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Takings Watch Newsletter -
2002 Eye on Washington Archive




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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