ELEMENTS B POWER POINT SLIDES Class #29 Monday, November 9, 2015 National Scrapple Day

The Essential Duke Ellington Duke Ellington & His Orchestra Disc 1: Music 1920s & 30s OFFICE HOURS Cancelled Today Added for This Wednesday Fajer’s Exam Technique Workshop Encore Presentation Tomorrow in Room 12:30-1:50 pm

Hadacheck v. Sebastian: Holding/Rules DQ3.09 Apply rules/principles from Hadacheck to “Airspace Solution”

Hadacheck v. Sebastian: Holding/Rules DQ3.09 Apply rules/principles from Hadacheck to Airspace Solution (from Friday): OK under Broad Versions Exercise of police power Constitutional if not arbitrary. Exercise of police power Constitutional if not arbitrary. Take-Aways from Klotz-Fajer Discussion Friday: Perception of “Unfairness” isn’t Same as Arbitrary All Surface Os Except Gas Reinserters Treated Alike Airspace Solution Genuinely Addresses Reinsertion Policy 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 human health & safety. Encouraging Reinsertion, which Increases Safety

Hadacheck v. Sebastian: Holding/Rules DQ3.09 Apply rules/principles from Hadacheck to Airspace Solution: Exercise of police power Constitutional if not arbitrary and prohibiting nuisance/ harmful use of land. Exercise of police power Constitutional if not arbitrary and prohibiting nuisance/ harmful use of land. Brickyard Os Hadacheck : Govt Prohibiting Harmful Use by Brickyard Os

Takings Problems Mapping Chart: Make Sure You Are Using Correct Factual Parallels CaseGov’t ActAffected Landowner Intended Beneficiaries HadacheckLA Bans Brickyards Brickyard OsNeighbors “Airspace Solution” Rights to Empty Gas Pools Surface OsGas Companies

Hadacheck v. Sebastian: Holding/Rules DQ3.09 Apply rules/principles from Hadacheck to Airspace Solution: Exercise of police power Constitutional if not arbitrary and prohibiting nuisance/ harmful use of land. Exercise of police power Constitutional if not arbitrary and prohibiting nuisance/ harmful use of land. Brickyard Os Hadacheck : Govt Prohibiting Harmful Use by Brickyard Os Surface Os? In Airspace Hypo, Similar Harmful Use by Surface Os? Not unless you stretch “Harmful Use” to include refusal to allow use of pool. Not unless you stretch “Harmful Use” to include refusal to allow use of pool.

Hadacheck v. Sebastian: Holding/Rules DQ3.09 Apply rules/principles from Hadacheck to Airspace Solution: Kelso (& Maybe Hadacheck): Unconstitutional if all value removed: Kelso (& Maybe Hadacheck): Unconstitutional if all value removed: Raises “Denominator Question”: Do We Look At: – All of Hammonds’s Parcel (Tiny % Lost) – Only at Underground Pools (100% Lost)

Hadacheck v. Sebastian: Holding/Rules DQ3.09 QUESTIONS ON HADACHECK OR APPLICATION TO “AIRSPACE SOLUTION”?

LOGISTICS: CLASS #29 We’re a little 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 Complete Assignment Sheet on Course Page Later Today

Takings Theorist #1: Joseph Sax & DQ OXYGEN

Takings Theorists: Joseph Sax Sax’s First Formulation “ Government-as-Enterpriser” “ Government-as-Enterpriser” Classic uses of Eminent Domain (Road, School etc.) Taking land for govt purpose, so should pay for “Government-as-Arbiter.” “Government-as-Arbiter.” conflicting land uses Govt resolving dispute between conflicting 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 Sax DQ3.10 “ Govt-as-Enterpriser” v. “Govt-as-Arbiter” “ 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)

Takings Theorists: Joseph Sax DQ3.10 “ Govt-as-Enterpriser” v. “Govt-as-Arbiter” “ 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 transfer property rights from one to the other to further strong public interest.

Takings Theorists: Joseph Sax DQ3.10 “ 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 from 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 or ecosystem (choosing between animals/habitat and landowners not exactly the same as choosing between two sets of owners)

Takings Theorists: Joseph Sax DQ3.11 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?

Takings Theorists: Joseph Sax DQ3.11 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? Easy; harm to health & property value from brick pollution – in “the Airspace Solution” to Hammonds Problem? Same issue as “stopping harmful use” from Hadacheck.

Takings Theorists: Joseph Sax DQ3.11 Sax’s Second Formulation 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 HARD Q 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.” conflicting land uses Govt resolving dispute between conflicting land uses When resolving dispute, no need to pay loser of dispute Sax’s Second Formulation State Can Regulate Without Compensating to Prevent “ Spillover Effects ” (= Negative Externalities) QUESTIONS ON SAX?

Unit Three : Introduction Relevant Considerations in Takings Cases Survey of Instincts About What Facts Matter % Reduction in Value (88%) Ban on Intended Use (85%) Purpose of Regulation (71%)= Hadacheck (Police Powers); Sax (Enterpriser v. Arbiter; Stopping Spillovers) $$$ Amount Reduction (59%) $$$ Amount Left (49%) = Kelso (left open by Hadacheck) Return on Investment (32%)

Pennsylvania Coal Co. v. Mahon We’ll Start with Brief Introduction to 1922 & to Justices 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 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: 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: – 1 st Radio in White House & 1 st Presidential Broadcast – 1st Paid Commercial – 1st Coast-to-Coast Broadcast of a Football Game – 1st Play-by-Play of World Series (Giants over Yankees) Mah Jongg introduced in US; becomes a craze; by 1923, tile sets outselling even radios

Early Foreshadowings of WWII 1922: WORLD EVENTS Early 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 Responsibility N EW Y ORK T IMES, 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: DQ Introduction to Case and Arguments from Earlier Precedent

Pennsylvania Coal Co. v. Mahon DQ3.12: 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 Assume CCs Have to Give Surface Os Adequate Notice Before Undermining

Pennsylvania Coal Co. v. Mahon DQ3.12: 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 Assume CCs Have to Give Surface Os Adequate Notice Before Undermining – Is action rationally related to protecting Safety? to protecting Safety? to improving/protecting Welfare? to improving/protecting Welfare?

Pennsylvania Coal Co. v. Mahon DQ3.12: Introduction (Krypton) 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

Pennsylvania Coal Co. v. Mahon DQ3.12: Introduction (Krypton) 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?

Pennsylvania Coal Co. v. Mahon DQ3.12: Introduction (Krypton) 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

Pennsylvania Coal Co. v. Mahon DQ3.12: Introduction (Krypton) 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 no factual record – Holmes: (very bottom of p.117) “warranted in assuming” statute makes mining “commercially impracticable”, so whole value gone.

Pennsylvania Coal Co. v. Mahon DQ3.12: Introduction (Krypton) 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 no factual record – Holmes: “warranted in assuming” whole value gone. aught – Brandeis: (2d line top of p.120) “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

Mahon: Externalities & Contract Rights BUT Direct harm to surface owners not an externality b/c not external to decisions/activities of CCs. BUT Externalities beyond direct harm to surface owners society – Costs to society 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.) (so these are externalities to contract)

Mahon: Externalities & Contract Rights BUT Direct harm to surface owners not an externality b/c not external to decisions/activities of CCs. BUT 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

Mahon: Externalities & Contract Rights BUT Direct harm to surface owners not an externality b/c not external to decisions/activities of CCs. BUT 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 – Cf. Implied Warranty of Habitability

Mahon DQ3.12: Demsetz Takings Story (Krypton) Decision: Undermine surface? Old Rule: OK if own subsidence rights Externalities: Harm to non-parties/society (lost value/dislocation) Changes  Increased Externalities?

Mahon DQ3.12: Demsetz Takings Story (Krypton) Decision: Undermine surface? Old Rule: OK if own subsidence rights Externalities: 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

Mahon DQ3.12: Demsetz Takings Story (Krypton) Decision: Undermine surface? Old Rule: OK if own subsidence rights Externalities: Lost value/Dislocation Costs Changes  Increased Externalities Rule Change: Kohler Act Losers 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?

Mahon DQ3.12: Demsetz Takings Story Holmes (last paragraph of majority opinion): “The question … is upon whom the loss of the changes desired should fall. …”

Mahon DQ3.12: Demsetz Takings Story 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.”

Mahon DQ3.12: Demsetz Takings Story 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.118: “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--i.e., transfer property rights--not merely to resolve a dispute parties couldn’t settle themselves).

Mahon Under Authorities We’ve Studied 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.

Mahon Under Authorities We’ve Studied 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

Mahon Under Authorities We’ve Studied 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 Analysis Krypton: DQ Uranium: DQ

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 ppty 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 Majority What Does “Too Far” Mean? Holmes’s Analysis: 1.Subsidence Right defined as property right in Pa & specifically contracted for 2.Loss of Subsidence Right effectively makes Mineral Rights valueless 3.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 Majority Very 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; AND 4.is not addressing widespread public harm; AND 5.does not create reciprocity of advantage.

Mahon Analysis: Holmes Majority Explore Possible Broader Holdings by 1.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. Opinion 3.Will Yield Possible Rules: DQ3.17

Mahon Analysis: Holmes & Brandeis DQ3.14: Height Restrictions (Krypton) Measuring Loss of Value HMS argument similar to Kelso HMS argument similar to Kelso – Relevant property here is mineral rights – Assumes Act reduces value to 0  Taking BDS disagrees for two reasons BDS disagrees for two reasons 1.Doesn’t accept that value of mineral rights is 0 2.Need to view mineral rights in context of “value of all other parts of the land.” (last para. p. 119)

Mahon Analysis: Holmes & Brandeis DQ3.14: Height Restrictions (Krypton) Measuring Loss of Value BDS: Need to view mineral rights in context of “value of all other parts of the land.” BDS: Need to view mineral rights in context of “value of all other parts of the land.” – Look at value of coal and surface together, not value of coal alone – Why? Owner can’t get more rights v. Gov’t by dividing land. – Example/Analogy: Height Restrictions

Mahon Analysis: Holmes & Brandeis DQ3.14: Height Restrictions (Radium) Measuring Loss of Value BDS Example/Analogy: Height Restrictions – Like Kohler Act, forbid use of part of parcel – BUT conceded to be valid/Constitutional – Height restrictions not characterized as: “Value of air rights reduced to 0. ”

Mahon Analysis: Holmes & Brandeis DQ3.14: Height Restrictions (Radium) Measuring Loss of Value BDS Example/Analogy: Height Restrictions BDS Example/Analogy: Height Restrictions – p : “[N]o one would contend that by selling his interest above 100 feet from the surface he could prevent the state from limiting, by the police power, the height of structures in a city. And why should a sale of underground rights bar the state’s power?” We’ll revisit issue in Penn Central.