Court Opinion

ID: 8911120
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:02:26.287864+00
Date Added: 2024-06-11T17:08:32.381374
License: Public Domain

FAY, Circuit Judge,
concurring:
In this era of ever-groping federal tentacles, perhaps it is quixotic to brandish one small sword in a crusade against further invasion of the powers of states. With the hope that this battle cry will not be a last gasp, I will charge forward with the apparently anachronistic views that states are sovereigns, that states do control property and property rights. A significant conflict between federal and state interests must exist to preempt state control. Trimmed to the bone, the facts of this case are that a private, Georgia utility company desires privately-owned Georgia land from Georgia citizens for a private hydroelectric power and recreation project in Georgia to supply power to Georgia citizens and to provide profit to private investors. In looking to define “just compensation” when such a private, state-controlled utility company exerts the eminent domain power to acquire private land, federal law should not control the inquiry. I therefore concur in the majority result, although I would have reached that holding by a different route.
Despite the danger of appearing to have surrendered this battle, I will also suggest an additional basis for preferring state laws as federal rules of decision.
A. States Control Property
A helpful, if overly-simplified, starting point may be to sketch out several types of state-federal relationships. In some instances, the Constitution forbids states to act, or grants the federal government exclusive power to act. In these subject areas, state action is precluded. At the opposite end of the spectrum are the powers the Constitution reserves to the states.1 In *1125those areas, congressional authority to regulate states is limited. See, e. g., National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). Between these poles are areas that Congress has the power to regulate, and Congress either does or does not act. If Congress has not acted, state law is usually effective. If Congress has acted, and state law conflicts, the supremacy clause requires preemption of the state law, although Congress can designate state law to be applicable. At times Congress partially exercises its powers, leaving open some questions of applicable law. In those instances, the courts decide whether federal or state law applies, under the rubric of determining the choice of law or the rule of decision.
Essentially four situations exist, therefore, in which state law may apply: when Congress expressly adopts state law, when Congress has not exercised its powers, when Congress has acted leaving some areas open, and when the tenth amendment2 requires state law to apply of its own force. In cases involving the latter three situations, the courts must determine whether state law applies, of its own force or otherwise, and, except in some tenth amendment situations, whether it conflicts with federal programs or policies. The determination requires an inquiry into the traditional, constitutional allocation of power over subject matters between state and federal governments.
My objection to the current framework for determining choice of law is that it stands on its head the proper order of questions, losing sight of the inquiry into constitutional allocations of power. The path to choice between a federal or state rule has acquired many steps. First, the court decides whether the source of the right is state or federal. If the source is federal, the court inquires whether Congress has provided that either federal or state law should govern. In the absence of congressional statement, the court considers whether the federal rule should be to adopt state law, or to apply or fashion a uniform federal rule. In answering this question, the court initially determines whether use of .state law will truly conflict with effectuation of federal policies or programs. If the answer is “no,” the court balances federal interests in uniformity against the state’s interests in spheres traditionally left to local control.
In my view the initial inquiry should be into what the competing subject areas are. The first step should be a determination of whether the subject area is one traditionally left to state control, not whether the source of right is state or federal. Especially when dealing with those powers left to the states, the courts should tread gingerly to the conclusion that Congress has preempted the field. See Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 99 S.Ct. 802, 808, 59 L.Ed.2d 1 (1979); Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 477-80, 97 S.Ct. 1292, 1302-05, 51 L.Ed.2d 480 (1977); United States v. Yazell, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404 (1966). Indeed, a premise to the interstitial choice of law rulemaking is that Congress has not spoken, and therefore it should be rare to uncover an intent to preempt state law. Perhaps this explains why state law is adopted as the federal rule in so many choice of law cases.
Instead of focusing on the allocation of state-federal control over the subject areas, the current choice of law analysis requires looking to the source of the right in question. Very little space is spent discussing this threshold inquiry. If the source of right is determined to be federal, the requirements of Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) and the Rules of Decision Act3 do not apply to cause state law to operate of *1126its own force. The source of right is held to be federal whenever the case involves the Constitution, Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S.Ct. 573, 574, 75, 87 L.Ed. 838 (1943); see Butner v. United States, 440 U.S. 48, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979); a federal statute, UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966); a federal relationship, United States v. Standard Oil Co., 332 U.S. 301, 305-06, 67 S.Ct. 1604, 1606-07, 91 L.Ed. 2067 (1947); a federal program, United States v. Kimbell Foods, Inc., 440 U.S. 715, 726-27, 99 S.Ct. 1448, 1457-58, 59 L.Ed.2d 711 (1979); United States v. Little Lake Misere Land Co., 412 U.S. 580, 592, 93 S.Ct. 2389, 2396, 37 L.Ed.2d 187 (1973); an implied federal cause of action, Burks v. Lasker, 441 U.S. 471, 476-77, 99 S.Ct. 1831, 1836, 60 L.Ed.2d 404 (1979); a federal agency, United States v. Security Trust & Savings Bank, 340 U.S. 47, 71 S.Ct. 111, 95 L.Ed. 53 (1950); or a federal contract, United States v. Allegheny, 332 U.S. 174, 64 S.Ct. 908, 88 L.Ed. 1209 (1944).
In a world in which the ever-burgeoning federal government colors most aspects of life, this federal nexus is rarely lacking, and, accordingly, state law rarely applies of its own force.4 Indeed, these choice of law cases normally arise in federal court, and, absent diversity, presumably need some federal connection to enter the federal halls of justice. Therefore the question posed in the first step of the prevailing choice of law analysis is often answered the instant the action is commenced.
Perhaps it is splitting hairs to argue over the means for selecting state law as the rule of decision so long as that result is reached in the majority of cases. I, for one, however, find an inherent harm in this usurpation of state power contrary to the precepts of federalism, even if the displacement is in name only. But the characterization of the source of the question as federal goes beyond the appellation. First, the courts still may reject state law that conflicts with or is hostile to federal policies, or is aberrant. Although prevailing preemption analysis might also weed out conflicting state rules, to call the source federal casts uncertainty over whether, in any particular case, that state’s law will apply, or will be found lacking in federal court. Second, characterizing the source as federal binds state courts to follow the federal rule. Third, by entitling the source federal, state conflicts of law rules will not apply, even if the state law is adopted as the federal rule. Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Fourth, the characterization and subsequent steps of the analysis relegate state interests to a simple balancing against federal policies rather than requiring a focus on constitutional allocations and unconstitutional infringements of power.
In this case, the open question is one of property law, one of the few areas traditionally left to the states. See United States v. Little Lake Misere Land Co., 412 U.S. 580, 605-08, 93 S.Ct. 2389, 2403-05, 37 L.Ed.2d 187 (1973) (Stewart & Rehnquist, J.J., concurring); United States v. Yazell, 382 U.S. 341, 352-58, 86 S.Ct. 500, 506-10, 15 L.Ed.2d 404 (1966); United States v. Burnison, 339 U.S. 87, 89, 70 S.Ct. 503, 504, 94 L.Ed. 675 (1950); Davies Warehouse Co. v. Bowles, 321 U.S. 144, 155-56, 64 S.Ct. 474, 480-81, 88 L.Ed. 635 (1944); see also Sunderland v. United States, 266 U.S. 226, 232-34, 45 S.Ct. 64, 65, 69 L.Ed. 259 (1923). The Supreme Court sometimes mentions this tradition of state property control when choosing the federal rule. E. g. But-ner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979); United States v. Brosnan, 363 U.S. 237, 241-42, 80 S.Ct. 1108, 1111-12, 4 L.Ed.2d 1192 (1960); RFC v. Beaver County, 328 U.S. 204, 210, 66 S.Ct. 992, 995, 90 L.Ed. 1172 (1946). The property question arises be*1127tween a Georgia landowner and a privately-owned, Georgia utility company over land in Georgia condemned for a Georgia power project. Grant of a federal license is conditioned on the project’s being one that the United States should not undertake. 16 U.S.C. § 800(b) (1976). The major purpose of the Federal Power Act was to remove impediments to development of local power plants by granting licensees permission to infringe upon the federal navigational servitude.5 Under these circumstances state law should govern the definition of just compensation!
It is true that section 21 appears to grant licensees some eminent domain power, though it may be limited. See Public Utility District No. 1 v. Seattle, 382 F.2d 666, 669-73 (9th Cir. 1967). But see Dodson, 563 F.2d 1178, 1187-88 (5th Cir. 1977). To call the source federal and to apply the choice of law analysis, however, skips the questions of whether Congress can constitutionally act in the property area, and whether Congress can constitutionally delegate the federal eminent domain power to private individuals or other legal entities and immunize such recipients from the requirements of state law.6 I would not be so quick to displace state supremacy over property within its borders, especially when the federal interests are so slight.
B. State Law Preference
While I depart from the majority on the route it took, I agree that state law governs. Although “considerations of federalism”7 provide one ground for preferring state law, another fundamental constitutional principle supports electing state law as the tie breaker. As vital to our system as the notion of federal and state sovereignty is the concept of the separation of powers of the three federal governmental branches. If state law is not utilized, the federal courts must decide whether to fashion a federal rule, a process that may encroach on the legislative powers reserved to Congress.8 See Wallis v. Pan American Pe*1128troleum Corp., 384 U.S. 63, 68, 86 S.Ct. 1301, 1304, 16 L.Ed.2d 369 (1966); United Auto Workers v. Hoosier Cardinal Corp., 383 U.S. 696, 701, 86 S.Ct. 1107, 1110, 16 L.Ed.2d 192 (1966); United States v. Standard Oil Co., 332 U.S. 301, 313-16, 67 S.Ct. 1604, 1610-12, 91 L.Ed. 2067 (1947).9
This is not to suggest that federal courts have no power to shape federal common-law rules; the Supreme Court has reaffirmed for almost forty years the judiciary’s authority to fill many of the gaps left by Congress.10 Nor is it suggested that separation of powers principles would require adoption of state law in the face of a significant conflict between that law and federal directives; under the current framework, the balancing of state and federal interests does not occur until after a determination that state law is not inconsistent with federal goals. Furthermore, I recognize that separation of powers considerations may not carry as much weight for questions such as this one, in which the federal common-law rules have been long evolving without indication of congressional displeasure. It does seem to me, however, that separation of powers principles fortify a general preference for applying a state law rather than creating a federal rule when the weight of federal and state interests is close on balance.11 If the current framework for ana*1129lyzing choice of law must remain, principles of federalism and separation of powers support favoring state law as the rule of decision.
ALVIN B. RUBIN, Circuit Judge, with whom AINSWORTH, TJOFLAT and FRANK M. JOHNSON, Jr., Circuit Judges, join, dissenting.
Because I fail to perceive any sound reason to distinguish between condemnation proceedings brought by the United States and those in which it authorizes its power to be used by its statutory licensee for a federal public purpose, I respectfully dissent. Federal rules ex proprio vigore should apply to such condemnation proceedings for the reasons set forth in the majority opinion in Georgia Power v. 54.20 Acres of Land, 563 F.2d 1178 (5th Cir. 1977), cert. denied, 440 U.S. 907, 99 S.Ct. 1213, 59 L.Ed.2d 454 (1979), and followed in the panel opinion, 596 F.2d 644.

. It is probably the height of naivety to recall that some of us were taught that the federal government received its powers through delegation and that powers and authority not specificaily prohibited to the states nor delegated to the United States were retained by those same sovereign states. U.S.Const. amend. X.

. Reference to the tenth amendment is not meant to be exclusive but rather primary. See also U.S.Const. amend. XXI.

. See note 7 infra.

. In a review of the choice of law cases, one is impressed with how infrequently the source of right is not federal. In United States v. Yazell, 382 U.S. at 357, 86 S.Ct. at 509, the Court left unanswered whether state law applied of its own force or as a federal rule. Perhaps if the source of right is state law, the courts immediately move into standard preemption analysis. See Ferri v. Ackerman, — U.S. —, 100 S.Ct. 402, 62 L.Ed.2d 355, (1979).

. See Public Utility District No. 1 v. Seattle, 382 F.2d 666, 671 (9th Cir. 1967). Before the Federal Water Power Act of 1920 was enacted, the Rivers and Harbors Act of 1890 restricted construction of bridges, piers, and abutments on navigable streams. Additional legislation in 1899, 1906, and 1910 allowed construction of dams upon passing of a special bill in Congress but provided no protection for investors and permitted forfeiture or government takeover at any time. See H.R.Rep.No.61, 66th Cong., 1st Sess. 2-5 (1919).

. In Dodson, the majority concluded that the delegation was constitutional by analogy to the Natural Gas Act, upheld in Thatcher v. Tennessee Gas Transmission Co., 180 F.2d 644 (5th Cir.), cert. denied, 340 U.S. 829, 71 S.Ct. 66, 95 L.Ed. 609 (1960). 563 F.2d 1178, 1181. Cf. Public Utility District No. 1 v. Seattle, 382 F.2d 666 (9th Cir. 1967) (Congress has not bestowed the full measure of its eminent domain power on licensees, especially since licensees are often private companies operating for profit, not for a national interest).

. The majority finds the roots of federalism in the Rules of Decision Act. As suggested by note 6 of the majority opinion, however, commentators debate whether the Rules of Decision Act applies when the source of law is federal. If the source is federal, “the Constitution or Treaties of the United States or Acts of Congress” may “otherwise require” than that state laws be rules of decision. United States v. Little Lake Misere Land Co., 412 U.S. 580, 592-93, 93 S.Ct. 2389, 2396, 37 L.Ed.2d 187 (1973). See Note, Adopting State Law as the Federal Rule of Decision: A Proposed Test, 43 U.Chi.L.Rev. 823, 826 n.23 (1976). Other commentators believe that the Rules of Decision Act incorporates international conflicts of law principles to restrict the “cases where they [state rules] apply” to ones involving intra-ter-ritorial situations. R. Bridwell & R. Whitten, The Constitution and the Common Law 78-87, 99, 129-30 (1977). Although a question of federal source might involve a totally intrastate transaction, such as this one involving Georgia parties and Georgia property, it also might cover a setting in which choice of state law might force its application to cases with extraterritorial circumstances. Nevertheless, federalism principles do support a preference for choosing state law, regardless of whether those principles are embodied in the Rules of Decision Act or extracted from the Constitution’s structuring of the federal system.

. As the majority suggests, a third ground for preferring state law in this case is that the suit is between private parties. The Supreme Court has indicated that, especially when the United States is not a party, a strong conflict is needed to displace state law. Miree v. DeKalb County, Georgia, 433 U.S. 25, 31, 97 S.Ct. 2490, 2494, 53 L.Ed.2d 557 (1977); Bank of America v. Par*1128nell, 352 U.S. 29, 34, 77 S.Ct. 119, 121, 1 L.Ed.2d 93 (1956). For cases in which federal law was applied when the United States was not a party, however, see Illinois v. Milwaukee, 406 U.S. 91, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972) (federal rule applied in dispute between states over interstate pollution); Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743 (1946) (federal rule of equity applied in federal action between private parties). See also Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979); J. I. Case v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964); Tunstall v. Brotherhood of Locomotive Firemen & Enginemen, 323 U.S. 210, 65 S.Ct. 235, 89 L.Ed. 187 (1944); Sola Electric v. Jefferson Electric, 317 U.S. 173, 63 S.Ct. 172, 87 L.Ed. 165 (1942). The United States’ status as a party, however, certainly does not trigger the automatic generation of a federal rule. E. g., United States v. Kimbell, 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1978); United States v. Yazell, 382 U.S. 341, 86 S.Ct. 500, 15 L.Ed.2d 404 (1966); United States v. Brosnan, 363 U.S. 237, 80 S.Ct. 1108, 4 L.Ed.2d 1192 (1960).

. In Standard Oil, the Court turned down the opportunity to create a federal rule, but it also rejected use of a state rule. That case is therefore not solid support for a general state law preference, but it does reflect the Court’s concern that its rulemaking not infringe on powers best exercised by Congress. See also R. Brid-well & R. Whitten, supra note 7, at 133-34. These • authors also express the concern that judicial rulemaking rarely takes into account the parties’ expectations, which causes unfairly retroactive rulemaking, and uncertainty in the law and in private relations. Id. at 133. See majority opinion, note 17.

. Cf. Cannon v. University of Chicago, 441 U.S. 677, 730, 745-47, 99 S.Ct. 1946, 1974, 1982-84, 60 L.Ed.2d 560 (Powell, J., dissenting) (1979) (distinguishing separation of powers problems from choice of law questions). For the view that Congress would be unable to bear the burden of interstitial lawmaking, see Hart, The Relations Between State and Federal Law, 54 Colum.L.Rev. 489, 534 (1954). See also United States v. Little Lake Misere Land Co., 412 U.S. at 593, 93 S.Ct. at 2397.

. The majority states that “the choice of law question in this case is a close one,” although federal interests are not “sufficient to overcome [a state law] preference.” The question does not appear so close to me. No significant conflict exists that will defeat the purposes of the Federal Power Act. The three articulated federal interests or policies are not unduly hampered by application of state law. Congress itself built into the Act a significant amount of disuniformity. As in Kimbell, the federal operations already specifically adapt to state law and involve individual negotiation with landowners, which minimizes the force of Georgia Power’s “generalized pleas for uniformity.” 440 U.S. at 729-30, 99 S.Ct. at 1459. The Court’s statements in Butner concerning use of state rules in bankruptcy proceedings have even greater relevance to the Federal Power Act, under which the federal interests are less compelling:
Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differently simply because an interested party is involved in a bankruptcy proceeding. Uniform treatment of property interests by both State and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party from receiving “a windfall merely by reason of the happenstance of bankruptcy.” Lewis v. Manufacturers National Bank, 364 U.S. 603, 609, 81 S.Ct. 347, 350, 5 L.Ed.2d 323.
*1129440 U.S. at 55, 99 S.Ct. at 918. Under these circumstances, the state interests outweigh the federal, regardless of whether a general presumption favoring state law is utilized.