DECEMBER 2003
Court Rejects Company's Efforts to Force State Buyout
of Oil Leases
It would take considerable chutzpah for a venture oil company
that has no income, no partners, and has never produced
a drop of oil to seek a state buyout of oil and gas leases
that most likely contain no mineral resources. But that's
exactly what took place in the case of Coastal Petroleum
Co. v. State, No. 02-4712 (Fla. Dist. Ct. App, Dec.
3, 2003) (per curiam). In a sharply-worded order, however,
a Florida appellate court this month saw through the company's
ruse and held that denial of an offshore drilling permit
did not give rise to a taking.
The Coastal Petroleum Company acquired leases to potential
oil resources in the Gulf of Mexico just north of Tampa
Bay in 1941. The company made little effort to develop the
resource and in 1976 entered into an agreement that obligated
it to seek the necessary environmental permits before drilling.
Although the Florida Department of Environmental Protection
initially granted a permit in 1996, this permit was invalidated
by a state court, which ruled that the environmental risks
of drilling far outweighed the speculative potential of
recovering oil from the lease. The company in turn filed
a takings claim.
In 50 years of doing business, Coastal Petroleum has never
produced any oil or made a profit, yet it sought hundreds
of millions of dollars in compensation for its "losses."
Circuit Judge Ralph Smith Jr. correctly rebuffed this transparent
attempt to get rich off the back of Florida's taxpayers.
In rescinding the permit, the court said, the state had
merely exercised its contractual right to insist that the
company secure permits under existing environmental laws.
NOVEMBER 2003
Property Rights "Scholar" Caught Plagiarizing
PR Firm
Doesn't it seem like the property rights movement makes
the same tired arguments over and over again? Now we have
the explanation.
Samuel Staley is the president of a property rights "think
tank" called the Buckeye Institute and a frequent apologist
for sprawl. Recently, Staley and his colleague Joshua Hall
submitted an op-ed to the Columbus Dispatch suggesting
that Ohio privatize its workforce to save money. An alert
reader noticed that the same basic text turned up two weeks
earlier in a Baltimore Sun op-ed by Geoffrey Segal
of the libertarian Reason Public Policy Institute.
Coincidence? No. In a meeting with the Dispatch's
editorial page editor, Staley admitted that the research
and text of his op-ed came from an Alexandria, Virginia,
PR firm that prepares such pieces for people who will submit
them (or a version of them) to newspapers in their columns.
Staley has now been barred from publishing again on the
opinion pages of the Columbus Dispatch. For the full
story, go to http://libpub.dispatch.com/cgi-bin/documentv1?DBLIST=cd03&DOCNUM=43688&TERMV=41566:6:46754:
6:51930:6:.
OCTOBER 2003
Let's Play Hardball
We thought we had seen it all. But the recent strong-arm
tactic by the claimant's attorney in McCarran International
Airport v. Sisolak, No. 41646 (Nev. S. Ct.) takes the
cake.
Sisolak involves a takings challenge to county height
restrictions around McCarran International Airport. The
trial court awarded the landowner more than $16.6 million
even though the County previously approved a development
plan for the land that included a four-story resort hotel,
a 33,050 square foot casino, and other structures. In light
of the potential ramifications of an adverse ruling on appeal,
several amici are supporting the defendants, including
the American Planning Association (represented by Community
Rights Counsel).
After the amicus briefs were filed, the claimants' counsel
filed motions to conduct discovery on amici. That's
right, discovery on amici, while the case is pending
on appeal before the state supreme court. The defendants
have filed hard-hitting oppositions representing to the
court that amici forcefully object to this transparent
effort to chill amicus participation. The court should summarily
deny the motions.
UPDATE
Last month's Outrage reported
on a paper by Professor Cass Sunstein and others that reached
the counterintuitive conclusion that the party affiliation
of judges makes no difference in the outcome of takings
cases. In response to a letter expressing our concerns,
we received a very generous reply from Professor Sunstein,
thanking us for our views and indicating that he will take
them into account as he prepares the final version of the
paper.
SEPTEMBER 2003
Takings and Parties: A Skewed View from the Ivory Tower
Three academics, including Professor Cass Sunstein, have
published a report concluding that while party affiliation
correlates with how federal appellate judges rule on many
issues, it plays no significant role in takings cases. The
report (available at http://www.aei-brookings.org/publications/abstract.php?pid=374)
concludes that "Republican and Democratic appointees
vote essentially alike" in takings cases.
Our flabbers have never been so gasted. Consulting with
other practictioners, we had a hard time thinking of a single,
recent federal appeals court case finding a taking that
did not involve a panel with a Republican majority. (We
came up with one from 1992, Nixon v. U.S., a D.C.
Circuit ruling involving presidential papers.) Deep ideological
division characterized Tahoe-Sierra in the Ninth
Circuit, with the denial of rehearing en banc pitting Judge
Alex Kozinski and three other Republican appointees against
Judge Stephen Reinhardt and other Democratic appointees.
The Fifth and Ninth Circuits produced party-line divisions
in takings challenges to IOLTA programs. These and other
rulings led us to question how the report could reach such
a counterintuitive conclusion.
First, we believe the Paper's methodology underemphasizes
the role of ideology by focusing on absolute numbers, disregarding
the relative importance of individual cases. Suppose a balanced
mix of judges were to reject takings challenges to 100 routine
land-use decisions, but Republican-appointed judges sustained
three takings challenges that gutted key protections for
endangered species, wetlands, and public lands. The absolute
numbers might suggest no significant ideological influence,
but the results could constitute a radical revolution in
the law.
Second, the results might well be skewed by the rules imposed
on takings claimants under Williamson County. Developers
frequently disregard these requirements, resulting in a
large number of federal appellate rulings rejecting takings
claims on procedural grounds. These procedural dismissals,
however, are explained not by a lack of sympathy for takings
claims on the merits, but by a desire to avoid premature
adjudication.
Third, the Paper appears to disregard rulings from the
Federal Circuit, the court with exclusive appellate jurisdiction
over the vast bulk of takings challenges to federal protections.
Those who litigate in the Federal Circuit know all too well
that party affiliation plays a significant role in takings
cases. The same ideological division holds true at the U.S.
Court of Federal Claims. Consider the rulings by this court
that federal wetland protections constitute a taking; all
but one were rendered by a single Republican-appointee,
Judge Loren Smith.
We have expressed these concerns in a letter to Professor
Sunstein and eagerly await his response.
AUGUST 2003
Rightly Criticizing for the Wrong Reason
In an August 1 speech on judicial nominees before the American
Constitution Society, Senator Hillary Clinton criticized
the Federalist Society for arguing that the 1954 ruling
in Brown v. Board of Education created a "Constitution
in Exile" that needs to be restored. And she implied
that the Bush Administration is committed to appointing
federal court nominees who would revive the Constitution
in Exile and, among other things, undermine Brown.
She's right to warn of the effort to revive this
so-called Constitution in Exile, but wrong about the alleged
connection to Brown.
Chief Judge Douglas H. Ginsburg of the D.C. Circuit coined
the phrase "Constitution in Exile" in a 1996 book
review to describe the non-delegation doctrine and a host
of other legal theories he believes courts have wrongly
neglected. In addition to the non-delegation doctrine, Chief
Judge Ginsburg highlighted an expansive takings jurisprudence
and a revitalized approach to substantive due process as
part of the Constitution in Exile whose return he is working
to achieve.
In 1999, Chief Judge Ginsburg attempted to resurrect the
Constitution in Exile by using an extreme application of
the non-delegation doctrine to strike down clean air protections
that prevent thousands of premature deaths each year. That
decision was short lived, however, because Justice Antonin
Scalia authored a unanimous opinion reversing the ruling,
a repudiation aptly characterized by former Solicitor General
Seth Waxman as a "thoroughgoing rebuke of the D.C.
Circuit's little escapade."
Given the threat posed by the Constitution in Exile theory
to environmental safeguards and other community protections,
as well as its promotion of radical takings theories, we
welcome public exposure of its many flaws. But Senator Clinton
erred badly in linking the project to Brown. Elsewhere
in the speech, she reprised her "vast right wing conspiracy"
rhetoric to suggest that the conspiracy (presumably including
the Bush Administration and its judicial nominees) would,
among other things, return us to the days "before
Brown when people were told that in this country we
should try to integrate our schools and provide equal opportunity
in fact, not just in theory." But when asked about
Brown, nominees have tripped over themselves to explain
why their views are consistent with that ruling. While some
nominees are open in their desire to revise precedents in
takings and other areas, there is no evidence that any of
them would urge a reconsideration of Brown. Given
Brown's preeminent place in our law and society,
it is no small thing to accuse your political opponents
of seeking to undermine it.
The Constitution in Exile theory no doubt deserves its
own Outrage column, but credible opposition to the theory
is undermined by ill-informed allegations. When evaluating
judicial nominees, we should focus on threats that are real,
not imagined.
JULY 2003
Property Rights Extremist Nominated to the D.C. Circuit
Our April 2002 Outrage was devoted to the latest in a series
of wacky expositions on takings law written by California
Supreme Court Justice Janice Rogers Brown. Justice Brown's
dissent in San Remo v. San Francisco (2002) began
with the assertion that "Private property * * * is
now entirely extinct in San Francisco," (query: if
this is true, why does a row house on Nob Hill cost $1 million?),
and went downhill from there.
Responding then to rumors that Justice Brown had somehow
found her way on to President Bush's short list of potential
Supreme Court nominees, we expressed the hope that President
Bush would think hard about this judge's radical views on
property before nominating her to the U.S. Supreme Court.
One might say we got our wish, but the net result is not
much better. Last week, President Bush nominated Justice
Brown to a lifetime position on the U.S. Court of Appeals
for the D.C. Circuit.
While takings cases represent a miniscule part of the D.C.
Circuit's caseload, the circuit has exclusive jurisdiction
over many challenges to important health, safety, and environmental
protections. Justice Brown's position that government regulation
can only be sustained if property owners would agree in
advance that the regulation is "appropriate and mutually
beneficial" suggests that she could have a field day
on the D.C. Circuit striking down such regulations. But
as the majority declared in response to Brown's dissent,
"nothing in the law of takings would justify an appointed
judiciary in imposing that, or any other, personal theory
of political economy on the people of a democratic state."
The Constitution simply "does not enact the late Robert
Nozick's 'Minimal State.'"
Justice Brown is not the only property rights extremist
nominated by this President. Lawrence Block, a chief architect
of the radical takings compensation legislation proposed
as part of the Contract with America, is already a judge
on the Court of Federal Claims. Victor Wolski, a former
Pacific Legal Foundation lawyer and self-professed ideologue
on property rights issues, was also confirmed to the CFC
on July 9, 2003, by a contentious 54 - 43 vote. The nomination
of Justice Brown, whose views often mirror those of extreme
property rights theorist Richard Epstein, should be given
the closest scrutiny by the U.S. Senate.
JUNE 2003
The Blame Game
Prior to Tahoe, during the many years that state
and local officials endured a takings victory drought of
biblical proportions in the U.S. Supreme Court, they generally
took their lumps with civility. Disagreements with outcomes
and rationales were expressed with dignity and decorum.
Not so with many developer lawyers, whose losses provoke
howls of protest that question not only judicial reasoning
but judicial integrity. For example, on the American Bar
Association's LANDUSE Listserve, one member of the claimants'
bar recently blamed his losses on judicial deception: "This
treatment cannot be attributed to ignorance. It is uniform
judicial mendacity stemming, I guess, from the judges' membership
in the elite group that enjoys sovereign immunity, and,
therefore, total unaccountability. * * * I think reform
is impossible. Demonstrating mendacity to those who want
to believe in our system of justice is too difficult because
of the number of half-truths that obscure every case."
This diatribe is by no means an isolated example. Michael
Berger and Gideon Kanner have accused the Eleventh Circuit
of a "morally scandalous performance" and denounced
the entire judiciary for "callous insensitivity to
constitutional rights" and "years of quite deliberate
judicial obfuscation of takings law." 38 Santa Clara
L. Rev. at 874 n.145, 881-82. And as we noted in our July
2001 Outrage column, Pacific Legal Foundation questioned
Justice Stevens' opinion in Palazzolo by dismissing
him as senile.
Civility toward judges enhances public confidence in the
judicial system. We applaud state and local government counsel
for taking the high road and encourage our brethren on the
other side to do the same.
MAY 2003
NAHB Nixes APA Award
Mary Umberger of the Chicago Tribune reports that
Professional Builder, a developers' trade magazine,
has revoked an award it planned to give to the American
Planning Association to honor the APA's "Growing Smart
Legislative Handbook," a collection of model ordinances
designed to promote smart growth.
The magazine had planned to present the award at the 2003
convention held by the National Association of Home Builders
in Las Vegas, but it was pressured to quash the prize after
howls from some of its readers and the NAHB. Umberger writes
that the NAHB, which has no official connection to the magazine,
has devoted an entire section of its website to criticism
of the APA's Guidebook, and so it comes as no surprise that
they would not tolerate developer praise for the APA's work.
What does surprise and outrage is that the editors of Professional
Builder, who obviously saw some merit in the APA's work,
could be so easily bullied. Many developers embrace reasonable
smart-growth initiatives like those advanced by the APA,
and it's a shame that the developer press is not allowed
to speak this simple truth.
APRIL 2003
A Red Under Every Bed?
In February, we described the proposed agenda of the "Preserving
the American Dream" conference, which was recently
convened in our Nation's capital by the property rights
movement. In an on-the-scene update, Philip Langdon of the
Hartford Courant reports that the conference was
marked by over-the-top rhetoric and unseemly proposals.
Langdon writes:
"David Strom of the Taxpayers League of Minnesota,
urged opponents of smart growth to 'be relentless in undermining
the credibility of your opponents.' Strom depicted pro-transit
leaders as practitioners of of social engineering. * * *
'We made it sound like they were a bunch of commies.' Strom
told smart-growth opponents to wage merciless attacks. 'We
often make the mistake of assuming this is a battle over
who has the better facts,' he said. Quite the contrary,
whether smart-growth policies are adopted will hinge, he
asserted, on whether voters can be persuaded that the typical
smart-growth leader is 'a pointy-headed intellectual fascist'
trying to ruin people's lives."
Not to be outdone, Jon Caldara from the Independence Institute
urged anti-smart-growth forces to avoid looking like "cranky
white men" by casting smart growth as harmful to minorities
and women. While it comes as no surprise that the property
rights movement is substituting rhetoric for facts, Langdon
deserves kudos for laying the strategy bare in dramatic
fashion. His article appears at http://www.ctnow.com/news/opinion/commentary/hc-plclangdon0302.artmar02.story
MARCH 2003
A Bad Month For the CFC
Community Rights Counsel and a broad coalition of public
interest groups adamantly opposed Larry Block when he was
nominated to serve on the U.S. Court of Federal Claims (CFC)
primarily because he was a leading promoter of extreme federal
takings compensation and ripeness bills.
Our main concern, that Mr. Block (now Judge Block) would
issue extreme takings rulings, has proven unfounded to date.
A check of the CFC website suggests that Mr. Block has not
yet issued a single ruling on any case in his five months
as a CFC Judge. According to a statement by Senator Patrick
Leahy, the real concern appears to be that Block is up to
his old tricks:
I understand that [Judge Block] has spent a great deal
of time working on legislative matters from the bench in
the past few months, which causes me some concern as well,
given our Constitution's separation of powers and the need
for confidence that judges are not engaging in the political
process or continuing past political activities.
This adds support to our December 2002 Takings Watch
report, which discussed the relative paucity of cases for
CFC judges. We seem to have a Takings Watch reader
at The Washington Post, because many of the issues
raised in our December issue were echoed in a March 26 Post
editorial calling for CFC to be abolished. Meanwhile, the
Senate is rushing to confirm four new judges to the CFC,
including Victor Wolski, an avowed libertarian and former
attorney for the radical Pacific Legal Foundation who has
bragged that "every single job I've taken since college
has been ideologically oriented, trying to further my principles."
What a mess.
FEBRUARY 2003
Dream or Nightmare: You Make the Call
On February 23, property rights activists gathered in our
nation's capital to attend a three-day conference on "Preserving
the American Dream." Keith Schneider, a regular contributor
to The New York Times and Deputy Director of the
Michigan Land Use Institute, rightly denounces the conference
as designed to promote the "right to build anything,
anywhere."
According to Schneider, the proposed American dream is
based "on cars, cheap fuel, and suburban sprawl"
and will be advanced by "opposing public transit, ending
zoning, paving over farmland, and taking other measures
to ensure that sprawl survives." Agenda topics include
"Selling the Idea of Autos and Highways" (newsflash:
they're already pretty popular). Among those encouraged
to attend are "opponents of traffic calming measures,"
presumably because their right to careen around our neighborhoods
has been deeply eroded by speed bumps.
Conference cosponsors included unbiased, middle-of-the-road
groups like the Tennessee Road Builders Association and
the omni-present homebuilders. To read Keith Schneider's
excellent critique, go to http://www.mlui.org/growthmanagement/fullarticle.asp?fileid=16423
JANUARY 2003
Massachusetts Cigarette Disclosure Law Goes Up in Smoke
Philip Morris v. Reilly, 312 F.3d 24 (1st Cir. Dec.
2, 2002) (en banc)
The First Circuit ruled last month en banc that a Massachusetts
law requiring tobacco companies to give the state detailed
lists, including relative amounts, of the ingredients of
cigarettes and tobacco products sold in the state was an
unconstitutional condition that took the companies' property
in violation of the Fifth Amendment.
The law, which allowed for public disclosure of these ingredient
lists in the interest of reducing risks to public health,
"essentially destroys the tobacco companies' trade
secrets," Judge Juan Torruella wrote in the lead opinion.
In a blatant example of judicial second-guessing of reasonable
legislative determinations, Torruella concluded: "I
simply am not convinced that the Disclosure Act . . . really
helps to promote public health." Torruella noted that
while two other states, Minnesota and Texas, require some
disclosure of additives to tobacco products, neither makes
complete product content and ingredient ratios available
to the public.
The decision's rejection of what seemed settled law is
surprising and disturbing. As far back as 1919, the U.S.
Supreme Court held that manufacturers who sell goods in
the stream of commerce can be required to disclose the ingredients.
In Corn Prods. Refining Co. v. Eddy, the Court said
"it is too plain for argument that a manufacturer or
vendor has no constitutional right to sell goods without
giving to the purchaser fair information of what it is that
is being sold." Likewise, in Ruckelshaus v. Monsanto
Co. (1984), the Court held that the government could
disclose trade secrets submitted by a company in exchange
for the ability to sell a product to the general public.
So long as the company is aware of the government's ability
to reveal the information and the regulation is rationally
related to the government's legitimate interest in protecting
public health, under Monsanto there is no taking.
The original three-judge panel in the case, which included
a senior judge and district court judge, rejected Philip
Morris's takings claim. In an unusual rehearing en banc
with only three judges participating, Judge Selya concurred
in the result but rejected Torruella's reasoning, and Judge
Lipez dissented. Because the three judges on the en banc
panel could not agree on a rationale, the precedential effect
of the ruling is questionable. The state has until March
to decide whether to petition the U.S. Supreme Court for
review.
