Unit Three

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Stan Getz &
the Oscar Peterson Trio
(Recorded 1957)
Stan Getz, Tenor Sax * Oscar Peterson, Piano
Herb Ellis, Guitar * Ray Brown, Bass
Please Place Takings Surveys
on Chair in Front of Room.
Extra Copies Available.
REV. PROB 2C: Treat Custom as Law?
OXYGEN: Yes v. KRYPTON: No
Easy Swift/Ghen Factors
• Used by Whole Industry for Long Time (~YES)
• Problem says Almost Whole Industry
• Easier to Use than Existing Legal Rules (~ NO)
• Custom Itself Can Be Hard to Apply (See 2B)
• Almost Certainly Few Limits Absent Custom
• Trademark or Copyright Violations
•
Require Very Close Copying of Protected Material
•
Apply with or without Custom
• Might Have More General Discussion of Certainty
REV. PROB 2C: Treat Custom as Law?
OXYGEN: Yes v. KRYPTON: No
Harder Swift/Ghen Factors
• Affect Outsiders (Leave for You)
• Necessary for (Which?) Industry to Operate?
• Reasonableness of Custom?
Oil & Gas: “Escape” *
Starting Point:
What Hammonds calls “Escape”
the industry calls “Reinsertion”
*Featuring “Sybil Green” Font
(reinsertions into empty spaces)
Oil & Gas: “Escape”
Factual Setting of Hammonds & White
• Gas pool underneath multiple surface lots
• All usable gas extracted from pool
• Gas Co. (G) uses empty pool for storage:
– G has lawful access from some point on surface
– G wants to extract and reinsert at will
– G does not want to pay surface Os for right to store
gas in the underground parts of their lots
Oil & Gas: “Escape”
Legal Issue in Hammonds & White
• White (p.97): [W]hether title to natural gas, once
having been reduced to possession, is lost by the
injection of such gas into a natural underground
reservoir for storage purposes.
• Hammonds (p.92): “[W]hether the gas, having once
been reduced to possession …, was restored to its
original wild and natural status, by being replaced in
a similar reservoir of nature….”
Hammonds v. C. Ky. Nat’l Gas Co.
URANIUM:
BRIEF & BASIC INFORMATION
DQ2.26-2.27
Hammonds v. C. Ky. Nat’l Gas Co.
FActs & LEGAL CLAIM (URANIUM)
• Dfdt CKNG has gas it extracted from different
places.
• Stores “vast quantities of gas” in depleted
underground reservoir, a portion of which is
part of Ptff H’s land.
• H sues for trespass.
Means what here? Who (allegedly) is
trespassing where?
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.26: Cost/Benefit Analysis (URANIUM)
• Material Harm to H if CKNG stored its
gas in the part of the reservoir in her
land?
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.26: Cost/Benefit Analysis (URANIUM)
• Material Harm to H if CKNG stored its gas in
the part of the reservoir in her land?
– Alternate Uses? Very Unlikely (Shoe Storage??)
– Danger from Reinsertion: Very unlikely to have
leaks or explosions b/c in original reservoir
surrounded by non-permeous rock + CKNG knows
it’s liable for this kind of harm
– Noise/Fumes: Likely no more than from original
extraction; 54-acre lot mostly not affected.
• Other Kinds of Harm?
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.26: Cost/Benefit Analysis (URANIUM)
• Other Harm to H if CKNG stored its gas in the
part of the reservoir in her land?
– Loss of Rental Value (if she’s entitled to)
– More Psychological/Abstract Harm:
• Unlikely to be aware of presence of gas (but
see “The Princess & the Pea”)
• Maybe need to protect all property rights (“Just
bugs me that …”)
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.26: Cost/Benefit Analysis (URANIUM)
• Harm to H = Loss of Property Rts & Rental Value
• Benefits to society if gas was stored
underground rather than aboveground?
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.26: Cost/Benefit Analysis (URANIUM)
• Harm to H = Loss of Ppty Rts & Rental Value
• Benefits to society if gas was stored
underground rather than aboveground:
– Safety (See Sylvester Stallone)
– Aesthetics (Try to Avoid Seeing New Jersey)
– Cost Savings (No Tanks or Surface Space) 
Cheaper Fuel
• Big Social Benefits Outweigh Harms Unless
Great Value Given to Abstract Property Rights
Hammonds v. C. Ky. Nat’l Gas Co.
DQ2.27: BARGAINING (URANIUM)
Why parties were not able to bargain to a
satisfactory solution in Hammonds?
• Ordinary Transaction Costs (see DQ1.29(b))
• Unsurprising if big gap between positions:
– Hammonds has little to lose from holding out
– CKNG has to worry about similar deals w lots of owners
of small surface lots, so unlikely to want to give much
Oil & Gas: “Escape”
Cf. Trespass & Airline Overflights
• Airlines want to use empty space
technically owned by surface Os
– High value to airline & passengers
– Little value to surface Os
– Bargaining very expensive (every lot from NY LA)
Oil & Gas: “Escape”
Cf. Trespass & Airline Overflights
• Airlines want to use empty space technically
owned by surface Os
• Solution is Federal Statute Removing Surface
Rights Above X Feet
• Could Do Something Similar for Reinsertion
– We’ll Do As Alternative to Escape ACs in DQ2.35
• For Practice: Fact Comparisons: Reinsertion v. Airspace
– Will Become Part of Our Standard Analysis of
Takings Cases (See DQ3.03, 3.09, 3.10, 3.17, etc.)
Introduction to Unit Three :
Constitutional Protection
of Private Property
Darth Fajer
with Special Appearances by
OXYGEN (DQ3.01-3.02)
& KRYPTON (DQ3.03-3.04)
Unit Three : Constitutional Protection of
Private Property
State Regulations of Land Use Frequently Limit
What Landowners Can Do With Their Land
and/or Reduce Its Value.
Under What Circumstances Does the U.S.
Constitution Require that the State Compensate
the Landowner for These Effects?
Unit Three : Constitutional Protection of
Private Property
Key Differences from Units One & Two
• Whole Unit is Single Line of Cases from Same
Court, So Need to Work With as a Group
• US Supreme Court Opinions Longer & More
Complex
• Context:
– Not State Court Working with Common Law of
Property
– Federal Court Determining if State Law Violates US
Constitution (Takes Us to DQ3.01)
Unit Three : Introduction
DQ3.01: Role of Fed’l Court (Oxygen)
When Federal Courts review state statutes to
determine whether they violate the U.S.
Constitution, most people believe their role does not
include determining whether the statute is a good
idea as a matter of policy.
Why shouldn’t a Federal Court strike down
a state statute because it is stupid?
Unit Three : Introduction
DQ3.01: Role of Fed’l Court (Oxygen)
Why shouldn’t a Federal Court strike down a state statute
because it is stupid? Common Answers Include:
• Democratic Theory
– State Legislature is Elected Body; Fed’l Court is Not
– Bill of Rights Generally as Limit on Democracy
• Relative Expertise:
– Legislature Can Do Better Fact-Finding
– See DQ1.58 after Albers
Unit Three : Introduction
DQ3.01: Role of Fed’l Court (Oxygen)
Upshot = Default Rule is Deference to
State Legislation
• Many Bad Laws are Constitutional
• State Legislatures Allowed to do Stupid Things
Unless They Violate a Specific Constitutional
Provision (Parent Analogy)
Unit Three : Introduction
DQ3.01: Role of Fed’l Court (Oxygen)
Parent Analogy
“You Are Not Leaving the
House in That!!”
Unit Three : Introduction
DQ3.01: Role of Fed’l Court (Oxygen)
Default is Deference to State Legislation
• States Allowed to do Stupid Things Unless They
Violate a Specific Constitutional Provision
• Relevant Provision Here is Takings Clause of Fifth
Amendment (Applicable to States through
Fourteenth Amendment)
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause of the Fifth Amendment of the
U.S. Constitution: “[N]or shall private property be
taken for public use without just compensation”
What sort of cases do you think the
framers intended to prevent when they
included this provision in the
Constitution?
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain (Property not Elements)
– Govt Deliberately Attempts to Purchase
Private Property (“Condemnation”)
– Takings Clause requires:
– “For Public Use” (Midkiff, Kelo, etc.)
– “Just Compensation” (= Fair Market Value)
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain (Property not Elements)
– Takings Clause requires:
– “For Public Use” = Concern About Govt
Handing Out Prizes to Favored Individuals
– “Just Compensation”
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain (Property not Elements)
– Takings Clause requires “Public Use” and
– “Just Compensation” = Concerns About
–
Ensuring Govt Has to Consider/Budget to Take Land
–
Protecting/Encouraging Investment in Land
–
Taking Property to Punish Disfavored Individuals
–
Redistributing Wealth
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain (Property not Elements)
– Takings Clause requires “Public Use” and
– “Just Compensation” = Concerns About
–
Taking Property to Punish Disfavored Individuals
–
Redistributing Wealth
– Speculation re Madison & Slavery
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain Cases
2. Takings Cases (Elements Unit Three)
– Govt Not Trying to Purchase, but to Regulate
– Property Owner Claims Regulation Effectively
“Takes” Property so Gov’t Must Cease or Pay
(“Inverse Condemnation” Action)
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Clause : “[N]or shall private property be taken
for public use without just compensation”
1. Eminent Domain Cases
2. Takings Cases (Elements Unit Three)
– Property Owner Claims Regulation Effectively
“Takes” Property so Govt Must Cease or Pay
(“Inverse Condemnation” Action)
– Little Historical Evidence Connecting Framers to
These Claims
Unit Three : Introduction
DQ3.02: Role of Fed’l Court (Oxygen)
Takings Cases (Elements Unit Three)
•
•
Property Owner Claims Regulation Effectively
“Takes” Property so Govt Must Cease or Pay
Left with Hard Q of When Govt Must Pay
–
Really No Historical Guidance
–
Generally Defer to State Legislative Process
–
Can’t Pay for All Loss of Value (Military Bases; Opium
Poppies)
Unit Three : Introduction
Relevant Considerations in Takings Cases
• We’ll Look at Cases & Theorists to Determine
What’s Relevant
• Cases Complex (Like Escape Cases)
– Use a Variety of Factors
– Can Use Charts to Keep Track
Unit Three : Introduction
Relevant Considerations in Takings Cases
Survey of Instincts About What Facts Matter
1.
2.
3.
4.
5.
6.
% Reduction in Value
$$$ Amount Reduction (Loss Can Be Small % but Big $$$ or v-v)
$$$ Amount Left (Regardless of Loss, Is What’s Left Substantial?)
Return on Investment (Focus on Long Term Financial Effects to O)
Ban on Intended Use
Purpose of Regulation
I’ll Let You Know Wed-Thurs How You Responded
& Compare to Prior Classes
Unit Three : Constitutional Protection of
Private Property
Special Tools
• Recurring Hypo: “Airspace Solution to Hammonds
Problem” (Introduced in DQ2.35 & 3.03)
• Minimum Requirement for Constitutionality: Rational
Basis Review (Introduced in DQ 3.04)
• The “Demsetz Takings Story” (Introduced in DQ 3.05)
• In Class: Replace Briefs w Introductory Line of Qs for
Each Case (E.g., DQ3.06, 3.12, 3.22)
• Four Theorists (Each Panel will Introduce One)
• Uranium: Joseph Sax
• Krypton: Richard Epstien
Unit Three : Introduction
To Krypton for DQ3.03-3.04
Unit Three : Introduction
DQ3.03: Airspace Solution (Krypton)
“Airspace Solution to Hammonds Problem”
• Suppose Kentucky adopts a statute treating
empty underground gas reservoirs like
airspace needed for airlines. The statute:
(a) allows the gas company to store its gas
under Ms. Hammonds’s property without
paying rent; and
(b) prohibits her from extracting it.
Unit Three : Introduction
DQ3.03: Airspace Solution (Krypton)
• Suppose Kentucky adopted a statute that
(a) allowed the gas company to store its gas under
Ms. Hammonds’s property without paying rent; and
(b) prohibited her from extracting it.
• Suppose Ms. Hammonds then claims this is an
unconstitutional taking of her property.
Do you think this is the kind of harm the
Takings Clause forbids? Why or Why Not?
Unit Three : Introduction
DQ3.03: Airspace Solution (Krypton)
• Suppose Kentucky adopted a statute that
(a) allowed the gas company to store its gas under
Ms. Hammonds’s property without paying rent; and
(b) prohibited her from extracting it.
• Suppose Ms. Hammonds then claims this is an
unconstitutional taking of her property.
We’ll apply the authorities we study to this
problem to help see what they do.
Unit Three : Introduction
DQ3.04: Police Power (Krypton)
• “Police Power” = Basic Authority of State Gov’ts
• Can regulate to protect/further “HSWM”
•
•
•
•
Health
Safety
Welfare [general well-being including economic success]
Morals
• Good lawyer can tie virtually any state law to one of
these purposes
Unit Three : Introduction
DQ3.04: Rational Basis Review (Krypton)
• Is Challenged Law “Rationally Related to a
Legitimate State Purpose”?
– Minimal Test for Constitutionality Under Due
Process & Equal Protection Clauses
– Applies When No Specific Constitutional Provision
is Violated
– Very Deferential: Gov’t Virtually Always Wins
Unit Three : Introduction
DQ3.04: Rational Basis Review (Krypton)
• “Rationally Related to Legitimate State Purpose”
– What is Purpose?
– Is Purpose Legitimate?
• Arising under Police Power (HSWM)
• Not Just to Harm Individuals or Group
– Is Law “Rationally Related” to Purpose?
Unit Three : Introduction
DQ3.04: Rational Basis Review (Krypton)
• “Rationally Related to Legitimate State Purpose”
– What is Purpose?
– Is Purpose Legitimate?
– Is Law “Rationally Related” to Purpose?
• Not asking if “rational” to a psychologist or economist
• Term of art = a rational legislator could believe the state
law will help further its purpose, at least a little bit
• Doesn’t have to be best option or even particularly good
Unit Three : Introduction
DQ3.04: Rational Basis Review (Krypton)
• Apply to Airspace Solution
– What is Purpose?
– Is Purpose Legitimate?
• Arising under Police Power
• Health Safety Welfare Morals
– Is Law “Rationally Related” to Purpose?
• Could a rational legislator believe the state law will help
further its purpose, at least a little bit?
Unit Three : Introduction
DQ3.05: Demsetz Takings Story
Description of How Takings Cases Arise
• Change leads to rising externalities
• Creates a demand for a change in the law.
• After the change, people affected by the new law
complain that their property rights have been
taken.
Unit Three : Introduction
DQ3.05: Demsetz Takings Story
Airspace Solution?
• Change leads to rising externalities
• Creates a demand for a change in the law.
• After the change, people affected by the new law
complain that their property rights have been
taken.
Unit Three : Introduction
DQ3.05: Demsetz Takings Story
Description of How Takings Cases Arise
• Change leads to rising externalities
• Creates a demand for a change in the law.
• After the change, people affected by the new law complain that their
property rights have been taken.
Long Term Q for You:
If this story represents a common pattern among
Takings cases, what does that suggest about the
proper role of the Takings Clause?
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