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Community Rights Report Newsletter - Eye on Washington

(Past Eye on Washington Archives: 2001, 2002, 2003, and 2004.)


Update on Rapanos/Carabell Wetlands Cases

As we reported in our October 2005 newsletter, the U.S. Supreme Court has agreed to review two wetland cases challenging federal authority to regulate wetlands and other intrastate, non-navigable waters under the federal Clean Water Act.

John Rapanos was convicted in a criminal proceeding for destroying wetlands to build a shopping mall. Rapanos’ own consultant testified that Rapanos fired him after he told Rapanos the extent of wetlands at the site. Rapanos continued to fill the property even after receiving numerous cease and desist orders from Michigan environmental officials. His appeal to the Supreme Court arises out of a parallel civil enforcement action for millions of dollars in fines and mitigation fees. Carabell challenges the denial of a permit to destroy one of the last large forested wetlands in Macomb County, Michigan, 16 acres of wetlands about one mile from Lake St. Claire.

The issue before the Court concerns the phrase “waters of the United States,” a key jurisdictional term in the federal Clean Water Act. Rapanos, supported by more than 20 amici, argues that the phrase is limited to traditionally navigable waters and their adjacent wetlands, a reading that would permit the discharge of fill material and pollutants in countless small streams and wetlands across the nation. Alternatively, they argue that any broader reading would exceed Congress’s power under the Commerce Clause. If this position were to prevail, federal officials would lose authority to protect about 99 percent of the waters covered by existing regulations.

In January 2006, Community Rights Counsel will file a brief on behalf of an association representing state pollution control officials from all 50 states showing that longstanding federal protections are essential to the State-federal partnership created by the Act to protect our nation’s waters, including the harm to downstream States that would result from a narrowing of federal authority.

The Court will hear oral argument on February 21.


Cane Tennessee, Inc. v. United States, Case No. 96-237 L (Fed. Cl. Oct. 27, 2005)

The U.S. Court of Federal Claims handed the U.S. Department of the Interior a significant victory in a regulatory takings case that has been embroiled in litigation for nearly five years. Cane Tennessee sought compensation for an alleged taking of 10,000 acres of land in the Cumberland Plateau region of Tennessee that Cane purchased in 1979 for coal mining. After a request by a citizen’s group and a subsequent review of the property, the Interior Department designated a portion of Cane’s property as unsuitable for mining under the federal Surface Mining Control and Reclamation Act of 1977.

In prior proceedings, the court determined that the entire 10,000 acre parcel would be used in determining whether a taking had occurred. The court had also previously concluded that Cane’s challenge failed two of the three Penn Central factors to determine whether a regulatory taking has occurred: the character of the governmental action did not require a finding of a taking, and the owner’s investment backed expectations were unreasonable as a matter of law. The sole remaining issue was whether the economic impact of the regulation on Cane’s property caused a sufficiently serious financial loss.

In making this determination in its October 2005 ruling, the court reviewed testimony from experts for both Cane and Interior on the value of the land. Cane argued that all economically viable use of the property had been destroyed. In reviewing the law, the court rejected Cane’s argument that the original cost or the intended use of the land be the basis for a value determination, stating that the proper determination of the economic impact of a regulation “is a comparison of the market value of the property immediately before the governmental action with the market value of that same property immediately after the action.”

The court reviewed three acceptable methods of determining market value before and after a taking. Because Cane’s experts failed to support their opinion with objective methods of valuation, the court determined that the property retained significant market value after Interior’s action. The ruling is a welcomed reaffirmation of the before-and-after test for determining economic impact under Penn Cenrtal.


High Court to Review Key Wetlands Cases

On October 11, the U.S. Supreme Court agreed to review two cases out of the Sixth Circuit raising statutory and Commerce Clause challenges to federal authority to regulate wetlands that have a surface hydrological connection to navigable waters: United States v. Rapanos and Carabell v. U.S. Army Corps of Engineers. Rapanos is a civil enforcement action for millions of dollars in fines and mitigation fees, alleging that the landowners illegally filled about 54 acres of wetlands at three sites near Midland, Michigan to build a shopping center and engage in other construction. Carabell involves a challenge to a permit denial to fill about 16 acres of forested wetlands near Detroit to build a condominium complex. The record shows that all of the wetlands at issue have a hydrological connection to navigable waters.

The landowners rely heavily on the Court’s 2001 ruling in Solid Waste Agency of Northern Cook County (SWANCC) v. U.S., holding that the Clean Water Act does not extend to isolated wetlands that have no hydrological connection to navigable waters. SWANCC, however, did not cut back on the Court’s ruling in United States v. Riverside Bayview Homes (1985), which upheld federal authority over wetlands adjacent to open waters due in part to Congress’s concern for the protection of water quality in traditional navigable waters, a core federal interest that was not at issue in SWANCC. The pending cases reportedly implicate federal authority to protect roughly one hundred million acres of wetlands across the country.

CRC plans to file an amicus brief emphasizing that state and local officials embrace a vision of cooperative federalism that supports a vibrant federal role in protecting wetlands and other vital environmental resources.


CRC’s Reports on the Environment, Judicial Junkets Discussed at Roberts Hearings

Citing a major report and other materials co-authored by Community Rights Counsel, on September 15 former EPA Administrator Carol Browner testified before the Senate Judiciary Committee on the nomination of John Roberts to be Chief Justice of the United States. While she took no position on the nomination, she stressed the Supreme Court’s critical role in determining the constitutionality of federal, state, and local environmental safeguards. And she urged the Senate to give careful attention to his views on a wide range of environmental issues, including Congress’s authority to enact environmental protections under the Commerce Clause, and the standing of citizens to vindicate protections for public health and the environment in federal courts.

During his questioning of the nominee, Senator Russ Feingold asked whether Roberts, as Chief Justice and head of the Judicial Conference, would seek to ban anti-environmental junkets for judges, an issue CRC has been investigating and analyzing for many years. Roberts agreed to study the issue, stating that it was “clear” that “special interests should not be permitted to lobby federal judges.”

After careful review of the record, including the nominee’s demonstrated commitment to precedent and the rule of law, CRC issued a press release indicating that despite certain environmental concerns, the record contains nothing disqualifying and Roberts should be confirmed. We wish the new Chief Justice well.


Victory Under NAFTA Expropriation Provision

In a significant but little-noticed victory for state and local environmental laws, an international trade tribunal ruled on August 9th that California’s ban on MTBE, a gasoline additive that has contaminated drinking water in several states, does not violate the expropriation provision set forth in the North American Free Trade Agreement (NAFTA).

In 1999, California began phasing out the use of MTBE in gasoline because the substance had leaked from underground gasoline storage tanks into drinking water supplies, causing water to smell and taste like turpentine. The City of Santa Monica, for example, had to shut down most of its water wells during six months in 1996 because of MTBE contamination. More than a dozen other states have also banned MTBE.

Soon after California enacted its ban, Methanex, a Canadian producer of MTBE’s key ingredient, filed a claim against the United States under NAFTA’s Chapter 11, which prevents discrimination against investors from other nations. Methanex argued that California’s law was designed to favor ethanol, which is mostly made from U.S. ingredients, at the expense of their product. The company asked for $970 million in compensation. The NAFTA panel found that it did not have jurisdiction over Methanex’s claim, and that the claim would have failed on the merits. Had the company succeeded, the U.S. government would have had to force the states to reverse their MTBE bans, or pay almost a billion dollars to Methanex. Instead, Methanex has to pay the U.S. $4 million in legal costs.

The NAFTA ruling constitutes an encouraging victory under the widely criticized expropriation provision, which exists in varying forms in several international trade agreements. These provisions have drawn strong opposition due to concerns they will be used to require compensation for a broad range of public health, safety, and environmental safeguards.

JULY 2005

Judge John G. Roberts

[A longer version of this op-ed by CRC's Doug Kendall ran in the July 24 Washington Post]:

The nomination of John Roberts raises important questions about the future of the Supreme Court. But as a progressive environmentalist, I would rather have Roberts and genuine questions than another one of the judges on President Bush's short list and a lot of bad answers.

Roberts is a conservative. In his short tenure as an appellate judge, he has written some troubling judicial opinions, including one in a very important Endangered Species Act case that suggests he has an unduly restrictive view of congressional power under the all-important commerce clause of the Constitution -- the basis for federal protections for the environment, workers and civil rights.

But there are critical differences between Roberts and the others on Bush's short list. Unlike Judge Michael Luttig of the 4th Circuit, who once opened an opinion by rewriting the preamble of the Constitution to create a more limited government than the Constitution actually establishes, Roberts has a fairly limited judicial record that is devoid of rhetorical excess. In contrast to Judge Janice Rogers Brown of the D.C. Circuit, who made a name for herself by delivering bombastic speeches that thrill the libertarian right, Roberts made his reputation largely on his undisputed skills as a litigator representing clients in cases before appellate courts and the Supreme Court.

I have particular knowledge about one of these cases, having worked on it on behalf of several amici. In 2002, the Court agreed to hear a challenge to a carefully crafted consensus plan to save Lake Tahoe from the damaging effects of overdevelopment. Facing the prospect of a devastating defeat, the Tahoe Regional Planning Agency did a very smart thing: It hired the best conservative Supreme Court advocate it could find. That advocate was Roberts, and he wrote the best legal brief I've ever read in a takings case. His argument resulted in a surprising and broad Supreme Court victory that stopped the takings movement in its tracks.

Does this prove that Roberts is a fan of environmental safeguards? No. But his work on the Tahoe case does demonstrate that he has the ability to see both sides of a divisive issue. This is a critical quality for a Supreme Court justice. Roberts' combination of intellect, skill, and open-mindedness should temper anxiety about his nomination.

Roberts is not the Supreme Court justice I would choose. But before Senate hearings begin, I'm open to the possibility that he will not be what I most fear.

JUNE 2005

Victory in Gonzales v. Raich, ESA Lives Another Day

In Gonzales v. Raich, No. 03-1454 (June 6, 2005), the U.S. Supreme Court rejected a Commerce Clause challenge to the application of federal drug laws to the medical use of marijuana, even where the marijuana is grown and distributed intrastate. The 6-3 decision is a straightforward application of Wickard v. Filburn (1942), which held that Congress may regulate wholly intrastate activity (there, homegrown wheat) when Congress reasonably could conclude that the activity, when viewed in the aggregate with similar activity, could affect interstate commerce. In Raich, the court deferred to congressional findings that locally produced and distributed marijuana could "leak" into the interstate market.

Although CRC takes no position on medical marijuana use, we filed an amicus brief in support of the government because a narrowing of Commerce Clause authority could jeopardize environmental safeguards, civil rights laws, and other federal protections. Just one week after Raich, the court declined to review a Commerce Clause challenge to federal protections for endangered species, and it used Raich to vacate and remand lower court rulings invalidating federal controls on machine guns, child pornography, and discrimination against the disabled. On June 21, the Seventh Circuit relied on Raich to reject a Commerce Clause challenge to federal wetland protections. United States v. Gerke Excavating, Inc., No. 04-3941.

By reaffirming longstanding Commerce Clause precedent, Raich solidifies the constitutional foundation of a vast array of federal protections.

MAY 2005

Cert. Denials for Two Key Takings Cases

In addition to the Lingle ruling, on May 23 the U.S. Supreme Court issued an order denying review in two very important takings cases.

In the first, Avenal v. Louisiana, 886 So.2d 1085 (La. 2004), the Supreme Court of Louisiana had nixed a $1.8 billion takings award to oyster fishers alleging that their state-issued oyster bed leases were devalued by a successful coastal restoration plan. The cert. denial leaves in place the Louisiana Supreme Court's very helpful discussion of the public trust doctrine as a defense to takings liability.

The second case, Tien Fu Hsu v. Clark County, No. 04-1282, involved a takings challenge to routine, federally mandated height restrictions around McCarran International Airport in Las Vegas. The cert. denial leaves undisturbed the Nevada Supreme Court ruling overturning a $22 million judgment.

APRIL 2005

Toxic Contamination as a Taking: Judge Block's Short-Lived Ruling

On April 11, Judge Lawrence Block of the U.S. Court of Federal Claims handed down a surprising ruling that threatened to transform nearly all government contamination of private land into a compensable taking. But just four days later, the appellate court for that circuit tacked in a much different direction.

The issue of whether contamination should be treated as a taking or a tort is of special significance to claims against the United States because the Court of Federal Claims (the court with jurisdiction over takings claims against the U.S.) has no jurisdiction over claims sounding in tort. In Hansen v. United States, No. 02-21L, Judge Block held that a takings claimant may state a cause of action based on government contamination of private land without asserting that the contamination was foreseeable. Judge Block read existing precedent as requiring only causation, not predictability.

On April 15, however, the U.S. Court of Appeals for the Federal Circuit reviewed the same line of precedent and reached the opposite conclusion. In Moden v. United States, No. 04-5092, the court held that where a claimant alleges a taking based on the government's contamination of private land, the claimant first must establish that the contamination was the foreseeable or predictable result of authorized government action.

CRC opposed Judge Block's nomination to the Court of Federal Claims due to serious concerns over whether he could set aside his personal views on property rights and dispassionately apply the law. His Hansen ruling, which failed to outlast even Washington's ephemeral cherry blossoms, heightens those concerns considerably.

MARCH 2005

Oysterers Seek High Court Review

It comes as no surprise when the loser in a high-dollar takings suit adds a big-name attorney to its legal team in preparing a petition for certiorari, hoping that "star quality" might spur the U.S. Supreme Court to grant review. It is surprising, however, when the resulting petition runs only twelve pages (the page limit is thirty) and presents a lead argument that is utterly incoherent.

In Avenal v. State of Louisiana, 886 So.2d 1085 (La. 2004), oyster fishers allege that Louisiana's coastal restoration efforts - designed in part to keep the next hurricane from swallowing New Orleans - worked a taking of their leasehold interests in underwater oyster beds by adversely changing the salinity of the water. Ironies abound in the case, not the least of which is that the oyster industry encouraged the restoration efforts. As noted in the October 2004 issue of Community Rights Report, the state Supreme Court rejected the challenge on several grounds, including the public trust doctrine.

The oysterers now have brought in Harvard Law School Professor Alan M. Dershowitz, who argues that the restoration efforts worked a physical-invasion taking of the oyster bed. It's unclear whether the underwater beds were allegedly "invaded" by new water, or by the dissolved salt in the new water. In either case, it seems absurd (not to mention unprecedented) to suggest that underwater property can be deemed physically invaded and thus "taken" under the Fifth Amendment by a change in the coastal currents. The high court should make short work of this one, notwithstanding counsel's celebrity status.


Oral Arguments in Kelo and Lingle

On February 22, the Supreme Court heard arguments in two of the three major property rights cases it will decide this term.

In Kelo v. New London, the Court pressed counsel for both parties regarding the scope of the "public use" provision as applied to condemnations of property designed to promote economic development. It is virtually certain the Court will reject the landowners' primary argument, which attempts to take economic development off the table altogether as a justification for eminent domain. Some Justices expressed more sympathy for the idea of a greater judicial role in reviewing these condemnations, but even here they expressed deep concerns about judicial competence and democratic decision-making. Led by Justice Kennedy, several Members of the Court explored whether unfairness issues might be addressed by adjusting the Court's rulings on just compensation, an issue not before the Court in Kelo.

The argument in Lingle v. Chevron was a snoozer, which is good news for the government. Hawaii Attorney General Mark Bennett did a masterful job in explaining why the Court's oft-repeated but rarely applied "substantially advance" test is not a freestanding test of regulatory takings liability. The Court seemed so persuaded by his argument that it asked few questions, with Justice Scalia observing that the Court might be forced to "eat crow" and admit it has been confusing due process and takings analysis.

In contrast, the Court peppered Chevron's attorney with difficult questions. He ultimately fell back on the language in Dolan asserting that the Takings Clause is not a "poor relation" as compared to the rest of the Bill of Rights. This makes for a fine rhetorical flourish in the closing minutes of an argument, but when you go to it too early, it's a sign of trouble.

The Court will decide these cases this spring. CRC filed amicus briefs in both. For two CRC op-eds supporting New London, go to (Give Eminent Domain a Chance) and (Saving a City).


Happy Holidays, Roger and Nancie

In a surprising and disappointing development finalized quietly during Christmas week, the Bush administration decided to settle -- rather than appeal -- Tulare Lake v. United States, putting $16.7 million into the pockets of a handful of California farmers and their lawyers, Roger and Nancie Marzulla, co-founders of Defenders of Property Rights.

Tulare Lake involved a challenge to federal protections for endangered salmon and delta smelt that resulted in reductions of water available to certain farmers under their contracts with the state of California. The Court of Federal Claims found a taking even though the reductions at issue ranged from 8 to 22 percent of the claimants' allocated water, losses that came nowhere close to the near-complete wipeout generally needed to show a regulatory taking under Supreme Court precedent.

As Roger Marzulla boasts, Tulare Lake is the first case ever where a court has found that enforcement of the Endangered Species Act violates the Takings Clause. And as explained in a March 2004 memo written by the National Oceanic and Atmospheric Administration to the Department of Justice urging appeal, the Tulare Lake case is already making it more difficult for NOAA to enforce endangered species protections for salmon. Yet the government decided to settle rather than appeal the case to the Federal Circuit.

As takings guru Joe Sax told the Contra Costa Times, "it was a terrible thing that the government didn't appeal [Tulare Lake], partly because it's wrong and partly because government is usually quite zealous about trying to protect the Treasury against claims that are disputable." And as the Stearns case indicates (see Feature Case), the Federal Circuit has shown itself willing and able to reverse baseless rulings by the Court of Federal Claims. On the bright side, the settlement must have Roger and Nancie Marzulla believing anew in a federal Santa Claus.




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