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DECEMBER 2004
Claims Court Rejects Wetlands Taking Claims
Norman v. United States, No. 95-667L (Fed. Cl.
Dec. 10, 2004)
In an unusually detailed, 94-page opinion, the U.S. Court
of Federal Claims this month rejected a developer's multi-million
dollar claim that wetlands protections affecting 220 acres
of a 2,280-acre ranch in Reno, Nevada, constituted a taking.
During the 1980s and 90s, the Normans assembled a 2,280-acre
tract of property. The U.S. Army Corps of Engineers determined
that 230 acres of the property were wetlands. In 1999, the
Normans sought and received a Section 404 permit to construct
a multi-purpose residential, commercial, and industrial development
on the property. The permit allowed the Normans to fill some
61 acres of wetlands in exchange for restoring roughly 220
wetland acres. The Normans filed a takings suit over these
restrictions, asking for $34.2 million in compensation.
The Normans argued that the restrictions constituted a physical
taking of property under Loretto, an impermissible
exaction under Nollan, a categorical regulatory taking
under Lucas, and a regulatory taking under the multi-factor
test of Penn Central. The Court rejected the
physical taking claim, noting that although the Corps placed
a permanent condition on the plaintiffs' land by requiring
protection of the wetlands, "the government did not occupy
or take physical possession of the lands." Nor is the
condition unconstitutional under Nollan because requiring
the creation of new wetlands in exchange for the right to
fill other wetlands "epitomizes the connection that was
lacking in Nollan."
The court's extensive discussion of precedent is also notable
for its treatment of the parcel-as-a whole issue. The court
declined the Normans' invitation to consider only the 220
wetland acres as the relevant parcel after determining that
"the 2280 acre Development was to be developed as part
of an overall single scheme." The court then rejected
both the Normans' categorical and Penn Central
claims, finding that the 220 acres retained value as open
space and as part of the development project's flood control
and flood detention facilities.
NOVEMBER 2004
Pot in the Supreme Court
As discussed above, States, in briefs filed over the past
decade, have argued that the Court is misfiring in its federalism
jurisprudence for two reasons. First, the Court has been too
quick to stamp out state experimentation. Second, the Court
has been too aggressive in striking down federal laws as beyond
Congress's authority under the Commerce Clause, despite arguments
by States about the need for a federal role to address national
problems.
This second issue is front and center in a battle this term
over medical marijuana. In Ashcroft v. Raich, No. 03-1454,
argued on November 29th, the Court is considering whether
the Commerce Clause allows Congress to regulate the cultivation
and distribution of drugs in a comprehensive manner that sweeps
into its purview intra-state drug production.
Angel Raich is a very sick woman who makes a sympathetic
spokesperson for the need for medical marijuana. But her legal
claim, pressed by Randy Barnett, a law professor with extreme
anti-government views, is meritless. More than 60 years ago
in Wickard v. Filburn, the Supreme Court ruled that
the federal government could regulate the production of small
amounts of wheat grown for personal consumption as a part
of a comprehensive effort to regulate the interstate wheat
market. If Wickard is still good law, Raich
is easy. If Raich wins, on the other hand, the floodgates
will open to claims that health, safety, and environmental
protections are beyond federal power.
CRC filed an amicus brief in Raich in support of the
federal government.
OCTOBER 2004
U.S. Supreme Court to Hear Chevron "Substantially
Advance" Case
On October 12, the U.S. Supreme Court agreed to review Lingle
v. Chevron U.S.A., Inc., No. 04-163, which presents the
question of whether a regulatory taking occurs where government
action does not substantially advance a legitimate state interest.
The Chevron case-styled below as Chevron v. Bronster,
363 F.3d 846 (9th Cir. 2004)-involves a takings challenge
to a Hawaii law designed to promote competition in the retail
gasoline market. To ensure continued price competition at
the pump, Hawaii lawmakers passed Act 257, which prohibits
oil companies from converting independent lessee gas stations
into company-operated gas stations. The law also places a
ceiling on rents charged by oil companies to prevent them
from driving independent lessees out of business. Chevron
challenged Act 257 as an uncompensated taking of property
because, in its view, the rent cap fails to advance a legitimate
government purpose.
The trial court gave no deference to the State's legislative
judgment and held that Act 257 works an unconstitutional taking
of property because it does not substantially advance a legitimate
public interest. The Ninth Circuit affirmed, applying heightened
scrutiny, rejecting the familiar rational basis test typically
applied under the Due Process Clause, and giving no deference
to the views of the State legislature regarding the wisdom
of the law. In essence, the Ninth Circuit and trial court
invalidated Act 257 because they disagreed with the State's
elected lawmakers that the measure would advance the interests
of Hawaii consumers. The courts articulated a naked preference
for Chevron's economic views and rejected the State's legislative
judgment as to the efficacy of Act 257, much as the Court
in Lochner v. New York, 198 U.S. 45 (1905), concluded
that New York's worker protection laws were unnecessary and
unwise.
Community Rights Counsel filed an amicus brief in support
of Hawaii's petition for certiorari on behalf of state and
local organizations, and will do so on the merits as well.
SEPTEMBER 2004
Federal Circuit Marks Shift in Takings Jurisprudence
Bass Enters. Prod. Co. v. United States, 2004 WL 1925615
(Fed. Cir. Aug. 31, 2004)
The Federal Circuit's latest ruling rejecting a mining company's
claim for compensation for a forty-five month delay in issuing
a permit signals an important shift in the court's takings
jurisprudence and demonstrates the impact of the landmark
Tahoe-Sierra ruling.
In 1996, Bass Enterprises won an $8.9 million judgment in
the Court of Federal Claims after alleging that the Bureau
of Land Management's delay in approving an application to
drill for oil and gas near Carlsbad, New Mexico constituted
a permanent taking under Lucas. BLM originally denied the
permits pending an EPA decision on whether drilling would
conflict with a plan to create a storage facility for nuclear
waste in the area, but later granted the company a permit
to drill. In light of the approval, the Federal Circuit reversed
the decision in 1998, but remanded for consideration of whether
the forty-five month delay constituted a temporary taking.
Just prior to the Supreme Court's ruling in Tahoe, the trial
court held that the permit delay was a temporary taking. On
reconsideration after Tahoe, the court reversed itself and
rejected the claims.
The Federal Circuit's decision last month acknowledged the
necessity of a significant change in its jurisprudence as
well. "Based on Palazzolo and Tahoe-Sierra, our recent
decisions mark a return to the pre-Lucas evaluation of the
'character of the Government actions' factor. We therefore
consider the purpose of the regulation and its desired effects
in determining whether a taking has occurred." Importantly,
the court also distanced itself from its prior takings rulings
in Loveladies Harbor v. United States and Palm Beach Isles
Assocs. v. United States, which held inapplicable under Lucas
the "weighing of public versus private interests in determining
whether a taking has been effected."
By recognizing the important public interests that may underlie
regulatory delays, the court has handed the government an
important victory.
AUGUST 2004
Another Takings Challenge to a National Security Initiative
With the third anniversary of September 11 approaching, the
Federal Circuit recently addressed yet another takings challenge
to a U.S. national security initiative, El-Shifa Pharmaceutical
Industries Co. v. United States, No. 03-5098 (Fed. Cir.
August 11, 2004). In El-Shifa, the claimants sought
$50 million in compensation, arguing that the United States
took their property when U.S. armed forces destroyed a pharmaceutical
manufacturing facility in Sudan. President Clinton ordered
the cruise missile strikes in response to the 1998 truck bomb
attacks on U.S. Embassies in Kenya and Tanzania that killed
more than 200 people. The President explained that the U.S.
response was designed to disrupt al-Qaeda's terrorist network
and destroy parts of its infrastructure, and that the plant
was being used to produce chemical weapons for terrorists.
The claimants denied any links between the plant and terrorist
activity.
The U.S. Court of Federal Claims dismissed the complaint
for failure to state a claim. The Federal Circuit affirmed,
holding that courts have no authority to review a President's
designation as "enemy property" the property of
aliens located outside the United States. Such decisions,
in the court's view, are nonjusticiable political questions.
El-Shifa is akin to several other takings challenges
to national security measures discussed in our September 2001
and October 2002 newsletters. We hope those who promote sweeping
federal takings bills keep the broader ramifications of their
efforts in mind.
JULY 2004
Federalism in the 2004 Term
Several cases in the upcoming Term will give the U.S. Supreme
Court an opportunity to bring clarity to its federalism revival.
In Ashcroft v. Raich, No. 03-1454 (cert. granted June
28), the Court will decide whether Congress has authority
under the Commerce Clause to restrict the medical use of marijuana.
While we have great sympathy for anyone who needs marijuana
to alleviate the side-effects of serious illnesses, Community
Rights Counsel will file an amicus brief arguing that this
debate should be resolved in the political process, not in
the courts through a miserly reading of the Commerce Clause.
In Bronster v. Chevron USA, Inc., the State of Hawaii
soon will be asking the Court to review a ruling by the Ninth
Circuit that struck down a statute that controls the rent
that oil companies may charge service stations. The court
invalidated the law as a "taking" of property based
on its conclusion that the law does not substantially advance
a legitimate government purpose. The circuit split created
by the Ninth Circuit's ruling raises a question of historic
proportions: May courts invoke the Takings Clause to resurrect
heightened, Lochner-esque scrutiny of economic regulation?
We plan to file an amicus brief on behalf of state and local
government groups in support of Hawaii's cert. petition.
Finally, in Bates v. Dow Agrosciences LLC, No. 03-388
(cert. granted June 28), the Court will decide whether federal
law preempts state remedies against an herbicide manufacturer
for breach of warranty, fraud, and failure to warn. Federal
pesticide law prohibits states from imposing "requirements
for labeling or packaging" but authorizes them to regulate
the sale or use of pesticides. The Supreme Court has sent
inconsistent signals on whether the term "requirement"
embraces state common law actions. The Court should reaffirm
that federal law does not preempt state remedies unless Congress
sends a clear and manifest signal of its intent to do so.
JUNE 2004
Federal Circuit Rejects Takings Challenge to ESA Protections
Seiber v. United States, 364 F.3d 1356 (Fed. Cir. April
19, 2004)
The Federal Circuit recently rejected a temporary takings
challenge that arose when the U.S. Fish & Wildlife Service
denied a logging permit under the Endangered Species Act to
protect nesting habitat for the northern spotted owl.
The Seibers own 200 acres of timber land in Oregon. Forty
acres of that parcel were designated as protected owl habitat
under the Act. In 1999, the Seibers applied for a federal
incidental take permit to allow for logging on the 40 acres.
The Service initially denied the permit, and the Seibers sued,
alleging a taking. In 2002, the Service revisited the property
and determined that a permit was no longer required because
the land was no longer a protected habitat under the Act.
The Seibers nevertheless pursued a temporary takings claim.
Rejecting a lower court ruling for the government on ripeness,
the Federal Circuit held that under Cooley v. United States,
324 F.3d 1297 (Fed. Cir. 2003), a permit denial is a final
decision even if the agency permits the applicant to revise
their application. On the merits, the Court rejected the Seibers'
claim that the permit denial constituted a physical taking
under Loretto, stating that "regulatory restrictions
… do not constitute physical takings." The court
declined to decide whether Agins presents a distinct
takings test based on the lack of a legitimate governmental
interest, noting that "even if it did, it is indisputable
in this case that the [Act and its permit] process serve a
legitimate public purpose." Although the court left open
the possibility that a similar regulation might result in
a temporary categorical taking, it ruled, citing Lucas,
that "such a thing did not occur here because the Seibers
did not lose all value in their parcel as a whole." Lastly,
the court held that the Seibers failed to establish a taking
under Penn Central because they did not provide evidence that
the two-year delay in harvesting a portion of their 200-acre
property had any economic impact.
Kudos to Kathryn Kovacs, Kelly Johnson, and Katherine Barton
who represented the government, and the Georgetown Environmental
Law & Policy Institute, which filed an amicus brief in
the case.
MAY 2004
Engine Mfrs. Ass'n v. South Coast Air Quality Mgmt.
Dist., 124 S. Ct. 1756 (2004)
In another clear sign that the Supreme Court's commitment
to federalism does not fully extend to cases alleging preemption
of state and local laws, last month the Court dealt a blow
to Southern California's efforts to improve its air quality
by requiring fleet owners to phase out diesel and other high-emission
cars and trucks.
The 8-1 ruling reversed a Ninth Circuit decision that previously
upheld rules requiring the owners of buses, trash trucks,
street sweepers, and other fleets to purchase clean fuel vehicles,
such as those powered by natural gas. Since the rules were
adopted, more than 5,000 vehicles have been replaced, reducing
emissions of smog precursors and cancer-causing soot.
The Court held that the Air Quality District's rules are
preempted by the federal Clean Air Act because they set "standards"
within the meaning of the act's ban on state or local standards
relating to the control of emissions from new motor vehicles.
The Court ruled that this prohibition extends to purchase
rules as well as manufacturing requirements. "If one
state or political subdivision may enact such rules, then
so may any other; and the end result would undo Congress's
carefully calibrated regulatory scheme," Justice Scalia
wrote for the court. CRC filed an amicus brief on behalf of
a broad coalition of state and local groups supporting the
state's position, arguing that the term "standard"
as used in the act's motor vehicle provisions applies only
to regulations imposed on manufacturers, not on fleet owners
and other vehicle purchasers.
Although the Court held that the Air Quality District cannot
require private fleets to buy new clean fuel vehicles on its
own, the court did not entirely foreclose the possibility
that California can enact similar rules. For one, the state
remains free to set its own requirements for government-owned
fleets and contractors where such rules "can be characterized
as internal state purchase decisions." Moreover, California
could petition the EPA to approve more sweeping rules that
would cover private fleets. The case is nonetheless a setback
for environmental federalism.
APRIL 2004
CFC Rejects Claim Alleging Taking of Fishing Trawler
Arctic King Fisheries, Inc. v. United States, 59 Fed.
Cl. 360 (2004)
A former owner of a fishing vessel is not entitled to compensation
for loss of value and related property interests resulting
from passage of the American Fisheries Act (AFA), the U.S.
Court of Federal Claims held in February. Congressional action,
the court held, reduced the value of the vessel by no more
than 50 percent, well below the threshold generally required
to find a regulatory taking. Most importantly, Judge Francis
Allegra distinguished the court's ruling in American Pelagic,
in which it held that singling out a vessel for regulation
could give rise to a temporary taking, finding the plaintiff's
claims here "wholly lacking in the proof of targeting
and animus that the court earlier found persuasive."
Built in 1968, the Arctic Trawler was one of the first
American factory trawlers to fish for pollack off the coast
of Alaska. Overcapitalization of the fishery in the 1990s,
however, sapped the vessel's profitability and prompted the
National Marine Fisheries Service to limit access to boats
that had been active in the fishery in recent years. In 1995,
the owners elected to fish in Russian waters, but they returned
the Arctic Trawler to Alaska in 1997 and put the boat
up for sale. The owners entertained offers in the $2 million
range, but were unable to close a deal. Congress passed the
AFA in October 1998, further limiting licenses to fishery
and buying out nine named factory trawlers for as much as
$10 million. Because the Arctic Trawler had no domestic catch
history after 1995, it was neither included in the buyout
nor permitted to reenter the fishery. The owners then sold
the vessel for $750,000, and filed suit alleging a taking.
The court first determined that the res at issue was the
vessel itself, not the value of the Arctic Trawler's
fishing rights or buyout benefits the owners might have received
under the AFA but did not. The court ruled that the regulatory
changes limiting access to the fishery were reasonably foreseeable
and that the vessel's owners gambled and lost by removing
the ship from Alaskan waters and allowing its domestic catch
history to lapse. Finding the AFA to be a comprehensive fishery
reform that neither interfered with investment-backed expectations
nor improperly targeted the vessel, the court rejected the
takings claim.
MARCH 2004
Ethical Laxity at Interior
A rotting fish stinks from the head down. This adage is borne
out by a recent Inspector General report describing ethical
lapses by Deputy Interior Secretary J. Steven Griles that
favored his industry allies at the expense of community welfare.
The report not only criticizes Griles personally for a "lax
understanding" of his ethical obligations, but also identifies
a deficient "ethical culture" and deep-seated "institutional
failure" at Interior to address conflicts of interest.
According to the report, while at Interior Griles repeatedly
dealt with industry clients of his former lobbying firm while
continuing to receive payments from that firm. The public
will never receive a full accounting of the conflicts, however,
because the investigation was thwarted by "an unanticipated
lack of personal and institutional memory." Indeed, the
report notes that when informed of the inquiry into his alleged
conflicts of interest, Griles cavalierly responded to investigators:
"Good luck."
More information on the report is available at: http://www.washingtonpost.com/wp-dyn/articles/A64647-2004Mar16.html.
FEBRUARY 2004
And Now, A Word From Our Readers at the Forest Service
An official from the U.S. Forest Service takes exception
to our December 2003 blurb on Walt Freeman's $600 million
takings challenge to federal efforts to block mining in the
environmentally-fragile Siskiyou region of southern Oregon.
In response to our assertion that Mr. Freeman would have
"little responsibility" for the environmental harm
caused by his proposed operations, Mike Doran of the Forest
Service's Minerals and Geology Management office wrote to
remind us that Mr. Freeman would be required to post a bond
and prepare a reclamation plan. We thank Mr. Doran for noting
these requirements. But the more pressing issue for us, and
we hope for the Forest Service, is whether these legal responsibilities
are adequate to the task. A 2003 report by the Mineral Policy
Center concludes that taxpayers could be liable for more than
$12 billion in clean-up costs at hardrock mining sites because
bond requirements fall far short of actual reclamation and
closure costs. See http://www.mineralpolicy.org/
publications/pdf/PuttingAPriceOnPollution.pdf. Moreover,
reclamation occurs only after the fact and often cannot repair
the damage mining does to environmentally-fragile lands like
those in the Siskiyou region. The U.S. Environmental Protection
Agency estimates that mining has polluted 40 percent of the
headwaters of all western waterways, and it ranks the mining
industry as the nation's worst toxic polluter. Id.
As applied to hardrock mining on public land, the text of
the General Mining Law has remained essentially unchanged
since its signing in 1872. That's why former Interior Secretary
Bruce Babbitt lampooned the law in a press conference by signing
a new patent with a quill pen, much as Ulysses S. Grant signed
the law itself. Many thoughtful people continue to view the
General Mining Law as a hopelessly antiquated relic in need
of serious reform. E.g., John Leshy, Mining Law
Reform Redux, Once More, 42 Nat. Resources J. 461 (2002).
For those who want more information about mining in the fragile
Siskiyou National Forest, including a breathtaking array of
photographs of the area, visit www.siskiyou.org.
JANUARY 2004
Upcoming Takings Appeals to the Federal Circuit: Critical
Opportunities to Set the Law Straight
Two of the most outrageous takings decisions of 2002 will
be back in court in coming months. On Feb. 3, the Federal
Circuit will hear oral argument in Rose Acre Farms v. Madigan
(Sept. 2002 Takings Watch), in which the trial court awarded
millions of dollars to one of the nation's largest egg producers
after ruling that government restrictions on the sale of potentially
salmonella-contaminated eggs constituted a taking. The case
has special importance in light of the recent mad cow and
avian flu outbreaks. We filed an amicus brief showing that
these public health protections are not a taking. Later this
Spring, the Federal Circuit will review Judge Loren Smith's
ruling in Stearns Co. v. US (Aug. 2002 Takings Watch)
that the Interior Department worked a physical taking of Stearns's
mineral rights when it concluded that the company lacked "valid
existing rights" to mine in the Daniel Boone National
Forest, even though Stearns probably could have received permission
to mine anyway. We will be filing an amicus brief in Stearns.
On Feb. 6, the Federal Circuit will hear argument in Bass
Enterprises v. US, which explores the application of the
landmark Tahoe ruling to temporary restrictions on
oil and gas leases. We will keep you apprised of developments
in all three cases.
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