Source: http://www.nelfonline.org/docket/archives/10-2005
Timestamp: 2019-04-19 15:15:38+00:00

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This case involved a ship owner, American Pelagic Fishing Co. (“American Pelagic”), who made a substantial investment in a large fishing ship based on a regulatory scheme that encouraged mackerel and herring fishing and obtained the required federal permits Rival fishing interests succeeded in having the regulations changed, thereby destroying the American Pelagic’s investment. American Pelagic sued the United States in the Court of Federal Claims for a regulatory taking. It prevailed in that forum, in part because of the targeted nature of the legislation that retroactively revoked its permits. The United States appealed this decision to the United States Court of Appeals for the Federal Circuit, and the Federal Circuit reversed primarily on the basis that because, prior to American Pelagic’s investment, the federal government already had complete sovereignty over the maritime zone at issue in the case (the “Exclusive Economic Zone”), American Pelagic had no cognizable property interest and, accordingly, is entitled to no relief. Potentially, this decision could be read to indicate that investors in any heavily regulated industry have no protectible property interest in their investments.
On October 7, 2004, NELF filed an amicus brief in support of American Pelagic’s request for a rehearing of this matter en banc. NELF argued, first, that the Federal Circuit’s decision represents poor public policy, as it would discourage investment in highly regulated industries. Second, NELF argued that the panel’s decision in this case was directly contrary to the recent Federal Circuit decision in Cinega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003), which held, inter alia, that “the fact that [an] industry is regulated [is not] dispositive,” and that, the mere fact of heavy regulation, “does not mean that all regulatory changes are reasonably foreseeable or that regulated businesses can have no reasonable investment-backed expectations whatsoever.” The Federal Circuit denied reconsideration en banc. American Pelagic petitioned for certiorari and NELF submitted a supportive amicus brief that focused on the Federal Circuit’s misunderstanding of the limited nature of the federal government’s sovereign rights in the Exclusive Economic Zone. On June 27, 2005, the Supreme Court denied certiorari.
Rose Acre Farms is large, family-owned egg producer headquartered in Indiana. It operates eight egg farms. In 1990 and early 1991, the United States Department of Agriculture (USDA) detected signs of salmonella on three of Rose Acre Farms’ farms. The three affected farms in total had approximately 307,000 chickens in 69 “layer houses.” USDA imposed restrictions on the affected layer houses for approximately 25 months requiring the diversion of nearly 700 million healthy eggs to a lower priced alternative market, resulting in losses exceeding $9.2 million. Rose Acre contended that available screening methods could have readily distinguished healthy from salmonella-infected eggs, but the USDA chose the over inclusive method of restricting all eggs from affected layer houses. Rose Acre brought a claim for a partial regulatory taking in the Court of Federal Claims for the lost value of the healthy eggs and the court found in favor of Rose Acre Farms. Rose Acre Farms, Inc. v. United States, 55 Fed. Cl. 643 (2003). The Court of Appeals for the Federal Circuit reversed and remanded for reconsideration of several elements of the Penn Central partial regulatory takings test. Rose Acre Farms, 373 F.3d 1177 (Fed. Cir. 2004).
A principal issue for the Federal Circuit was the definition of the affected property to be considered when conducting a Penn Central partial regulatory taking. The extent of the affected property is significant for the test because percentage diminution in value of the affected property caused by the regulation is a major aspect of the Penn Central test. The terminology from Penn Central indicates that the analysis is to be performed on the “parcel as a whole,” a phrase that gives little guidance in the area of personal property. Even in regard to real property, different courts have interpreted the phrase in different ways. The Court of Federal Claims considered the affected layer houses as the “parcel as a whole” and awarded recovery, while the Federal Circuit considered the affected farms as the “parcel of the whole” and indicated that there was little likelihood of recovery. Rose Acre petitioned the United States Supreme Court for certiorari. No. 04-1149 (U.S.).
NELF, together with Defenders of Property Rights, the United Egg Producers, and the Iowa Poultry Association submitted an amicus brief supporting the petition. NELF argued that the doctrinal confusion around the meaning of “parcel as a whole,” especially in regard to personal property, warrants granting certiorari to set standards for determining the extent of affected property under the Penn Central test. On June 6, 2005, the Supreme Court denied certiorari.
The issue before the Supreme Court in this case was whether federal courts should create an exception to the full faith and credit statute, 28 U.S.C. § 1738, for regulatory taking claims brought under the Fifth Amendment. This question arose because of the holding in Williamson County Regional Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), that a Fifth Amendment regulatory takings claim is not ripe for federal adjudication until the plaintiff has first sought unsuccessfully to obtain adequate compensation for the taking through all available state procedures, including state court litigation. The San Remo hotel in San Francisco brought a takings claim in federal court contesting a city ordinance that required a $567,000 fee in 1996 to convert from a residential to a tourist hotel. Under Williamson County, the federal case was stayed, while the matter was litigated under state law in the California courts. The California courts, however, did not simply adjudicate San Remo’s claims under California law; they also decided that there was no viable federal constitutional claim. Returning to the federal court, San Remo found its case dismissed under the full faith and credit statute because the matter had been fully adjudicated by the California courts. In the Supreme Court, San Remo argued that, unless full faith and credit is interpreted to allow re-litigation of federal issues in regulatory takings cases, the result of Williamson County will be that plaintiffs in such matters will be forced to litigate their claims in state courts without any realistic possibility of review of a decision on their federal constitutional claims in a federal forum (unless certiorari were to be granted by the Supreme Court to review directly the state court’s decision).
In an amicus brief jointly filed with the Defenders of Property Rights, NELF argued that San Remo provided the Court with an opportunity to reconsider the complex and expensive ripening process mandated under Williamson County. NELF argued that the Fifth Amendment should not require prior, duplicative state court litigation and that the more appropriate ripeness requirement for regulatory takings would permit a federal case to be brought once a state or local government renders a final decision restricting the full use of private property, without contemporaneously providing compensation.
The Supreme Court was not persuaded by San Remo’s arguments and on June 20, 2005 issued a decision unanimously affirming the lower court’s dismissal of the takings claim under the full faith and credit statute. However, in a separate concurrence joined by Justices O’Connor, Kennedy, and Thomas, Chief Justice Rehnquist suggested that Williamson County may not have been correctly decided, referring specifically to NELF’s brief in a footnote. Noting that the courts below had not addressed this issue and that neither party had asked the Court to reconsider Williamson, Justice Rehnquist stated his view that, in an appropriate case, the Court should reconsider Williamson.
At issue in this case was the claim by Connecticut’s Banking Commissioner that the Connecticut-based Wachovia Mortgage Corp. (“Wachovia Mortgage”) is subject to state regulation even though it is a wholly-owned subsidiary of Wachovia Bank (“Wachovia”), which is a national bank. Connecticut’s position is directly contrary to 12 C.F.R. § 7.4006, a federal regulation promulgated by the Office of the Comptroller of the Currency, which provides that “[u]nless otherwise provided by Federal law or OCC regulation, State laws apply to national bank operating subsidiaries to the same extent that those laws apply to the parent national bank.” Since state laws do not apply to national banks, under this regulation they also do not apply to a national bank’s wholly owned subsidiary.
In this case, Wachovia Mortgage was initially a partially-owned subsidiary of Wachovia and, as such, it complied with Connecticut’s state licensing, inspection and reporting procedures. When Wachovia Mortgage became a wholly-owned subsidiary on January 1, 2003, it notified the Connecticut Banking Commission and claimed exemption from state regulation under § 7.4006 and the Supremacy Clause. The Commissioner responded by threatening to issue a cease and desist order, prohibiting Wachovia Mortgage from doing business in Connecticut unless it renewed its state license. Wachovia and Wachovia Mortgage then initiated a declaratory judgment in the federal district court in Connecticut, obtaining a judgment that Wachovia Mortgage is exempt from state regulatory oversight. Wachovia Bank, N.A. v. Burke, 319 F. Supp. 2d 275 (D. Conn. 2004). The Connecticut Banking Commissioner appealed to the U.S. Court of Appeals for the Second Circuit.
Consistent with NELF’s longstanding support for rational administrative procedures that provide adequate oversight without burdening business with conflicting mandates, NELF filed an amicus curiae brief on November 8, 2004, in the Court of Appeals for the Second Circuit appeal in support of Wachovia. In its brief, NELF concentrated its argument on the reasonableness prong of the federal preemption analysis of Chevron, USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984), in order to counteract the Banking Commissioner’s public policy argument that state regulation of national banks’ mortgage subsidiaries is required to prevent abuses like “predatory lending.” NELF argued that (1) duplicative state and federal regulation is economically inefficient and (2) constitutional history demonstrates the importance of the Supremacy Clause and federal preemption as part of the system of checks and balances in the United States federal system.
NELF filed an amicus brief supporting petitioners on behalf of itself and two New London citizens’ groups that had proposed alternative development plans which didn’t require destruction of petitioners’ homes. NELF argued, first, that the taking was not for a “public use” under the Fifth Amendment, since the property was going to be privately developed, principally for private or undetermined uses. NELF noted that the Supreme Court had only permitted the taking of property for private development under exigent circumstances not present in this case (such as the redevelopment of a blighted urban area that was a threat to public health and safety). For these reasons NELF argued that the Fifth Amendment’s requirements were not satisfied and the development corporation could not take petitioners’ homes.
Conservation Law Foundation v. Hannaford Bros., Inc.
The question raised in this case was whether the owners of a shopping mall parking lot located in South Burlington, Vermont, should be required to obtain a National Pollution Discharge Elimination System (“NPDES”) permit under the Clean Water Act (“CWA”) for the storm water runoff from the parking lot even though neither the federal Environmental Protection Agency (“EPA”) nor the delegated state agency, the Vermont Agency for Natural Resources (“VANR”) has required the owners to obtain such a permit. Under the broad definitions of the CWA, the storm water runoff is a point source that discharges pollutants into United States waters (in this case, Lake Champlain).
At issue were the interpretation of the 1987 amendments to the CWA and the regulations promulgated by the EPA under those amendments. Hannaford’s position—which was supported by the EPA—was that the EPA and the delegated state authority (the VANR) have residual authority under the CWA to require that a storm water runoff permit be obtained upon a determination that it is necessary. Absent such a determination, the owners in this case are not required to obtain a permit. CLF, on the other hand, argued that Congress’s amendment of the CWA did not alter the CWA’s original requirement that all storm water runoffs that discharge pollutants into the nation’s waters are illegal absent an NPDES permit. After having its complaint dismissed by the Federal District Court in Vermont, CLF appealed to the Second Circuit.
On October 29, 2004, NELF filed an amicus brief in support of Hannaford’s opposition to CLF’s appeal, presenting to the Second Circuit its members’ concern that, if CLF prevailed in the case, it would mean that all owners of storm water runoffs that discharge into federal waters, from large and small businesses to individual home owners, would be required to go through the complicated permitting process even though the agencies charged with carrying out the mandate of the CWA have not determined that this is necessary. This would involve potentially huge expense and inconvenience that NELF argued would have a negative effect on land development and the New England economy in general.
On July 22, 2005, the Court of Appeals, agreeing with Hannaford and NELF, entered a Summary Order affirming the District Court’s decision dismissing CLF’s complaint.

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