieve that (but who really cares if you beat china and turn the rest of the world into a corporate dictatorship? Not the citizens, but it’s not their interest this is being done in)

      1. JTMcPhee

        TPP-TTIP look more like OFFENSIVE weapons, whips and clubs actually, against what is left of the sovereignty that extended “rights” first to the feudal barons beyond the absolute monarchy, and mostly because the royal levies interfered with the private wars and wealth grabs that the barons wanted to get on with. That seems a lot more likely than that this secret sh_t is in any way any kind of “defense” against “economic viability threats from China.” In the Game of Thrones and Empire, the endgame is moneyed interests against everyone else, that latter set being the ones who actually grow the crops and weave the cloth and hammer out the arms and armor and other futile and destructive toys.

        This whole scam looks like the final theft of the legitimacy of all politics. NC has that illuminating series that ought to be looked at every so often, “Journey Into a Libertarian future,” http://cfdtrade.info/2011/11/journey-into-a-libertarian-future-part-i-%E2%80%93the-vision.html, which sure seems to illuminate the nature of the Beast us ordinary people are getting trampled by. Not that this whole rodents’ nest is anything new:

        Question: who will be the enforcers that make the rulings (a word used advisedly) of the Corporatokleptocratic Tribunals stick? All well and good for a decree to go out from the Kaiser that Keokuk’s zoning impacts the “reasonable expectations of profit” of some fracker or lot operator nominally headquartered in that funny “Ugland House” in the Caymans. But there is some history in “America” that in abusive economic times, people kind of gather from the neighborhood when the Sheriff comes to conduct the foreclosure sale or attach the assets, and give him and his posse to understand that “¡no pasarán!”

        So what happens to the big old oil or mining or real estate development corporation that gets its “judgment” from the Corruptnik Panel on this month’s Arbiter Maxima, when the minions try to collect the billions of whatever the denominated currency of “restitution” of imaginary profits happens to be, and The People tell them to “Go f__k themselves”? Looks like our “representative government” has this all in hand, since Wyden says TPA, TAA to move together; Preference, Enforcement Bills In the Mix, per the April 17 ed of “Inside US Trade’s World Trade Online,” which hides behind a paywall at . Maybe someone else has access to see what the enforcement mechanisms are supposed to be.

        Of course, these grand overarching “Agreements,” that pervert and crush what’s left of “liberal” mythology of “governance” give all the “rights” and powers to pure socialize-loss-privatize-profit entities, don’t seem to have a lot of legitimacy, except in a very pro forma sense that power trumps rights of the less powerful. There ain’t jack that I can find about the enforcement processes that gives ordinary people any rights here. Except, at the last, the right of resistance.

        “Law” only exists when there’s a regularized structure including enforcement of legitimately adopted rules governing rights and obligations. Failing that, there’s a tendency to descend into anomie…

        1. Jeremy Grimm

          Agree, and thanks for the new word: “anomie” — I very much like it and it is fitting to the ongoing deconstruction of our communities.

    3. different clue

      I believe that none of TPP/ TTIP is about “threats” from “China”. “Threats” from “China” will eventually be put forward as the “national security excuse” for Obamatrade, but the point is exactly in the negative features discussed in all these NaCap articles.

      The point is to establish and cement One World Corporate Globalonial Government, to the profit of the Overclass who harvests the most of the money and the non-money wealth and power.

  7. vidimi

    i know that americans are understandably more concerned with the TPP than the TTIP, as in the latter it’s the US that is the regulatory weak link. here in europe, though, the TPP gets hardly any mention and all the talk (which isn’t all that much) is focused on the TTIP.

    This is a mistake, though, since if A=B and B=C, then it follows that A=C and that a TTIP will bind europe to a lowest common denominator with not just the US but also Asia.

    1. Praedor

      I’ve always tried to zero in on both but people have no attention spans. TTIP IS = TTP but imprisons Europe instead of Asia. Both deals imprison the USA…under true, unadulterated corporatocracy. The deals literally elevate corporations to co-equal status with countries (superior to countries, actually, since they get to undo any regulations or laws they think will hinder alleged profits). Unfortunately, the way the US Constitution is written it seems to allow for totally wiping out all provisions of the Constitution via simple Treaty. Treaties are THE law of the land, when signed so if a treaty undoes a prior constitutional protection or procedure, that’s OK. Treaties trump even amendments, so it seems.

      1. crittermom

        Treaties as the law of the land? Tell that to Native Americans. Didn’t work so well for them.
        As citizens, we need to stop the TPP, but who in power is listening to us?

        1. different clue

          When it benefits the Globalonial Overclass, Treaties will indeed be the Law of the Land. The Constitution is wired up that way. That doesn’t mean that the American people cared / care about that where Indians are concerned. But many Indian Nations do have Treaty Law on their side, technically speaking. It is just a matter of somehow torturing the non-Indian authorities and people to recognize and follow the Constitutional Treaty mandate in these cases.

          I remember reading somewhere where an Indian spokesman was asked something like: Do American Indians believe in the United States Constitution? He said something like: “Of course we do! In fact, we are the ONLY people in America who DO believe in it.”

          1. susan the other

            It’s true. We took inspiration from the native Americans. They were as awesome in the first centuries of this now USA as we immigrants were abject. What karma.

      2. Vatch

        My understanding is that the U.S. Constitution has priority over treaties, but treaties have priority over federal laws. State constitutions and laws are subordinate to the U.S. Constitution, treaties, and federal laws. But my interpretation might be wrong, and anyhow, the current Supreme Court is likely to give preference to pro-business treaties, even if the treaties violate the Constitution. Here’s the relevant clause from Article VI. Note that the hierarchy that I described among the U.S. Constitution, treaties, and federal law is not explicitly stated. All we really know is that state laws and constitutions are subordinate.

        This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

        This web site annotates the Constitution:

        From the Supreme Court’s ruling in Gibbons v. Ogden:

        In argument, however, it has been contended, that if a law passed by a State, in the exercise of its acknowledged sovereignty, comes into conflict with a law passed by Congress in pursuance of the Constitution, they affect the subject, and each other, like equal opposing powers. But the framers of our Constitution foresaw this state of things, and provided for it, by declaring the supremacy not only of itself, but of the laws made in pursuance of it. The nullity of an act, inconsistent with the Constitution, is produced by the declaration, that the Constitution is the supreme law. The appropriate application of that part of the clause which confers the same supremacy on laws and treaties, is to such acts of the State legislatures as do not transcend their powers, but though enacted in the execution of acknowledged State powers, interfere with, or are contrary to the laws of Congress, made in pursuance of the Constitution, or some treaty made under the authority of the United States. In every such case, the act of Congress, or the treaty, is supreme; and the law of the State, though enacted in the exercise of powers not controverted, must yield to it.

        I’m still confused.

        1. hunkerdown

          Reid v. Covert established that treaties couldn’t override the Constitution. Makes me wish we’d gotten that Second Bill of Rights in.

        2. Calgacus

          Vatch: but treaties have priority over federal laws. No, they’re at the same level. Treaties can be self-executing (not need enabling legislation to take domestic force) or non-self-executing (need enabling legislation, more usual probably). Federal laws or treaties have to exercise only Constitutionally granted powers of the federal government. “Made in pursuance of the Constitution” or “under the authority of the United States” are the relevant phrases above – neither Congress nor a Treaty could not make a state governorship hereditary, for example. So another commenters comment that treaties can supersede the Constitution is quite wrong.

          No treaty has ever been declared unconstitutional. The US Supreme Court has the right to interpret treaties, which is actually a greater power. If one can just interpret “black” to mean “white”, why ever nullify a law? (This doesn’t work with respect to the states – the State Supreme Courts are the supreme interpreters of their own State’s law, not the US Supremes.) Interpretation and the usual need for enabling legislation has created enough wiggle room to obviate the need for declaring treaties unconstitutional. However, the TPP etc are so absurd that they have a chance to be first, were there a court which actually decided cases on law and reason rather than wealth.

          The wikipedia article “Treaty Clause” is quite good, has citations for most of the above, resolves most of the usual muddles I see here.

  8. TedWa

    I thought we didn’t negotiate with terrorists?? It’s basically a coup of government, democracy and our national sovereignty by our very own financial terrorists. Wyden’s deal doesn’t say anything about the international tribunals where corporate attorneys can act as both judge and lawyers in these cases. A revolving door between sitting on the bench and defense of corporate claims of lost earnings. How can they lose. Monsanto would be able to sue their way to controlling the worlds agriculture. We’d be competing for jobs on a global basis, lowering wages. This thing is anti-Constitution. Isn’t there some way to prosecute those trying to quiet coup our government??? It’s Obama and Holders Too Big To Fail run a muck.

  9. justsayknow

    So after the TTP and TTIP are (almost certainly) passed who exactly pays the “lost profits” fines? Is it the US Treasury? The state? Or the local governing authority?

    Side note: Contacted my congressman and both senators. Only one of their interns bothered to ask my opinion. Only two wanted my address.

        1. Vatch

          Probably each office has different procedures. I suspect that Senators in larger states are less likely to want the names of callers, because they get more calls than Representatives or Senators from small states.

  10. John M

    Let’s call TPP what it is. A Bill of Rights for multinational corporations that establishes their supremacy over nation states and individuals. It is an extension of the Citizens United ruling and worldview that corporations are entities, not just equal, but superior to individuals and nation states.

    1. JTMcPhee

      Kind of an extension of the Magna Carta, too, if you look at the real nature of that document…

  11. Mel

    More than one law lately has been passed under the assumption that “this will only be used against Bad People”. The talking mouths try to justify the ISDS provisions by saying that they’ll protect trade against capricious local decisions. Might look good until those local decisions are your own. Signing a blank check against your future decisions and actions means you may soon find you can’t afford your own lives.

    I think the civil forfeiture laws were passed via the same bad thinking.

  12. Ron

    The more local and regional control that is lost along with jobs due to these trade agreements the quicker Americans will come to develop a strong distaste for these agreements and the political class that approves them.

  13. Ron

    The more local and regional control that is lost along with jobs due to these trade agreements the quicker Americans will come to develop a strong distaste for these agreements and the political class that approves them.

  14. Curtis

    It would seem that after TTP, eventually the dragon will be forced to eat it’s own tail. Just be patient the whole process will self correct and society may be able to begin again.

    1. jrs

      I wouldn’t mind salvation through collapse, although I rather wish it would come quick before these things pass in that case! And if it wasn’t for the fact bad conditions can last a long long long time before they are corrected, our lifetimes perhaps. Can’t they?

  15. Vatch

    I was wondering how the two White House petitions to require the release of the full text of the TPP are doing. I was shocked, but not really surprised, to learn that each has fewer than 1000 virtual signatures.

    There is, though, an absolutely idiotic petition to rename the planet Uranus, which is even stupider than the petition that demanded that the government build a death star.

    1. jrs

      Here’s the popular petitions, including pardoning Edward Snowden which has had over 100k for a long time.

      I don’t think a single one of these petitions is being answered.

      It’s rational for people to stop signing White House petitions unless they are using them to get the word out. And I’m not even sure if a “the TPP” sticker I saw on a “Stop” sign isn’t a better way to get the word out to the ignorant than these BS petitions which probably mostly reach the converted.

      1. Yves Smith Post author

        White House petitions are not very useful. But Congresscritters pay attention to ones by Credo, etc. They are tantamount to polling on narrow issues.

  16. TedWa

    I hope sheeple democrats don’t take Wydens compliance with the Repuglies as a go ahead on fast track. I guess if he had to compromise, making it so that it’s public for 60 days should wake up those that aren;t.
    This atrocity is the opposite of the Constitution.

  17. McWatt

    The local shenanigans surrounding Zoning Laws is now so great I can’t imagine what would transpire if Uber money became involved from the TPP. Sounds like Ben is on the side of “transit oriented” development which has run amok in suburban areas near large cities. You can not believe the developments that have been built because of phony “transit oriented” needs and how bad they been. Local governments are sweet talked into providing millions of dollars of subsidies to already wealthy developers to build these huge monstrosities. Then the developer either bankrupts or sells the development which turn out to be difficult to rent and nightmares for small villages to administer. These developments all have commercial ground level components that typically sit vacant adding to the nightmare of already vacant existing commercial properties. This dream of stacking people vertically ruins school districts, adds to local governments service costs and never pays for itself with the promise of increased real estate property tax revenue. It is mathematically impossible to add more people and lower your tax burden. Our town has been taken over a dozen times by these developers with a handful full of gimmie and a mouthful of much obliged.

  18. Jeremy Grimm

    @McWatt — I live in a relatively small, pop. 22,000, community with a downtown business center that sits half and more than half empty across from the half-empty small shopping center across the street — which was half-empty when the business center was built. I never gave it much thought until your comment. Now, I’m curious to find out more how the business center came about. No transit orientation was necessary for what on further reflection starts to look like “local shenanigans.”

    I recall an even larger downtown development I saw about ten years ago when I went back to visit Winooski, Vermont hoping to eat at a favorite restaurant I used to go to in the middle 1980’s. The Winooski development was a multi-block and multi-story complex with no apparent rationale behind its construction and appeared to be largely vacant. I can only imagine what kind of shenanigans went into building that development in a town of less than 10,000. Especially in a place like Vermont. Maybe the place has filled up with tenants now, but with the sale of the IBM plant nearby that seems doubtful. [Can anyone in the area fill me in on what things are like in Winooski now?]

    I think you’re right. Things are bad without the help of the TPP. With TPP added in it will make for some very interesting times in our local communities. Even those far away from large cities.

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