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.
Property Rights "Scholar" Caught Plagiarizing
Doesn't it seem like the property rights movement makes the
same tired arguments over and over again? Now we have the
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:
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
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.
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.
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
We have expressed these concerns in a letter to Professor
Sunstein and eagerly await his response.
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
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.
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
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
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.
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.
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.
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
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
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.
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
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.