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Community Rights Report Newsletter -
2004 Eye on Washington Archive


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.


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.


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.


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.


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:


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
. 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


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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