Meat Loaf, BAT OUT OF HELL (1977) SCHEDULE ADJUSTMENTS Today & Mon/Tue (11/19-20): Lecture (Hold Qs) Finish Michelman & Application of Theorists to PC Facts Analysis from PC Majority & Dissent (DQ127-34) Extend class as necessary on Mon/Tue to complete After Thanksgiving: Mon(B1)/Tue(B2) (11/26-27) Shift Oxygen DQs to these Classes Krypton on Ackerman & DQ Course Evaluations

Penn Central: DQ125 (Uranium) Arguments about PC from Prior Cases One Common Way to Do This: Compare Facts of Old Case to Facts of New Case/Hypo (E.g., Fayne argument from Mahon)

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC E.g., Compare Nectow to Penn Central: – PC: Less Interference w Ppty Rts (Value Left) – PC: Furthers Police Power (Welfare) (Nectow Didn’t) – Thus, Better Case for Gov’t than Nectow

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC E.g., Compare Hadacheck to Penn Central: – Importance of Gov’t Purpose

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC E.g., Compare Hadacheck to Penn Central: – Gov’t Purpose? Stronger in Hadacheck – Extent of Interference with Property Rights?

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC E.g., Compare Hadacheck to Penn Central: – Gov’t Purpose? Stronger in Hadacheck – Interference with Property Rights? Hard Call Had: Basically can do anything except existing use; may have substantial loss on investment. PC: Basically can only do existing use; still have reasonable return on investment.

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC If compare facts for all cases, should see that PC facts are between the other cases (like an exam Q): – Smaller interference w property rights than Mahon or Nectow; greater interference than Miller (Hard to say re Hadacheck) – Arguably less important purpose than Hadacheck or Miller; more important than Nectow or arguably Mahon (at least as described by Holmes)

Penn Central: DQ125 (Uranium) Compare Facts of Old Case to Facts of PC If compare facts for all cases, should see that PC facts are between the other cases (like an exam Q): Suggests Theorists especially helpful to resolve. Note that US SCt in PC explicitly relies on both Sax and Michaelman. (Epstein not yet written).

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT Must Understand Role of US Supreme Court – Setting Rules for Lots of Cases While Deciding One Case – Can Choose to Affirm or Modify Precedent; Must Defend Must think about best way to handle legal problem

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT Think about best way to handle legal problem. Keep in mind “legal problem” you will address: – NOT “Is the regulation a good idea?” – BUT “Has the regulation interfered with claimant’s property rights too much?” – As with other Constitutional questions, in effect asking “How should the gov’t operate?”

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT “Legal Problem” you will address: “Has the regulation interfered with claimant’s property rights too much?” Terminology Point: If we conclude that the regulation has interfered with property rights more than the Constitution allows (without paying), we call it a “Taking.” Thus: “Has the regulation interfered with claimant’s property rights too much?” = “Has the regulation interfered with claimant’s property rights so much that it constitutes a “Taking”?

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT “Legal Problem” you will address: “Has the regulation interfered with claimant’s property rights too much?” Policies at issue: – How much leeway do we give the democratically elected gov’t to regulate property? – How much protection do we give owners to use their land as they wish when majority disapproves? – NOT: What is best way to use this land? (Policy Q for state legislature, not federal court)

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT “Legal Problem” you will address: “Has the regulation interfered with claimant’s property rights too much?” Policies at issue: – How much leeway do we give the democratically elected gov’t to regulate property? – How much protection do we give owners to use their land as they wish when majority disapproves? – Theorists can give us ideas about these Qs.

Penn Central: DQ126 Apply Theorists to Facts of PC: Sax Arbiter v. Enterpriser: – Not Standard Arbiter Case b/c No Land Use Conflict – Not Standard Ent. Case b/c Gov’t Doesn’t Want to Run – Might Argue : More like Ent. b/c Gov’t Wants Parcel Used Only for Particular Purpose that Serves Gov’t Interest Control Spillover Effects – Not Preventing Harm to Other Land Uses – BUT: Externalities to NYC from decision to change bldg.

Penn Central: DQ126 Apply Theorists to Facts of PC: Epstein Stopping Public Nuisance: NO Implicit Compensation – Reciprocity? Last Time: Normally not for Hist. Preservation Penn Central does get some tourism benefits – Other Compensation? Tax Breaks: Probably Not Enough to Matter (Not Raised) TDRs: Could discuss; might depend on actual value

Takings Theorists: Frank Michelman DQ123 Compensate losers if Costs of Compensating (= Settlement Costs) are less than Costs of Not Compensating (= Demoralization Costs)

Takings Theorists: Frank Michelman DQ123: Settlement Costs High if many properties affected and losses are hard to value (Miller & Airspace Solution) Relatively low if few properties affected & value reduced to zero because loss easy to determine (Nectow)

Takings Theorists: Frank Michelman DQ123: Settlement Costs Hadacheck: – Probably easy to identify losers – Valuation may be easier b/c clear difference in use – BUT need to pay all similar. Expensive to pay off not just a couple of brickworks but any existing noxious use that might be banned.

Takings Theorists: Frank Michelman DQ123: Demoralization Costs Depends on Guesses re Public Reaction Likely Low if widespread small losses to achieve goal public sees as reasonable (Miller, but see Florida reaction re Citrus) Likely Low if public sees goal as very important (Hadacheck) (no need to pay to prevent substantial harm to humans)

Takings Theorists: Frank Michelman DQ123: Demoralization Costs Depends on Guesses re Public Reaction Likely High if public perceives substantial loss w/o strong reason (Nectow) Airspace Solution may depend on spin: – Greedy landowner trying to extort $$ for space she can’t use & driving up energy prices – Govt effectively completely taking rights to part of parcel without paying; giving to rich Gas Cos.

Takings Theorists: Frank Michelman DQ123: Fairness Principle OK not to compensate, if affected parties ought to understand how not compensating in similar cases probably is more beneficial in long run. Michelman likely thinks reasonable people OK with cases like Hadacheck w extensive harm Principle might have different result in Mahon because of possible harms to society from overturning established contract rights.

Penn Central: DQ126 Apply Theorists to Facts of PC: Michelman Settlement Costs – Easy to Identify “Losers” b/c NYC Designates – Valuation: Losses Vary w Parcel; Hard to Do Precisely – Lot of Landmarks; Some Amounts May Be Large; Demoralization Costs – Maybe Low b/c People Like Landmarks in Place – Helpful that PC Gets Reasonable Return, but Big $$$ Loss Fairness Principle: – Should Gov’t Have to Buy Landmarks to Prevent Change? – Hard Q; Leave Arguments for You

Takings Theorists: Frank Michelman Me if Questions on Michelman; I’ll Circulate Qs & Answers if Appropriate

Penn Central: Demsetz Takings Story This Analysis Provides Another Way to Think About Q of When Regulation Interferes Too Much w Property Rights Who Should Bear Burden for Changing Technology and/or Values? Though Not a Tough Question if “Change” is: “We’ve just discovered you’ve been poisoning us for years.”

Penn Central: Demsetz Takings Story Decision: Whether to alter historically significant building Old Rule: Os can do as they like. Externalities: Harm to nearby tourist businesses and tourism generally; harm to “history buffs” & civic pride Change in Circumstances: As time passes, historic buildings become more well-known/more popular/rarer Increased Externalities: Increase in [Perception of] Harms b/c more popularity; more reliance; loss of some historic buildings

Jacqueline Kennedy Onassis: "Is it not cruel to let our city die by degrees, stripped of all her proud monuments, until there will be nothing left of all her history and beauty to inspire our children? If they are not inspired by the past of our city, where will they find the strength to fight for her future? …

Jacqueline Kennedy Onassis: "Americans care about their past, but for short term gain they ignore it and tear down everything that matters. Maybe… this is the time to take a stand, to reverse the tide, so that we won't all end up in a uniform world of steel and glass boxes."

Penn Central: Demsetz Takings Story Decision: Whether to alter historically significant building Change in Circumstances: As time passes, historic buildings become more well-known/more popular/rarer Increased Externalities: Increase in [Perception of] Harms b/c more popularity; more reliance; fewer historic bldgs Change in Rule: Passage of Historic Preservation Laws Response: Os of historic buildings claim “Taking” b/c of interference w Property Rights:

Penn Central: Demsetz Takings Story Policy Questions State Legislature: Is Historic Preservation a Good Way to Address Growing Externalities? Federal Takings Analysis: Society decided relatively recently that historic preservation is important. – Fair to Os of historic bldgs to bear financial burden? OR – Should govt pay them to preserve landmarks?

FINAL EXAM QUESTION 3 OPINION/DISSENT FORMAT Requires You to Describe and Defend Two Positions Must Show that You Understand Range of Relevant Arguments Arising from Line of Cases Must Understand Role of US Supreme Court (Think About Best Ways to Analyze Takings Issues) Must Address One or More Difficult Unresolved Qs QUESTIONS?

Penn Central Transportation Co. v. City of New York (1978): Analysis

Last & Most Complex Case of Semester – Culmination of Skills: Read & Reread – Figure out range of arguments it creates – Figure out how it affects earlier cases – NOTE: Far & Away Most Important Case for Exam Question 3, which is worth more 25% of grade in Three Credit Course

Penn Central: Introduction DQ130: Arbitrary? Penn Central claimed designation of historical buildings arbitrarily singled out some property owners.

Penn Central: Introduction DQ130: Arbitrary? Majority: Not Arbitrary (pp ) Comprehensive Plan Here – No Singling Out: Rule applies to “vast numbers of structures” in NYC – Arbitrariness limited by judicial review of designation or decision

Penn Central: Introduction DQ130: Arbitrary? Majority: Not Arbitrary (pp ) Comprehensive Plan Here Hard to say gov’t action is “arbitrary” when PC didn’t exhaust other remedies: – Didn’t appeal designation as landmark – Didn’t appeal decision by Board to reject plans – Only tried 2 options for additional stories

Penn Central: Introduction DQ130: Arbitrary? Majority: Not Arbitrary (pp ) Comprehensive Plan Here Hard to say arbitrary gov’t action when PC didn’t exhaust other remedies: NOTE: US SCt not happy to be asked to decide constitutional Q that might be unnecessary, but Majority doesn’t reject claim for this.

Penn Central: Introduction DQ130: Arbitrary? Majority: Not Arbitrary (pp ) Comprehensive Plan Here PC didn’t exhaust remedies Not “arbitrary” just b/c falls more heavily on some landowners: regulatory burdens don’t have to be evenly distributed (citing Miller; Hadacheck; Euclid)

Penn Central: Introduction DQ130: Arbitrary? Majority: Not Arbitrary Same result on this claim as Hadacheck & Miller Reminder : Arbitrariness won’t be an issue for you. Leaves us with real Takings Question First Some Historical Context

The Blizzard of ‘78

1978: Births & Deaths BORN: Louise Brown: 1st test tube baby Clay Aiken * Kobe Bryant Nelly Furtado * Josh Hartnett Ashton Kutcher * Dirk Nowitzki Chase Utley * Reggie Wayne DIED Hubert Humphrey Margaret Mead Golda Meir Keith Moon Norman Rockwell

1978: Entertainment (Bonus Slide) John Travolta – Saturday Night Fever (Grammy for album) – Grease (movie) Vietnam movies (5 yrs after fall of Saigon) – Deer Hunter (best picture) – Coming Home (best actor & actress) Premieres: Dallas; Evita; Garfield

1978: Songs (Bonus Slide) Just the Way You Are (Billy Joel) Copacabana (Barry Manilow) Three Times a Lady (Commodores) Sailing (Christopher Cross) Paradise by the Dashboard Light (Meatloaf)

1978: International Camp David Accords: Peace treaty between Israel & Egypt Unrest in Iran & Nicaragua anticipates revolutions of ’79 US agrees to formally recognize People’s Republic of China Panama Canal Treaties ratified by Senate; will end US control of Canal as of end of ’99

1978: California I arrive at Stanford mid-September Calif. Propositions 13 & 6 (11/7) Jonestown Mass Suicide (11/18) Killing of Harvey Milk/George Moscone by Dan White (11/27)

1978: Other Memorable 1st US casinos outside Nevada open in Atlantic City Affirmed wins Triple Crown (not happened since) Red Sox & Yankees: Bucky Dent Pope Paul VI  Pope John Paul I  (53 Days)  Pope John Paul II

1978: U.S. Supreme Court Regents of the Univ. of California v. Bakke (affirmative action) Tennessee Valley Authority v. Hill (snail darter) Penn Central Transportation Co. v. City of New York (Grand Central Station)

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property Owner 5.Means/End Testing

Penn Central: Takings Analysis Big Qs Left Open by Penn Central A.Noxious Use B.Meaning of Distinct Invest-Backed Expectations (DIBE) C.Denominator Q D.DIBE & Hadacheck E.Heightened Scrutiny for Takings?

Penn Central: Takings Analysis Structure of Penn Central Takings Analysis 1.Overview 2.Relatively Clear Instances of Takings 3.Arguments from Purpose 4.Arguments re Harm to Property Owner 5.Means/End Testing

Penn Central Takings Analysis: Overview Majority Makes Clear: No Easy Answers – no “set formula” – “depends on particular circumstances” – essentially ad hoc factual inquiries – several relevant factors

Penn Central Takings Analysis: Overview Majority Makes Clear: No Easy Answers Not every case where gov’t action adversely affects property value (PV) is a Taking (p ) a.Taxing Power b.Economic harm insufficiently tied to claimant’s reasonable expectations to be called “property” (e.g., from closing military bases) c.Police Power cases like Miller & Hadacheck (more on later)