LOGISTICS: CLASS #32

LOGISTICS: CLASS #32• Group Written Assignment #1: Coded Feedback on Question 1 for

All Three Sub-Assignments on Course Page. Can look at more than your own work.

• Group Written Assignment #3: Recurring Qs about Titles and Subject Headings:– (1)(f) Do not repeat the subjects of the arguments I have given you; simply

make the arguments. MEANS: Don’t include phrases from the instructions like: “Choose two factual differences between the situations addressed in the escaping animals cases and the recovery of sunken treasure in international waters.”

– For Sub-Assignments 3A & 3C: No need for any titles. Just state your arguments .

– For Sub-Assignment 3B: Instructions say to begin arguments (1) (4) by listing the particular factor you are discussing in that argument. That is the only title you need for these arguments.

LOGISTICS: CLASS #32• We’re behind where we need to be.• Today + Wed.: I’ll mostly lecture through

Sax, Mahon, Epstein, Miller. • Fri: If we’re back on track, more normal class• Last Set of Materials Posted Mid-Week

MUSIC: Alberta HunterComplete Recorded Works Vol. 2: 1923-24

Hadacheck v. Sebastian (1915)

Continued

DQ 3.09

Hadacheck v. Sebastian: Holding/Rules

DQ3.09 What rules or principles can you derive from Hadacheck to use in future cases? •Start with very broad holding: Any Any exercise of police power is exercise of police power is Constitutional if not arbitrary.Constitutional if not arbitrary.

•Narrower Versions?


DQ3.09VERY BROAD: Exercise of police power

Constitutional if not arbitrary. NARROWER EXAMPLES: – Exercise of police power Constitutional if

not arbitrary and related to human health & safety.

– Exercise of police power Constitutional if not arbitrary and related to substantial concerns re human health & safety.

– Exercise of police power Constitutional if not arbitrary and prohibiting public nuisance/ harmful use of land.


DQ3.09Other possible rules or principles:•Prohibiting existing use not automatically unconstitutional•Large decrease in property value not automatically unconstitutional

Note that even Conservative Note that even Conservative commentators generally OK with these commentators generally OK with these where purpose is to prevent substantial where purpose is to prevent substantial

health/safety risks.health/safety risks.


DQ3.09Other possible rules or principles:•Prohibiting existing use not automatically unconstitutional•Large decrease in property value not automatically unconstitutional

•Maybe: Unconstitutional if all value removed (following Kelso)•Private interests must yield to progress & good of community (See third full paragraph p.109)


DQ3.09

Apply rules/principles from Hadacheck

to “Airspace Solution”

FINAL EXAM QUESTION 3Mapping Chart

Case Gov’t Act Affected Landowner

Intended Beneficiaries

Hadacheck LA Bans Brickyards

Brickyard Os Neighbors

Mahon PA Bans Undermining

Coal Companies

Surface Os

“Airspace Solution”

Rights to Empty Gas Pools

Surface Os Gas Companies


DQ3.09Apply rules/principles from Hadacheck

to “Airspace Solution”

•Exercise of police power Constitutional if not arbitrary.

•Exercise of police power Constitutional if not arbitrary and related to human health & safety

•Exercise of police power Constitutional if not arbitrary and prohibiting nuisance/ harmful use of land

•(Maybe): Unconstitutional if all value removed


DQ3.09Apply Hadacheck to “Airspace

Solution”?•Airspace Solution OK under broader readings of reach of police power.•If Kelso rule applies, raises “Denominator Question”: Do We Look At:

– All of Hammonds’s Property (Tiny % Lost)– Only at Underground Reservoirs (100% Lost)

QUESTIONS ON HADACHECK?QUESTIONS ON HADACHECK?

Takings Theorist #1:Joseph Sax & DQ3.10-3.11

Takings Theorists: Joseph Sax

Sax’s First Formulation

•“Government-as-Enterpriser” • Classic uses of Eminent Domain (Road, School

etc.)• Taking land for govt purpose, so should pay for

•“Government-as-Arbiter.” • Govt resolving dispute between conflicting conflicting

land uses land uses • Not just conflicting parties• “Reese’s Peanut Butter Cup” Problems

• When resolving dispute, no need to pay loser of dispute

Takings Theorists: Joseph SaxDQ3.10

“Govt-as-Enterpriser” v. “Govt-as-Arbiter”

•Apply to Hadacheck: Pretty Clearly Arbiter Case (even though city may benefit some)

•Circumstance Where It’s Hard to Tell?• E.g., Looks Like Arbiter but One Side of

Dispute is Govt Owned (School, Military Base, Hospital)


“Govt-as-Enterpriser” v. “Govt-as-Arbiter”

•Apply to Airspace Solution to Hammonds Problem

• Could View as Arbitration between Gas Cos. & Other Surface Owners

• Could View as Taking Property from Other Surface Owners for Gas Cos to Use for Large Public Benefit

• Could generalize: Sax unclear if arbitrating between two private parties, but result is to give one party property rights of the other to further strong public interest.


“Govt-as-Enterpriser” v. “Govt-as-Arbiter” Three Situations that are Difficult to Categorize

1.Looks like arbitrating, but one side of dispute is gov’t owned (School, Military Base, Hospital)2.Looks like arbitrating, but result is to transfer property rights of one party to the other to further strong public interest (not simply saying owner can’t do X) (Airspace Solution) 3.Limit on uses of private property to protect wildlife (choosing between animals and landowners not exactly the same as choosing between two sets of owners)


Sax’s Second Formulation

•State Can Regulate Without Compensating to Prevent “Spillover Effects” (= Negative Externalities)

•What “spillover effects” or externalities is the state trying to prevent …

– in Hadacheck?




•What “spillover effects” or externalities is the state trying to prevent …

– in Hadacheck? Easy; harm to health & property value from brick pollution

– in “the Airspace Solution” to Hammonds Problem?



•What “spillover effects” or externalities is the state trying to prevent in “the Airspace Solution” to Hammonds Problem?

• Surface Os not currently using, so no spillovers from activity.

• BUT refusal to allow gas cos. to use creates large costs to society (safety, higher gas prices, etc.). HARD Q: should we treat these as “spillover effects” for Sax purposes?

Takings Theorists: Joseph Sax

Sax’s First Formulation

•“Government-as-Enterpriser” • Classic uses of Eminent Domain (Road, School etc.)• Taking land for govt purpose, so should pay for

•“Government-as-Arbiter.” • Govt resolving dispute between conflicting land uses conflicting land uses • When resolving dispute, no need to pay loser of

dispute



QUESTIONS ON SAX?

Unit Three : IntroductionRelevant Considerations in

Takings CasesSurvey of Instincts About What Facts

Matter

•Ban on Intended Use (90%)•% Reduction in Value (88%)

•Purpose of Regulation (63%) = Hadacheck (Police Powers); Sax (Enterpriser v. Arbiter; Stopping Spillovers)

•$$$ Amount Reduction (59%)

•$$$ Amount Left (56%) = Kelso (left open by Hadacheck)

•Return on Investment (39%)

Pennsylvania Coal Co. v. Mahon

We’ll Start with BriefIntroduction to 1922 & toJustices Holmes & Brandeis

1922

1922: BIRTHS• Bea Arthur • Helen Gurley Brown • Sid Caesar • Doris Day • Judy Garland • Redd Foxx • Boutros-Boutros Ghali• Jack Kerouac • Jack Klugman

Surrender Dorothy!

1922: BIRTHS

• Christopher Lee• Charles Mingus• Leslie Nielsen• Yitchak Rabin • Jean-Pierre Rampal• Carl Reiner • Charles M. Schulz• Kurt Vonnegut• Betty White

Betty & Saruman the White

1922: INTRODUCTIONS & DISCOVERIES

• 1st US Navy Aircraft Carrier • Better Homes & Gardens• British Broadcasting Co.• Campbell’s Soup• Dr. Doolittle• Eskimo Pie• Etiquette by Emily Post • Hollywood Bowl• Insulin Treatment of Diabetes • King Tut’s Tomb

• Lincoln Memorial Dedicated• 1st Microfilm Device • National Football League• Reader's Digest• Rin Tin Tin• Ulysses, by James Joyce• Vitamin D • The Waste Land by T.S. Eliot• Water Skiing• Yankee Stadium Construction

Begins (Opens 1923)

1922: U.S. EVENTS• Last horse-drawn fire equipment used in Brooklyn• Henry Ford makes more than $264,000 per day; AP says

he’s a billionaire• Growth of Radio: Many New Radio Stations + Many Firsts:

– 1st Radio in White House & 1st Presidential Broadcast– 1st Paid Commercial– 1st Coast-to-Coast Broadcast of a Football Game– 1st Play-by-Play of World Series (Giants over Yankees 4-0 + 1 tie)

• Mah Jongg introduced in US; becomes a craze; by 1923, tile sets outselling even radios

1922 Bonus Slide:New in American Popular Music

• Carolina in the Morning• Chicago• Do It Again• I’ll Build a Stairway to

Paradise• My Buddy

• Taint Nobody’s Business if I Do

• Toot, Toot, Tootsie• Way Down Yonder in

New Orleans

Louis Armstrong Goes to Chicago

1922 Bonus Slide: Federal Baseball Club v. National League

• U.S. Supreme Court holds Major League Baseball exempt from Federal Antitrust Laws (Still True)

• Justice Holmes’s Majority Opinion says the business of giving “exhibitions of base ball” is not interstate commerce, and so can only be regulated by the states.

1922: WORLD EVENTSEarly Foreshadowings of WWIIEarly Foreshadowings of WWII

• Ecuador & Egypt & Ireland Became Independent• Ottoman Empire Abolished• USSR Formed; Joseph Stalin appointed General

Secretary of the Soviet Communist Party• Japan: Crown Prince Hirohito Became Prince-Regent• Italy: Mussolini & Fascists Take Power • Germany: Runaway Inflation; Stock Market Crash;

Hitler Addressed 50,000 National Socialists in Munich

Justice Oliver Wendell Holmes

• Born in 1841• Fought in Civil War (Wounded at

Antietam & Fredericksburg) • Wrote The Common Law (1881)• Appointed to US Supreme Court in

1902• Served until 1932 (At time, oldest

Justice ever)• Died in 1935

Justice Oliver Wendell Holmes

"Holmes was a cold and brutally cynical man who had contempt for the masses and for the progressive laws he voted to uphold."

Jeffrey Rosen, Brandeis's Seat, Kagan's ResponsibilityNEW YORK TIMES, July 2, 2010.

Justice Louis Brandeis

• Born in 1856• Progressive Cause Lawyering

(Brandeis Brief)• Appointed to US Supreme Court in

1916 (first Jewish Justice)• Served until 1939; Died 1941

Justice Louis Brandeis“[T]he image of Brandeis, when [President] Wilson sent his name to the Senate … was one that frightened the Establishment. Brandeis was a militant crusader for social justice whoever his opponent might be. He was dangerous not only because of his brilliance, his arithmetic, his courage. He was danger-ous because he was incorruptible… . The fears of the Establishment were greater because Brandeis was the first Jew to be named to the Court.” -- Justice William O. Douglas

Holmes & Brandeis: Successors

& Introduction to US SCt Abbreviations• Holmes (1902) (HMS)

• Cardozo (1932) (CAR)• Frankfurter (1939)

(FFR)• Goldberg (1962) (GBG)• Fortas (1965) (FTS)• Blackmun (1970) (BMN)• Breyer (1994) (BRY)

• Brandeis (1916) (BDS)• Douglas (1939) (DGS)• Stevens (1975) (STV)• Kagan (2010) (KGN)

Pennsylvania Coal Co. v. Mahon

KRYPTON: DQ3.12-3.13

Introduction to Case and Arguments from Earlier Precedent

Pennsylvania Coal Co. v. MahonDQ3.12: Introduction (Krypton)

Govt Action at Issue = Kohler Act

(Forbids CCs from Causing Surface to Collapse While Mining if Certain Structures

Present)

•Purpose: Prevent Subsidence when Buildings on Surface (to further Safety and Welfare)

– Is action rationally related Is action rationally related • to protecting Safety? to protecting Safety? • to improving/protecting Welfare?to improving/protecting Welfare?


Govt Action at Issue = Kohler Act (Forbids CCs from Causing Surface to Collapse

While Mining

•Preventing Subsidence when Buildings on Surface = Rationally Related to Safety & Welfare

– Safety concerns possible re landscape after cave-ins even with proper notice.

– Welfare concerns possible from • property values of non-contracting neighbors.

• disruption of economy (Katrina issues)

• environmental harms


Govt Action at Issue = Kohler Act (Forbids CCs from Causing Surface to

Collapse While Mining

•What limits are placed on the CCs’ use of their property? •What uses of their property are still permissible?


• CCs can mine coal so long as surface stays up; means must leave some coal in place.

• What is the resulting harm to CCs? Uncertain!– Because of posture of case, no factual

record– The two opinions differ as to extent of

harm

–Harm according to Holmes?



• What is the resulting harm to CCs? – Uncertain because no factual record

– Holmes: (very bottom of p.113) “warranted in assuming” statute makes mining “commercially impracticable”, so whole value gone.

Harm according to Brandeis?



• What is the resulting harm to CCs? – Uncertain because no factual record– Holmes: “warranted in assuming” whole value

gone.

– Brandeis: (2d line top of p.116) “For aught that appears [in the record] the value of the coal kept in place by the restriction may be negligible….” [Means?]

Mahon DQ3.12: Demsetz Takings Story (Krypton)

Decision: Do CCs undermine surface when they mine?

Old Rule (before Kohler Act)?

Mahon DQ3.12: Demsetz Takings Story (Krypton)

Decision: Do CCs undermine surface when they mine?

Old Rule: Can undermine surface if own subsidence rights

Externalities?: Tricky Issue

Mahon: Externalities & Contract Rights

• Direct harm to surface owners not an externality b/c not external to decisions/ activities of CCs. – CCs paid surface owners in advance for

subsidence– As if Hadacheck sold land around factory

• On condition that they’d allow brickworks to continue despite dust, etc.; and

• Paid separately for the condition


• Direct harm to surface owners not an externality b/c not external to decisions/activities of CCs. BUTBUT

• Externalities beyond direct harm to surface owners– Costs to societysociety of loss of surface value & dislocation – Loose parallel: Contract to infect person w contagious

disease to test treatment: • Voluntary to subject (so not externality)• Not voluntary to others who might get disease from

subject (and to those who have to pay their medical costs, etc.)



• Externalities beyond direct harm to surface owners• Also may worry K price may not reflect real value

to society even of the specific land in Q– Did purchasers have equal bargaining power (e.g., if

coal company workers)– Hard to value catastrophic harm many years away– Maybe like sale of human organs, we simply don’t trust

that market operates properly

•



• Externalities beyond direct harm to surface owners

• Also may worry K price may not reflect real value• Could do analysis like “Contract void as against

public policy.” Don’t allow or don’t enforce– Where K has large costs to non-contracting parties– Where we don’t trust that K can be fair

Mahon DQ3.12: Demsetz Takings Story (Krypton-

D)Decision: Undermine surface? Old Rule: OK if own subsidence rightsExternalities: Harm to non-parties/society (lost

value/dislocation)Changes Increased Externalities?


D)Decision: Undermine surface? Old Rule: OK if own subsidence rightsExternalities: Lost value/Dislocation Costs

Changes Increased Externalities? Maybe: • Cities/towns more developed; more lost value/dislocation• More surface under contracts; more lost value/dislocation• Mines approaching populated areas, so harms more imminent


D)Decision: Undermine surface? Old Rule: OK if own subsidence rightsExternalities: Lost value/Dislocation Costs

Changes Increased ExternalitiesRule Change: Kohler ActLosers under new rule (CCs) claim unconst.

interference with property rights

Mahon DQ3.12: Demsetz Takings Story

Reminder: Repeated Focus on Demsetz Takings Story Intended to Raise Question for You:

Under what circumstances should the landowner bear the burden where

changing conditions make her formerly permitted use of land more harmful to society or make the harms

more apparent?


Holmes (last paragraph of majority opinion):

“The question … is upon whom the loss of the changes desired should fall. …


Holmes (last paragraph of majority opinion): “The question … is upon whom the loss of the

changes desired should fall. So far as private persons or communities have seen fit to take the risk of acquiring only surface rights, we cannot see that the fact that their risk has become a danger warrants the giving to them greater rights than they bought.”


Holmes (last paragraph of majority opinion): “So far as private persons or communities have seen fit to

take the risk of acquiring only surface rights, we cannot see that the fact that their risk has become a danger warrants the giving to them greater rights than they bought.”

Q going forward: In Hadacheck, owners purchased residential lots “taking the risk” of proximity to the factory. Why different than surface Os in

Mahon?

Mahon Under Authorities We’ve Studied

DQ3.13: Sax (Krypton)Facts of Mahon Under Sax

1.Gov’t as Arbiter or Enterpriser?•Difficulties w Arbiter …

– Gov’t is one side of dispute in many instances here (Holmes 2d para. p.114: “short sighted”).

– Parties here have already contracted re subject of land use dispute (so one side is really asking gov’t to override the contract, not merely to resolve a dispute parties couldn’t settle themselves).


DQ3.13: Sax (Krypton)Facts of Mahon Under Sax

1. Gov’t as Arbiter or Enterpriser?•Difficulties w Enterpriser…

– Dislocation harms from subsidence may fall on neighboring private landowners who did not contract with CCs (so real arbitration)

2. Preventing Spillover Effects: See analysis of externalities above.


DQ3.13: Hadacheck (Krypton)Facts of Mahon Under Hadacheck

•Purpose Arguments– Regulation OK if under Police Power? Easy YES– Reg. OK if Protecting Health/Safety? Harder – Reg. OK if Preventing Public Nuisance? (See DQ3.15)

•Kelso: OK if Value Left? – Compare Holmes v. Brandeis re value


DQ3.13: Hadacheck (Krypton)Facts of Mahon Under Hadacheck

•Prior Use Can’t Stop Progress? Hard to Use– CCs not really claiming rights through prior use– Claiming rights through purchase– Might argue can limit/eliminate old type of property

interest to further progress of Penn cities/economy. •Other (significantly different) arguments from Hadacheck?•Qs on Mahon under prior Authority?

Mahon AnalysisRadium: DQ3.14-3.15Oxygen:DQ3.16-3.18

Hadacheck v. Mahon: Focus of Analysis

• Hadacheck: Main focus = purpose of regulation –Lots of scope if under police power–BUT reference to Kelso implicates Q of

what’s left

Hadacheck v. Mahon: Focus of Analysis

• Hadacheck: Focus on purpose• Mahon: Focus on change in property value

– Explicitly looks at what’s been taken away• Too great a “diminution in value” is a Taking• NOTE: explicitly not drawing clear line • Examine case by case to see if “goes too far”

– BUT some discussion of purpose (Holmes careful to say no safety issue)

Mahon Analysis: Holmes MajorityWhat Does “Too Far” Mean?

Holmes’s Analysis: 1.Subsidence Right defined as property right in Pa & specifically contracted for2.Loss of Subsidence Right effectively makes Mineral Rights valueless3.No safety issue (b/c notice)4.No issue of public harm: case about one house (though he goes on to address more)5.No “avg. reciprocity of advantage” (we’ll define later)

Mahon Analysis: Holmes MajorityVery Narrow Holding

A Gov’t Regulation is a Taking Where It:

1. Extinguishes a property right specifically contracted for by O;

2. renders O’s remaining property rights valueless;

3. is not addressing safety issue;4. is not addressing widespread public

harm; and5. does not create reciprocity of advantage.

Mahon Analysis: Holmes MajorityExplore Possible Broader Holdings

by1. Looking at the ways Justice Brandeis disagrees

with Justice Holmes re

a. Diminution in Value (DQ3.14)b. Public Nuisance (DQ3.15)c. Reciprocity of Advantage (DQ3.16)

2. Looking at Important Language in Maj. Opinion3. Will Yield Possible Rules: DQ3.17

Mahon Analysis: Holmes & Brandeis

DQ3.14: Height Restrictions (Radium)Measuring Loss of Value

•HMS argument similar to Kelso– Relevant property here is mineral rights– Assumes Act reduces value to 0 Taking

•BDS disagrees for two reasons1.Doesn’t accept that value of mineral

rights is 02.Need to view mineral rights in context of

“value of all other parts of the land.” (last para. p. 115)

Documents

LOGISTICS: CLASS #32