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DECEMBER 2002
Honey, I Shrunk the Docket
During his controversial tenure as Chief Judge of the Court
of Federal Claims (CFC), Loren Smith had two major projects:
re-writing takings law to undermine health, safety, and environmental
protections, and expanding the prestige and perks of judgeships
on the CFC, through efforts such as his implementation of
a uniquely cushy "senior status" system for CFC
judges. The Tahoe decision dealt a serious blow to
project one. Project two came under direct attack at the CFC's
fall Judicial Conference when George Washington Law Professor
Steven Schooner released a study attacking Smith's reforms
and concluding, more surprisingly, that the court itself is
unnecessary
.
Schooner makes no bones about favoring "the Court's elimination,"
arguing that its "judges lead a charmed existence"
because "a federal district court judgeship bears more
than eight cases for each case allocated to a CFC judgeship."
Schooner also notes that the court's "inefficient"
life tenure system "serves to accelerate individual judges'
paths to senior status," leading to the court's current
1 to 1 relationship between active and senior judges. By way
of comparison, the ratio for active to senior judges in the
federal district courts is 2.3 to 1. Thus, the CFC has "an
abundance of senior judge resources" to complement the
under-worked active judges. Finally Schooner observes that
the court has a "hodge-podge of jurisdiction" and
thus "has lost its claim of specialization" and
yet "falls short as a generalist court as well."
For all these reasons, Schooner concludes that "[i]t's
time for Congress to contemplate a federal judiciary without
the Court of Federal Claims."
We have not verified Schooner's analysis and cannot vouch
for his conclusions. We can say this, however: the President
and Congress plainly need to consider Schooner's findings
before filling the 5 active judge seats that are currently
vacant. Responding to similar workload issues that have been
raised by Senators Charles Grassley (R-IA) and Jeffrey Sessions
(R-AL) about the D.C. Circuit, The Washington Post
recently editorialized in favor of getting a formal opinion
from the Judicial Conference of the United States on the need
for new judges before the judicial nominations process begins.
This is a wise suggestion that should be expanded to include
the need for new appointments to the CFC.
Our thanks to the Georgetown Environmental Law and Policy
Institute for providing us with a copy of the Schooner report.
NOVEMBER 2002
Bass Enterprises Production Co. v. United States,
2002 WL 31526504 (Fed. Cl. Nov. 13, 2002)
The Supreme Court's Tahoe decision is starting to
have a salutary ripple effect on land use litigation. Most
recently, in Bass Enterprises, the Court of Federal
Claims reconsidered and reversed a takings ruling in light
of Tahoe.
The government in Bass denied the plaintiffs a permit
to extract oil and natural gas in an area that had been set
aside for nuclear waste disposal. The Bureau of Land Management
characterized the decision as a delay of regulatory action
pending final review of the feasibility of drilling. In March
2002 (just prior to Tahoe), Judge Hodges held that
the denial was a per se temporary taking and awarded the plaintiffs
more than $1.1 million.
After Tahoe, the government moved for reconsideration.
Judge Hodges agreed that Tahoe required the court to
employ Penn Central's multifactor test instead of a
per se rule. He concluded that the government's interest in
determining whether drilling for oil and gas could make the
nuclear waste facility unstable was "a serious public
health and welfare concern." Employing the parcel-as-a-whole
rule reaffirmed in Tahoe, the court evaluated the economic
impact as a fraction of the "entirety of the economic
value," concluding that the diminution of $1.1 million
amounted to just five percent of the value of the property.
As the court stated: "[T]he importance of government
action to public health and safety, and the negligible economic
impact, negate the possibility that plaintiffs could prevail
on any takings theory."
This 180-degree reversal is the latest in a series of cases
that have denied takings claims through express reliance on
Tahoe. In Walcek v. United States, 303 F.3d
1349 (Fed. Cir. 2002), the Federal Circuit invoked Tahoe
to reject the claim of beachfront property owners who argued
that wetlands protections effected a taking. In the July Takings
Watch, we alerted you to a similar reliance on Tahoe
by the Pennsylvania Supreme Court in Machipongo. There
should be little doubt that Tahoe is making its presence
felt.
OCTOBER 2002
More Takings Challenges to the War on Terrorism
In the wake of the tragic events of 9-11, we reported on
a takings challenge to federal efforts to protect national
security interests (Sept. 2001 Feature Case). It is no surprise
that we continue to see such cases.
The federal district court for the District of Columbia recently
rejected a takings claim and other challenges to the Treasury
Department's designation of a nonprofit group as a terrorist
organization and the freezing of its property under the International
Emergency Economic Powers Act. See Holy Land Foundation
for Relief and Development, 2002 WL 1818485 (Aug. 8, 2002).
The designation was based on a determination that the foundation
has acted on behalf of Hamas, a notorious terrorist organization.
The record showed that the foundation had financial ties with
Hamas since 1989; its leaders have actively met with Hamas
leaders; it funds Hamas-controlled organizations; and it provides
financial support to the families of captured or killed Hamas
terrorists. The designation occurred just three months after
the September 11 attacks, and shortly after the President
had declared a national emergency to address potential attacks
and curtail terrorist financing.
Although the court opined that it probably lacked jurisdiction
to entertain the takings claim (since the Tucker Act funnels
most monetary claims against the U.S. to the Court of Federal
Claims), it nonetheless addressed the merits and ruled that
the claim fails. Because the eight-month blocking order does
not vest the blocked assets in the government, it is a mere
temporary deprivation that does not work a taking. The Court
concluded, however, that the plaintiff might "some day
have a credible argument that the long-term blocking order
has ripened into a vesting of property in the United States,"
at which point a more viable claim might arise. The court
also rejected the plaintiff's claim under the Religious Freedom
Restoration Act, holding that it had failed adequately to
allege a substantial burden on the exercise of religion.
Expect similar takings cases to be brought as the War on
Terrorism continues.
SEPTEMBER 2002
Claims Court Nominees Promote Court's Rightward Tilt
The U.S. Court of Federal Claims (CFC) has been on an ideological
tear of late, with decisions like Rose Acre Farms,
The Stearns Co., and Tulare Lake Basin pushing
the boundaries of takings law and undermining important environmental
protections. Such decisions have emboldened property rights
advocates into filing a $1 billion regulatory takings lawsuit
against the United States in the CFC, challenging restrictions
on irrigation water from Klamath Lake in Oregon needed to
protect coho salmon and other endangered fish. The water withdrawal
at issue marks the first time since the Klamath Project irrigation
system opened in 1907 that the U.S. has acted in the interest
of commercial fishers and Indian tribes, who have suffered
for years due to declining salmon runs. The $1 billion price
tag illustrates the stakes at issue to taxpayers in CFC takings
rulings.
That's why nominations to the CFC are so important. At a
hearing on the nomination of Larry Block, Senate Judiciary
Chairman Patrick Leahy (D-Vt.) criticized Block for spending
"much of his legal career advancing a very specific and
ideological political agenda" and the Administration
for "proceed[ing] unilaterally" in nominations to
the CFC "without consultation" with Committee Democrats.
Noting Senator Orrin Hatch's (R-Utah) blockage of President
Clinton's nominees to the CFC, Senator Leahy urged President
Bush to "restore some sense of fairness to the process
of nominations to the Court of Federal Claims."
Astonishingly, the Bush Administration's response this month
was to nominate avowed libertarian Victor Wolski to the CFC.
A 39-year old former lawyer for the Pacific Legal Foundation,
one of the most extreme property rights groups in the country,
Wolski stated in 1999 that "every single job I've taken
since college has been ideologically orientated, trying to
further my principles."
At a hearing Sept. 19, in which the Judiciary Committee approved
Block's nomination, four Democratic senators spoke out against
attempts to pack the CFC with property rights zealots who
would undermine environmental, health, and safety regulations.
Let's hope the Committee stands firm and confirms judges who
will apply the law fairly, not those with ideological axes
to grind.
AUGUST 2002
Takings Alerts Judge Loren
Smith Strikes Again
Earlier this month, Senior Judge Loren Smith of the U.S.
Court of Federal Claims ignored an armload of binding precedent
in upholding a takings challenge to federal mining protections
in The Stearns Co. v. United States, No. 594-89 L (August
5, 2002). The case involves the application of the Surface
Mining Control and Reclamation Act of 1977 (SMCRA) to 47,000
acres of land in Daniel Boone National Forest in Kentucky.
In 1986, the Interior Department determined that Stearns does
not have "valid existing rights" under SMCRA (which
would have allowed Stearns to mine without further ado), but
Interior made clear that Stearns could mine if the mining
is compatible with other uses. Instead of seeking such a compatibility
determination, Stearns sued for a taking.
Judge Smith ruled the Interior Department worked "a
physical taking" of Stearns's mineral rights when it
concluded that Stearns lacked valid existing rights. This
is quite a peculiar conclusion given that the government physically
took nothing: it obtained no right to mine or use the coal.
Peculiar also because two Supreme Court takings landmarks,
Mahon and Keystone, involved similar restrictions
on mining rights and both were evaluated as regulatory, not
physical, takings. Tahoe-Sierra, decided in April,
emphasizes the clear and important distinction between physical
and regulatory takings. Judge Smith cites none of these cases
in his cursory discussion of the merits.
Equally bizarre is Judge Smith's ruling on ripeness. The
government argued that the case is unripe because Stearns
had not applied for a compatibility finding, a process one
witness described as a "rubber stamp." Judge Smith
concluded, however, that even if the finding were issued,
it would "not change the fact that Stearns' right to
mine has been fundamentally altered." This conclusion
ignores the basic precept that simply subjecting land to a
permitting scheme never works a taking.
Shortly before taking senior status, then-Chief Judge Smith
rendered one of the most expansive regulatory takings rulings
ever, in Florida Rock Indus. v. United States, 45 Fed.
Cl. 21 (1999). Let's hope that on appeal, the Federal Circuit
applies the proper corrective to his recent innovation in
the physical takings arena.
JULY 2002
Takings Alerts
Need to stay abreast of the latest takings developments as
they happen? Earthjustice Senior Legislative Counsel Glenn
Sugameli runs a low traffic listserve aimed at attorneys and
planners defending against takings claims. To sign up or for
more information, contact Glenn Sugameli, Earthjustice, gsugameli@earthjustice.org
or 202-667-4500 x 221.
JUNE 2002
The Block Nomination
With exclusive jurisdiction over most takings claims against
the federal government, the Court of Federal Claims (CFC)
already has several judges who distort the Takings Clause
to thwart environmental protections. Now Congress is about
to consider another extreme nomination, Lawrence Block.
During much of the 1990s, Block was the lead Senate staff
proponent of legislation to redefine takings in a manner that
would have required the government to pay compensation for
even slight diminutions of value. Although these bills would
have overturned decades of Supreme Court jurisprudence, Block
asserted that the measures would only codify existing law
on what constitutes a takings.
Block's record on takings issues indicates he would have
few qualms adopting a radical takings compensation standard
similar to the one he promoted in Congress. The nomination
may come before the Senate Judiciary Committee within the
next few weeks, and we are urging the committee to reject
the nomination. We'll keep you posted on developments.
MAY 2002
A Week to Forget for Joe Biden
A dozen years ago, Senator Joe Biden (D-Del) was ahead
of the curve in understanding the threat of expansive takings
theories, questioning Clarence Thomas and other judicial nominees
vigorously on their views of the extreme takings theories
posed by Professor Richard Epstein, and spearheading the opposition
to federal takings bills.
Two votes this past week suggest that Biden has badly lost
his way on takings issues. First, there was his inexplicable
decision to vote, initially at least, to oppose the Kerry
Amendment to the trade promotion bill in the Senate (see March
2002 Takings Watch). The Kerry Amendment would have ensured
that foreign corporations have no greater legal right to sue
than the U.S. Constitution's Takings Clause grants domestic
corporations. Senator Biden had to get unanimous consent of
the Senate after the voting had ended to change his vote to
support the Kerry Amendment. The Kerry Amendment failed by
a final vote of 55-41.
Even more disturbing was Biden's unfathomable decision to
break ranks with other Democrats and support the nomination
of Judge Brooks Smith to a position on the Third Circuit.
As the New York Times noted in an editorial opposing Smith's
confirmation, "other courts have roundly rejected"
Smith's "expansive reading of the Fifth Amendment's Takings
Clause." The Washington Post opposed Smith for ethical
lapses including his "unacceptable defense of his attendance
at privately funded judicial junkets" that tout radical
property rights theories.
At Smith's confirmation hearing, Biden seemed poised to lead
the charge against the Smith nomination, threatening a filibuster
on the Senate floor. When the nomination came up for a Committee
vote, however, Biden gave a rambling and contradictory statement,
concluding in a not particularly statesman-like fashion that,
despite the numerous problems with the nomination: "I'm
going to vote for this guy." Two Democrats followed Biden's
lead, sending the Smith nomination to the floor on a 12-7
vote.
APRIL 2002
A Friend Indeed
Those of us who file friend-of-the-court briefs
might wonder whether they have any real impact. In March 14
remarks at Georgetown University, Justice Sandra Day O'Connor
reaffirmed the value of amicus briefs, observing that "they
are read" and play an important role.
Justice O'Connor offered two bits of advice for brief writers.
First, she encouraged amici to avoid "me too" briefs
that parrot the arguments of the parties, and instead to "have
a different take" on the case. Her observations echo
Supreme Court Rule 37, which explains that an amicus curiae
brief that offers a fresh perspective or new information "may
be of considerable help to the Court," whereas a brief
that does not do so "burdens the Court, and its filing
is not favored."
Second, she cautioned brief writers against circumventing
the Court's rules on page limits by including lengthy footnotes
in an attempt to shoehorn additional material into the brief.
"Don't play that game, please!," she exclaimed.
Her remarks track those of other appellate jurists, some of
whom have eliminated all footnotes from their opinions in
an effort to make them more readable.
In a nutshell, potential friends of the Court should determine
whether they have something new to add and, if so, offer it
concisely. That's sage advice no matter which court you are
seeking to befriend.
MARCH 2002
Trading Away Community Rights
Imagine a new Takings Clause that affords special protections
to foreign corporations operating in the United States, allowing
them to seek millions of dollars in takings challenges to
laws that would pass muster under the U.S. Constitution. And
suppose this new provision could be used to attack all kinds
of state and local laws that protect human health, the environment,
worker safety, and other vital public interests. And then
imagine that foreign investors could bring these challenges
in secret arbitration tribunals, whose rules limit public
access to files and deny neighboring landowners and interested
third parties the right to intervene.
This nightmare scenario is unfolding right now as the U.S.
Congress considers trade promotion legislation. The bill --
the "Bi-partisan Trade Promotion Authority Act of 2001"
(H.R. 3005) -- passed the House by one vote (215-214) on December
6, 2001, and will be taken up by the Senate this Spring. The
bill would authorize U.S. negotiators of international trade
agreements to establish "standards for expropriations,"
language that does not require the negotiators to adhere to
U.S. Supreme Court precedent under the Takings Clause of the
Fifth Amendment. And once a trade agreement has been negotiated,
it becomes subject to an "up or down" vote in the
Congress, without the opportunity to modify the agreement
through amendment.
Would U.S. negotiators give away the store if handed this
open-ended authority? Many think they already did so in NAFTA,
which contains a broad expropriation provision that has produced
several very disturbing claims. A NAFTA arbitration panel
assessed a $17,000,000 award for lost profits against Mexico
based on a local government's denial of a permit for a hazardous
waste facility, even though the constitutional Takings Clause
has never been read to guarantee a profit. A Canadian company
is seeking nearly a billion dollars in compensa-tion due to
California's ban on a gasoline additive, MTBE, that harms
groundwater. A Canadian developer has brought a NAFTA claim
against a Boston redevelopment agency even though the state
supreme court rejected the claim. Another Canadian firm seeks
$725,000,000 due to the award of punitive damages in a civil
action. Indeed, in the eight years since NAFTA's ratification,
roughly 20 expropriation claims have been filed for compensation
in excess of two billion dollars.
Like the failed federal takings legislation that arose out
of the Contract with America, expropriation provisions in
trade agreements could require U.S. taxpayers to pay corporations
and others for simply following the law. Tufts University
researchers estimate that the pending trade promotion legislation
could lead to $32 billion in claims every year.
Sen. John Kerry (D-Mass.) plans to introduce an amendment
on the Senate floor that ensures that foreign investors are
not afforded greater legal rights to sue than the U.S. Constitution
affords domestic investors. We'll keep Takings Watch readers
posted on further developments.
FEBRUARY 2002
Tahoe Oral Argument Transcript
A transcript of the Jan. 7 U.S. Supreme Court oral argument
in the Tahoe moratorium case is available on CRC's web site
at http://www.communityrights.org. This transcript identifies
the name of the Justice asking each question, which makes
it a more interesting and illuminating read than the transcript
provided by most other sources.
JANUARY 2002
Remembering Peter Milius
Those who oppose outlandish reinterpretations of takings
doctrine lost an ally on January 10 with the sudden death
of Peter Milius at the age of 64. Peter was an editor and
editorial writer at the Washington Post. Although Washington
Post editorials are unsigned, many in the takings community
know that it was Peter who crafted the Post's first critiques
of federal takings bills.
As early as February 1995, Peter sounded the alarm on the
compensation bills that flowed from the Contract with America.
In a 1997 editorial entitled "Son of Takings," Peter
took on the National Association of Home Builders' takings/ripeness
bill, noting the hypocrisy among politicians who proclaimed
themselves to be federalists and yet supported the bill's
unprecedented shift of control over land-use issues from local
officials to federal courts.
Takings was, of course, only a tiny sliver of Peter's bailiwick.
He was perhaps best known for his editorials on welfare reform,
for which he was nominated as one of three finalists for a
Pulitzer Prize. But his approach to takings characterized
the entirety of his work. He rendered complex policy debates
into plain English arguments; he insisted on reading the actual
bill language, not just the talking points; he brought a meticulous
eye to the nooks and crannies of legislation to determine
how it would affect the lives of ordinary people; and he recognized
the need to balance competing concerns.
Indeed, balance was the hallmark of his thinking and writing.
He viewed takings jurispru-dence as a balanced effort to consider
all relevant factors -- an approach he described as "muddy"
but "usefully so" -- and he therefore bristled at
proposed compensation schemes that considered only lost profits
at the expense of the public good.
His colleagues at the Post remember not only his tremendous
talent, but also his unfailing generosity and self-deprecating
sense of humor, all-too-rare characteristics for a person
of influence in our nation's capital. Peter's voice will be
greatly missed.
To read Eye on Washington from our 2001 issues, click
here.
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