This particular amendment modified the takings clause of the OR constitution. It had been just like the US C. The Oregon court had previously interpreted the spillover from Lucas to be narrowly construed in OR: we require compensation only when there is a total deprivation of economic use. We follow Lucas (of course, because it is controlling), but only in the strictest sense.
The amendment says that whenever future zoning diminishes the value of the property, that diminution has to be paid for. Well, all zoning reduces property value for someone. So this means that OR planners have to account for payments every time they create any sort of zone.
Amendments are OK, but the constitution had another clause: you can't amend the constitution more than once in a single referendum. You have to have different votes for different changes. And here, the drafters had made a mistake. They tried to write in exceptions for things like gambling and pornography: so it should have read "all normal zoning has to pay for itself, unless the property down-zoned is a former porn-shop; we don't like them, and they don't get a nickel."
The OR SC said this upends the 1A of the OR Const: free speech. This means that OR had set up a separate classification for different businesses. So this single referendum effectively amended the constitution twice. On its face, of course, it amends only the takings clause-- the other impact is indirect. But the OR SC says it's an amendment nevertheless: either we sever the pornography stuff, or we void the whole thing entirely. And we don't know how to sever it. So the whole amendment is unconstitutional.
This might also have an impact on home rule-- the constitutional protection of local/municipal legislative power-- because it would prevent some ordinances from getting passed. It also might be an unfunded mandate. Or an interference with legislative authority (of course, all constitutional provisions do, but nevermind that). It also might affect judicial power, because it limits how the courts could react to zoning issues (again, nevermind that the constitution restricts judicial power as it stands). And also maybe separation of power.
Note that these objections apply to any and all possible amendments.
So this amendment was sort of a reductio of Lucas: we will protect all property very strongly.
After this case, the sponsors of the amendment felt they'd been chiseled by the court, so they put the same referendum out there, but laundered out the porn stuff, so there would be no 1A issue. And this passed.
There were two main reactions. Municipalities who didn't want the administrative overhead. And a trial court who tried to claim that this amendment might also be defective.
So the state that's most agressive about zoning is also the most agressive about protecting against its consequences.
Many states have limited versions of this: AZ (don't want to delegate too much power to individual owners), TX (reduction of > 20%), FL ("substantial" reductions in value), WI (if 20% of the affected landowners object to a proposed zoning ordinance which would reduce property values, then the city council must pass the ordinance by > 75%).
The property is on the CA coast. It's zoned for multi-family apartment use. The owner is allowed to put up 1K units, or thereabouts. The property is mostly undeveloped-- kind of a mess. Perhaps the Smith's Blue Butterfly is on this property: they only live 1 week, and only go about 200 yards. But someone found a larva there, and they are endangered.
Lots of back-and-forth about development proposals, continuously reducing the number of units to be built. Eventually the owners sell it to the state for pulic use at a modest profit. So there was some economic use.
The owners sue, alleging that they were denied procedural protections under the constitution. They want a jury. Risks: downward and upward. If the other people on the jury are as annoyed as we are, we'll get something. Indeed: $1.5M.
Holding: the zoners can't just take all the property, and they also need to be cautious procedurally.
Courts don't look at grand themes-- they look at individual cases. Cases are A v. B. So it's interesting to note who the amici are here. On behalf of Monterey: 86 cities, and the league of US cities, the council of state governments, 29 states, the American Planning Association, the Sierra Club, National Wildlife Federation. On the other side: two home builders groups, the Farm Bureau, several foundations, the Institute for Justice, the Institute for Property Justice. So this was a battle of interest groups. That raises some constitutional questions about the nature of litigation, in terms of our legal processes.
Eastern had been a mining company, and it had a contract with the miners that some medical expenses of active miners would be paid for (not spouses, widows, retired, etc.). The company agreed to set aside a sum of money per year, and miners who were ill could apply against that fund for their medical costs, so it wasn't an open-ended commitment. If the fund got used up before the year ended, it was gone for that year.
The Eastern got out of the mining business (now barges and natural gas), but had a subsidiary that stayed in. During the intervening 30 years, lots of other mining contracts got signed by miners, and these had somewhat better benefits. So, fast forward, and now we've got a lot of miner-widows who need medical help. Who is going to pay?
Congress passed a bill saying that a surcharge would be levied on existing sales of coal to cover the expenses. The president vetoes (not clear why, in our materials). So, back to square 1. New bill: any company dumb enough to still exist is now liable for the health problems of its former employees, their widows, and their dependants, with no cap. This is something like $75M +/- $25M.
Eastern says they honored their agreements from 30 years ago. Eastern has about 1K people who could claim under this new congressional policy. Eastern thinks that somewhere this violates the constitution.
5 justices agree that this is unconstitutional, but the decision is so convoluted it's impossible to say what is up. 4 justices say it's a violation of the takings clause: just taking money from one pocket and putting it in someone else's (O'Connor, Rhenquist, Scalia, Thomas): this violates Penn Central standards, chills investement, yadda- yadda.
Thomas's objection is that it's retro-active: it goes back 30 years and changes the law. So, a violation of the ex post facto prohibition. Only Thomas is willing to call it this. But in 1798, the supreme court said that ex post facto applied to criminal matters, and so to apply this reasoning would mean overruling a prior case. So the other judges sweep that aspect under the rug.
Kennedy agrees that it's retroactive, and unconstitutional. But, it's not a taking. Why not call it a taking? Because this would mess up takings law: government does this all the time-- that's what taxes do. Remember in Dolan, Kennedy agrees only because it's real property-- he thinks takings law can't apply with the same vigor to personal property. He says it's a due process violation (wrt property). The court has sworn not to mention substantive due process (wrt liberty).
But some other justices can't go along with the due process line of reasoning because of things they've said about abortion.
So five justices agree about unconstitutionality, but can't agree on a theory.
The remaining four agree that substantive due process could be a concern, but only if it's truly over the top. And they think it's not.
Hard to know if this decision will be a big deal. It's the first time in decades that the court has struck down an economic issue. But it's such a hopeless mess, it may just fade away-- there's no agreed theory of the case.
Some owners think this is a taking, Lucas-style: there is no value in land that you can't even go to. But the plaintiffs make a tactical error-- the moratorium doesn't permanently deprive anyone of anything.
But they contend that even a moment's taking is a taking, and that any moratorium deprives the owner of property value, and must be paid for. The court heads back to Penn Central: we need to look at each case individually, and they plaintiffs are asking us to look at this categorically (i.e., all moratoria), and that's no good, so they lose. The dissenters point out that this is really getting drawn out too far.
The court interpreted "take" to include "destroy habitat." The owner could apply for a permit, but the application fee is $10K, and the lot is worth less than that ($2,500). Why is that not a taking?
Issue: at what point does red tape itself become a taking? Is there some level at which the clumsiness of following the process drifts over into becoming a taking?
In the actual case, the owner lost on the grounds that the case was not ripe-- the owner could have applied for help from the agency with the filings. Still, at what point are the costs of regulations themselves to be considered?
So people started to think this was arbitrary, without legitimate government interest. Indeed, it is a glaring example of artificiality. So the USSC had a difficult time, because fixing this means undoing Prop 13. They eventually say that there is a legitimate interest in preserving the neighborhood.
A more salient issue is the escalation of the policy debate: the court names 7 conditions to be examined. The 7th: you can't raise the rent if it's going to cause tenant hardship. What might that mean? And besides, hardship of the tenant is not the fault of the landlord. Gouging would be, but the two are not the same. Remember from Armstrong: no one party should be made to bear a public burden.
The majority sweeps this concern aside, because we need to wait for an actual fact situation to arise. Again, not ripe: we want to deal with specific cases, not general principles. The dissenters see it the other way around, of course.
So Uncle Sam, for decades, insures each account for $10K. Then a new bill comes along, and bumps it up quietly to $100K. So that's some nice encouragement. There was not a whisper about appropriation here. Or a filing representing the financial obligation here (i.e., the need to set up a reserve account to cover the risk). This is pretty much exactly what we're doing now... An unfunded potential promise of about $3T, which would break the US bank, which means that no major bank can fold. Maybe when you add up all the unfunded obligations (social security, e.g.), you're up in the $50T range. Uh-oh.
Not all S&Ls, incidentally, went bankrupt. The midwest was pretty conservative. But a lot did go belly up, and the US had to pay off its guarantees to all the disappointed depositors. About $160B. That was a bitter pill. They could have renounced it, but that would have destroyed the government's credit.
The RTC's job is to minimize the loss: pay the depositors, and take over the assets of the S&L. This included a lot of apartment buildings. Now the US doesn't like running apartments, and it wanted to sell. OK, but they'd better make some money in order to defray some of that horrible debt.
When we sell it, we might want to get rid of the tenants. If the tenant has a lease, they're protected. But what if the tenant or the owner go bankrupt? Turns out that the trustee of the bankruptcy can terminate all leases. The RTC argues that they can do this, in order to get out of rent control, which is driving down the value of the property they are supposed to sell.
New York argues that this is a state created tenancy, a property interest different from a lease. Exclusio! The statute only says you can repudiate leases. Counter-argument: if rent control isn't a lease, it's a taking (of value from the property owner, and giving to the tenant). Of course, this is all just names-- it's pretty irrelevant, except for the policy behind it.
Feds can pre-empt state laws (supremacy clause), but there has to be some explicit statement that this is the plan. RTC can pre-empt NY, but not by indirection: tenancy is not a lease.
According to the preamble of the statute, RTC is supposed to:
Arguments for R.T.C.:
It's not a taking because the landlord is still making some profit, so there's not an investment loss.
Why isn't this an unlawful delegation? Tricky extortion argument. Tenants could sell their consent to the landlord, but more importantly they could sell their refusal to consent to other tenants. We tolerate a great deal of delegation. All the cases cited involve delegation by congress to federal agencies, though, not local governments to citizens. The court says there's no delegation issue here, but that seems a little shaky, and contradicts Pima County.
Ms. Tarasova finds for the landlords: chilling of investment, misallocation of resources.
Why are condominiums the enemy, as opposed to the salvation? They foster ownership, they'll be more efficient at producing quality (because people will take care of what they own) so we won't need this artificial implied warranty of habitability. On the other hand, it is so tempting to go from Apartment to Condo that it attracts too many people, and therefore drives out tenants who can't afford ownership. They wind up in worse housing.
It's a taking (contra Armstrong) not because some profit can still be made, but because one group-- landlords-- is being asked to pick up the tab for low-income folks. The public should pick up that tab, not focus it on one target group.
4 justices say it passes constitutional muster (both US and CA). The test is merely whether it is reasonable. A lowest-common- denominator test. It's not that the state is saying "give-us-your- building." This isn't real property, money is mere personalty. It's really no different from taxes: requiring people to contribute to paying for a problem. And it's an emergency: about 6K apartments have been pulled off the market because they're not making a profit, which hurts people at the low end. This isn't Nolan-style rough proportionality, either-- this meets a definite need.
The court says that each of us is burdened somewhat by property regulation, but we all benefit greatly. Of course, the property owners here are going to say, "this isn't 'somewhat,' it's $560K!" So not everyone sees the burden of regulation in the same light. The court goes on to say that Holmes was right to say that the Constitution doesn't enact pure laisses-faire economics. And so this is economic decision-making, not an equal protection issue. And, since 1937, the court is essentially silent on economic policy issues.
The court tries to defuse some of the dissent. The dissent wants zoning to be constitutional only when it costs nothing for the landowner. This will never be the case. An appointed (not elected/accountable) judiciary can never impose on an elected legislature (like SF city council) a personal theory of economics. The court can't impose policy on a free democratic state: we must defer to the legislature on this.
The dissent agrees that the city can do a lot, but that this is too much. Janice Brown is a confirmed libertarian, and an outspoken justice. She's now on the DC court of appeals (often a stepping stone to the USSC, but she may be too libertarian for that). She argues private ownership (Jacque). She says it's not private property if they can make you pay $560K in order to do what you want to it. The point of the constitution was to maximize the freedom of individuals, but by constraining property, the opposite happens. Government was once a necessary evil, and it was necessary in order to protect freedoms, such as private property. Now private property is the necessary evil, tolerated only because it is a source of funding for government programs. Also, this turns the takings clause on its head: owners have to pay the government in order to get back the value of their property. And lastly, she hopes the USSC takes this up.
And indeed, in 2005, the USSC contemplated it, but ducked it on the grounds that there were no federal issues here-- it was just a matter or CA law. This probably reflects the fact that the USSC is badly split on this issue, and they think this is a hard problem on which both sides have very powerful arguments. So they don't want to risk giving a definitive answer.
So only 0.1% is surface water that we can use. This is still abundant for the whole world, but not distributed usefully. For lots of areas, this is reaching crisis proportions: Turkey could starve Iraq of water in about a week... this is why they have the largest army in the area, to protect their water supply.
In the US, CA is the main place of conflict. The US has two main regimes. In the East (incl. WI), things were settled earlier, and there's more water: the "riparian" system-- rights are controlled by frintage on the water supply. You can use the water in a reasonable fashion-- you can't take all of it. Only riparians are protected. Anyway, you can use some of it, but you have to leave enough for the downstream people. And we can litigate what that means. Riparian rights never lapse. You get a percent share (not salable, attatched to the land)
Out west, it's the "prior appropriation" doctrine. Whoever starts using it gets to keep it. You don't have to be a riparian owner in order to have that right. And the right is salable/transferrable. It lapses if you don't use it. So this is a more efficient system, better suited to dry areas.
Increasingly, though, we don't have common law for water rights-- it's statutory. And this sets priority for who gets water usage (residential use tends to come first, for obvious reasons; agriculture comes second, even though it is far more water; industrial/manufacturing comes third). Water use tends to require a permit from a regulatory agency.
There was a lot of red tape when the agreement was re-formalized. Lots of committees had to agree, etc. But this wasn't a private property ownership issue. Finally they get everyone on board. Well, except Gillen.
If you want to get anywhere in court, you have to exhaust all your other remedies, which they have, so they sue. The law mentions "navigable" water. What is "navigable?" It can be traveled... this is sort of like "punitive" in Maxey. It says "navigable means navigable in fact." Oy. This is a wildly litigated topic, and we're not going to deal with navigability... basically if you want DNR to regulate it, you call it navigable, otherwise you don't.
The substantive issue: can the DNR tolerate this use of the water? Also: given that the DNR has approved it, does that bar normal citizens from disapproving. You can't sue every time you don't like what the government does. You have to have standing (and overcome sovereign immunity). Otherwise, the courts would be making all the decisions, and other branches of government would have no authority.
By that standard, it would seem that Gillen doesn't have standing. However, the WI legislature says any person can sue over violations of the public trust. There are constitutional limits to who can sue, though ("case or cause"), and states should not be able to legislatively sweep them aside (this is the DNR's response). DNR says that it is WI's representative on environmental issues, and private individuals shouldn't be able to override what it does. But the court says the legislative intent is clear, so he can sue.
Odd: the legislature, via the DNR, are on one side, and the court says this one guy might be able to overturn it. Looking to some very old definitions (the Northwest Ordinance, or maybe the WI constitution) for the public trust. But we don't know the status of this piece of the lake back then.
Gillen ran out of money, even though the decision looks like he won. So there was a settlement: Neenah could do what it wanted, but the income that came in had to be spent on local parks. So Gillen won all the battles, but basically lost.
Wha? The attorney general of the state is suing the state? That's not supposed to happen. WI used to also have the Office of the Public Intervener, who did that sort of thing.
Why should this have standing? Because environmental issues are important. It's not because Gillen should be able to sue whenever he doesn't like what the government does. It's that we want judges to have policy power over the legislature in environmental issues because the current majority will be interested only in short-term concerns, and we need to look further down the road.