Amicus Curiae Brief — Rose Acre Farms, Inc. v. United States, 125 S. Ct. 2541 (2005) (No. 04-1149)

a,Us.

FILED

G3) APR 28 2005 |

OFFICE OF THE CLERK |

No. 04-1149

IN THE

Supreme Court of the United States

ROSE ACRE FARMS, INC.,

Petitioner,

Vv.

UNITED STATES,

Respondent.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Federal Circuit

BRIEF OF AMICI CURIAE DEFENDERS OF PROPERTY RIGHTS,

IOWA POULTRY ASSOCIATION, NEW ENGLAND LEGAL

FOUNDATION, AND UNITED EGG PRODUCERS

IN SUPPORT OF THE PETITION

NANCIE G. MARZULLA BETTY JO CHRISTIAN

ROGER J. MARZULLA Counsel of Record

DEFENDERS OF DAVID S. LEE

PROPERTY RIGHTS STEPTOE & JOHNSON LLP

1350 Connecticut Avenue, N.W. 1330 Connecticut Avenue, N.W.

Suite 410 Washington, D.C. 20036

Washington, D.C. 20036 (202) 429-3000

(202) 822-6770 |

Counsel for Amici Curiae

TABLE OF CONTENTS

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INTEREST OF THE AMICI CURTAE...........:00.ssccsosccesoessoees

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I. CLARIFICATION OF THE DENOMINATOR/

RELEVANT PARCEL STANDARD BY THIS COURT IS

URGENTLY NEEDED

saiapekelsonspunnsabinlepeinaadid titania sedhinibaddsciapanesitinensineyliesicniadatansiniatixeuneneisan 5

II]. THIS CASE IS AN EXCELLENT VEHICLE FOR

ADDRESSING THE RELEVANT

PARCEL/DENOMINATOR ISSUE.........c.ssccsscsssssenseseaseees 12

IL PNUIIT dasahtintcncdaiyciendaonniensdintnennininnnaniteisakcimaneasaiis 19

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ii

TABLE OF AUTHORITIES

FEDERAL CASES

Page

Andrus v. Allard, 444 U.S. 51 (1979) .ccccscssssssssssssssssseeee 14, 15

Appolo Fuels, Inc. v. United States, 381 F.3d

1338 (Fed. Cir. 2004) cert denied 73 U.S.L.W.

3513 (U.S. Fale Zi, FI ds -coscisesesncsseensabiieeansvannsensenssidindsessenpiceen 8

Armstrong v. United States, 364 U.S. 40 (1960) ..........00++. 3,17

Bennett v. Spear, 520 U.S. 154 (1997) ......cccccssesssesseceereseeeeeees 2

Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439

(Lat Cit, 2QGB) ..<::c0csiiiisaicaseesitenpeeaneipidisiantaiuiiggmeniianemmepeiseiaente 2

Brown v. Legal Foundation, 538 U.S. 216

(20S ).......sssssssinusiesiinkasbilibliiatenaliieeaaaaaanaaaaaaaaaaaaananinabe 14, 15

Brubaker Amusement Co. v. United States, 304

F.3d 1349 (Red. Cie. FIED a cccncssimncttienaniindintnsniimmneinisiatsones 15

City of Monterey v. Del Monte Dunes at

Monterey, Lid. $26 U.S. GBT (8SGF) carscroresesrssnssoscsseresssncsscesese 2

Comm’r of Internal Revenue v. Banks, 125 S. Ct.

826 (QIBBS) .....-cncinssisainansiennsunsgiinadneaenasasidiadatibitedaiaaibenieadnnedns 2

Concrete Pipe and Prods. of Cal. v. Constr.

Laborers Pension Trust, 508 U.S. 602 (1993)........:.sseseseeees 14

Crosby v. Nat’l Foreign Trade Council, 530 U.S.

363 (2O000)...........:++++asssssassnnssesessiegnoonesseseneussssssnsssassessnonscsonssases 2 i

Dolan v. City of Tigard, 512 U.S. 374 (1994) .....cccecceseeseereees 2

EEOC v. Waffle House, Inc., 534 U.S. 279

Estados Unidos Mexicanos v. DeCoster, 229

P36 SEZ Chat Cit: BOCD) nncccontseocsnsssrcsessecscnsseccsasnennssssincessnoscsonne 2

Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,

925 &. Ce, 1517 CRBS) naceccceccrssceraccscesssscssanesccsssssesscosooscsensess 1,2

Florida Rock Industries, Inc. v. United States,

791 F.2d 893 (Fed. Cir. 1986) vacated on other

grounds 18 F.3d 1560 (Fed. Cir. 1994) .........cccsccscsesseseeeeenenees G

Forest Properties, Inc. v. United States, 177

3G 1360 CROE. Car. BGDG) encecssccnscscscsesscscsescesssseccsscsesssscsnesecs 10

Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444

Keystone Bituminous Coal Ass'n _ v. :

DeBenedictis, 480 U.S. 470 (1987) ........cc-sescseseeseeeeseenees 6, 17

Lucas v. South Carolina Coastal Council, 505

RO, BE Ci ccctcesisinsnctcensasecsssnsesensneinctinnsnutinininiamennes 2, 6, 7

Meriden Trust & Safe Deposit Co. v. FDIC, 62

P36 44D (26. CEr. 1995) nrccececcscccssesscreceserseceocscocenesssnssncsoccssnaes 16

Palazzolo v. Rhode Island, 533 U.S. 606 (2001)

a a eaniisnieeieals ey & © Me.

iv

Paradissiotis v. United States, 304 F.3d 1271

I Ee aici sidsnnisacnniciecaciinie inti iiaieninideaibaaiin 15

Penn Cent. Transp. Co. v. City of New York,

TEE CAs Re ie iitinstientesciiainiiniedantndiitiinen 6, 8, 13, 14, 17, 18

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

GG ih cnsessennsetsnsnnciniicanetiiaaiinnsanibtietiannsiabeiiniuiinsiteneniienteeiinnnsininnia 6

Phillips v. Washington Legal Found., 524 U.S.

Sat eave sinsikeciisnctashniasbictsiseschiatiniidiaicedabideiaiablaneatniadsiaansicia 2

Puerto Rico Tel. Co. v. Telecommunications

Regulatory Bd., 189 F.3d 1 (1st Cir. 1999)... eee eeeeeees 16

Rose Acre Farms, Inc. v. United States, 373 F.3d

Be Fes te esis sai ciiissctchaciatinnisacaneiicehabaailaniisianinnins 17

Ruckelshaus v. Monsanto Co., 467 U.S. 986

Solid Waste Agency v. United States Army Corps

OT, Fre Wels BOE Piccittentniiancehininisicininnsnbimnsisaienaniisiia ]

Suitum v. Tahoe Reg’l Planning Agency, 520

SA FOE GT Dinsiintanttciiintisnnianidiihbiabinesittcdaahudiiviisnibiessadadeneabbcsnsni 2

US West Communications, Inc. v. MFS Intelenet,

Fg, Te ce RE Re Ce Ges FO scetntntstntincinitninstesinnctntinsi 15

United States Fid. & Guar. Co., v. McKeithen,

ee es i iikiticclinniiniikiditinisiaibitdleshnsenentunciecies 15

Vulcan Materials Co. v. City of Tehuacana, 369

Fe EE ees ED asoencinatechacicneniiniplintndsnincnibniviccamiaihinaticies 8,9

Webb's Fabulous Pharmacies, Inc. v. Beckwith,

QP CEE. RE Cot ssssenrshcnsistetnaritiaiiailchaapaaiaaiatari a s

Yancey v. United States, 915 F.2d 1534 (Fed.

STATE CASES

Animas Valley Sand & Gravel, Inc., v. Bd. of

County Comm'rs, 38 P.3d 59 (Colo. 2001) ..........cceeeesteeeeee

LaSalle Nat’l Bank v. City of Highland Park,

799 N.E.2d 781 (Ill. App. Ct. 2003) cert. denied

SB Bis CH, 7 Ce vscensinannsbsininccamenniciinsamneilaiiamaiancaaiineniaa

Machipongo Land & Coal Co. v. Dep’t of

Environmental Protection, 799 A.2d 751 (Pa.

DIE) sstcithicnonpnuiiadinainhicasicnisnniiidalaaiabahadibisaanipeedmeaiimanciiie

Mibbs, Inc. v. South Carolina Dep’t of Revenue,

Dae SEG GO CK. SI istininesientatisiassinttenaiiinsivlanions

State ex rel. R.T.G., Inc. v. Ohio, 780 N.E.2d 998

TID FA Bcnisansssissscensehiastniscinitebiciniaiaalaaibadiameaaaacnniaca ns

US West Communications, Inc. v. Public Utils.

Comune ’n, 505 N.W.2d 115 (S.D. 1993) ......ccccsccoccsccssersceseses

Zealy v. City of Waukesha, 548 N.W.2d 528

CORR: RIOD wisinsiiscenssisnsinistsscinisieliaiiciiabiananeabeapaihtaasiaaadabiiaietia

vi

CONSTITUTIONAL PROVISIONS

UG. Const, Asma, V cccsssccsscstisssnsssnssissuiinisitindedsasiinisiisivaaan 3

RULES

B. Ce, Raho FFM encocresecerssssnnininscnasssnitainacestiniasiniaiasinsanansaamiaite |

MISCELLANEOUS |

Benjamin Allee, Note, Drawing the Line in |

Regulatory Takings Law: How a Benefits

Fraction Supports the Fee Simple Approach to

the Denominator Problem, 70 Fordham L. Rev.

9957 CBG) ncccccsscssesecsscnnsestsisisissctiatassinaesasasdeaiiamaiamaaiiedaaiials 7

John E. Fee, The Takings Clause as a

Comparative Right, 76 S. Cal. L. Rev. 1003

John E. Fee, Unearthing the Denominator in

Regulatory Taking Claims, 61 U. Chi. L. Rev.

£555 (2990). nccnrwisnnnsinnninniininmaan 8

Marc R. Lisker, Regulatory Takings and the

Denominator Problem, 27 Rutgers LJ. 663

Laura M. Schleich, Takings: The Fifth |

Amendment, Government Regulation, and the

Problem of the Relevant Parcel, 8 J. Land Use &

EMG, F.. SEE (EDI peccscnsesccensetsinisessatncneensnsieianiainiiadsiaimanimtion 16

BRIEF OF DEFENDERS OF PROPERTY RIGHTS,

IOWA POULTRY ASSOCIATION, NEW ENGLAND

LEGAL FOUNDATION, AND UNITED EGG

PRODUCERS AS AMICI CURIAE IN SUPPORT OF

PETITIONER

Defenders of Property Rights (“Defenders”), lowa

Poultry Association (“Iowa Poultry”), New England Legal

Foundation (“NELF”), and United Egg Producers

(“UEP”), as amici curiae, respectfully submit this brief in

support of the petition.’

INTEREST OF THE AMICI CURIAE

Defenders is the only national legal defense foundation

dedicated exclusively to protecting private property nghts.

Based in Washington, D.C., Defenders was founded as a

non-profit, public interest legal foundation in 1991. Its

mission is to protect vigorously those rights considered

essential by the Framers of the Constitution, and to promote a

better understanding of the relationship between private

property rights and individual liberty.

Defenders engages in litigation across the country on

behalf of its members and the public interest to prevent

government incursion into protections guaranteed by the Bill

of Rights. Defenders participated in Exxon Mobil Corp. v.

Saudi Basic indus. Corp., 125 S. Ct. 1517 (2005); Palazzolo

v. Rhode Island, 533 U.S. 606 (2001); Solid Waste Agency v.

United States Army Corps of Eng’rs, 531 U.S. 159 (2001);

' Pursuant to Supreme Court Rule 37.6, amici curiae state

that no counsel for any party to this dispute authored this brief in

whole or in part and no person or entity, other than amici curiae

and their members, made a monetary contribution to the

preparation or submission of this brief. All parties have consented

to this filing in letters on file with the Office of the Clerk of this

Court.

2

City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526

U.S. 687 (1999); Phillips v. Washington Legal Found., 524

U.S. 156 (1998); Suitum v. Tahoe Reg’l Planning Agency,

520 U.S. 725 (1997); Bennett v. Spear, 520 U.S. 154 (1997);

Dolan v. City of Tigard, 512 U.S. 374 (1994); Keene Corp. v.

United States, 508 U.S. 200 (1993); and Lucas v. South

Carolina Costal Council, 505 U.S. 1003 (1992).

Iowa Poultry is a voluntary statewide trade association

that brings together all poultry-associated industries,

businesses, and farms. Iowa Poultry is closely connected to

the Iowa Egg Council as well as numerous other egg and

poultry associations and boards across the country. These

entities share the mission to promote and educate the public

about the poultry and egg industries.

NELF is a non-profit, public interest law firm,

incorporated in Massachusetts in 1977 and headquartered in

Boston. Its membership consists of corporations, law firms,

individuals, and others who believe in NELF’s mission of

promoting balanced economic growth for the United States

and the New England region, protecting the free enterprise

system, and defending economic rights. NELF’s more than

130 members and supporters include a cross-section of large

and small corporations from all parts of New England and the

United States. NELF has regularly appeared in state and

federal courts, as party or counsel, in cases raising issues of

general economic significance to the New England and

national business communities. See, e.g., Exxon Mobil Corp.

v. Saudi Basic Indus. Corp., 125 S. Ct. 1517 (2005); Comm’r

of Internal Revenue v. Banks, 125 S. Ct. 826 (2005); Green

Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (2003); EEOC v.

Waffle House, Inc., 534 U.S. 279 (2002); Palazzolo, 533 U.S.

at 606; Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363

(2000); Estados Unidos Mexicanos v. DeCoster, 229 F.3d

332 (ist Cir. 2000); Bessette v. Avco Fin. Servs., 230 F.3d

439 (1st Cir. 2000).

3

UEP is a national organization representing members of

the egg industry, including Petitioner Rose Acre Farms, in

every state. Its members include table egg farmers, breeder

flock owners, hatchery owners, pullet growers, contract egg

producers, and certain farm cooperatives. UEP has a

membership base comprising of approximately 75 percent of

all egg-type chickens in the United States, and its leadership

has been a driving force in the egg industry. The outcome of

this case will directly affect a substantial number of its

members.

Amici have a strong interest in the issue raised by

Question | of the Petition -- the need for clarification of the

important “denominator question” in Fifth Amendment?

regulatory takings jurisprudence. Because the court’s

determination of the denominator (or, as it is sometimes

called, the “relevant parcel”), is often outcome-

determinative, this issue goes to the heart of the

Constitution’s “bar [on the] Government from forcing some

people alone to bear public burdens which, in all fairness and

justice, should be borne by the public as a whole.” Armstrong

v. United States, 364 U.S. 40, 49 (1960). Thus, amici have a

keen interest in advocating predictable and fair standards for

judicial determination of the takings denominator.

SUMMARY OF ARGUMENT

1. There is an urgent need for this Court to clarify the

standards by which “the difficult, persisting question of what

is the proper denominator in the takings fraction” should be

determined. Palazzolo, 553 U.S. at 631 In the absence of

clear guidance from this Court, the lower courts have

developed at least three wholly different -- and

? “(NJor shall private property be taken for public use,

without just compensation.” U.S. Amend. V.

4

fundamentally inconsistent -- approaches to these critical

issues, characterized by the Petition as the Unity of

Ownership, the Reasonable Expectation, and the Government

Conduct schools of analysis. And because a court’s

evaluation of a regulation’s economic impact on the claimant

depends on its identification of the denominator, the

threshold decision as to the standards by which the

denominator should be determined often controls the

outcome of the case. The multiplicity of inconsistent but

outcome-determinative standards has thus led to a situation in

which a claimant’s ability to obtain compensation for

government action that affects his property now depends on

the venue available to him to seek relief. The rights of

American citizens under the Fifth Amendment should not be

left in this posture.

2. This case is a particularly appropriate vehicle for this

Court to address the denominator/parcel issue because it

arises in the context of a case involving personal property --

an area in which regulatory takings claims are arising with

increasing frequency. Although this Court has recently

decided a number of takings cases involving such diverse

types of personal property as financial assets, intellectual

property, and artifacts, in none of those cases has it ever

addressed the denominator/parcel issue -- or even indicated

whether the concept of a “parcel” is applicable at all in the

personal property context. In such cases, the lower courts

thus have even less guidance than in cases involving real

estate -- although determination of the denominator is, if

anything, more complex and the need for clear standards

more acute.

In this case the denominator issue has been thoroughly

explored in the courts below, and the divergent results

reached by the Court of Federal Claims and the Federal

Circuit turn largely on their differing views as to the

5

analytical approach by which the parcel/denominator issue

should be determined in the personal property context. This

obvious confusion on the part of courts with extensive

experience in regulatory takings cases highlights the need for

prompt consideration by this Court.

ARGUMENT

I. CLARIFICATION OF THE DENOMINATOR/

RELEVANT PARCEL STANDARD BY THIS

COURT IS URGENTLY NEEDED.

There is an urgent need for this Court to decide the issue

that it noted, but did not decide, in its recent decision in

Palazzolo v. Rhode Island -- “the difficult, persisting

question of what is the proper denominator in the takings

fraction.” 533 U.S. at 631. As Palazzolo recognized, there is

tension even in this Court’s own decisions with respect to

this issue: “Some of our cases indicate that the extent of

deprivation effected by a regulatory action is measured

against the value of the parcel as a whole . . . but we have at

times expressed discomfort with the logic of this rule. . .”

Id. (citations omitted). And the lower courts, in deciding

regulatory takings cases, have split into at least three

different camps -- with wildly differing results -- in their

approach to determining the denominator or “parcel.” Given

the frequency with which the denominator issue arises in

both the federal and the state courts, and the differing

standards currently applied by the lower courts in resolving

it, there is a clear need for further guidance from this Court.

Although typically couched in technical language, the

denominator question is by no means an academic issue. To

the contrary, the resolution of the appropriate denominator is

often the issue on which the outcome of a takings claim

turns. If the denominator is defined as identical to the size of

the affected property (i.e., the numerator), this may establish

a total taking that can entitle the property owner to automatic

6

compensation without facing the uncertain Penn Central

balancing factors’ See Lucas, 505 U.S. at 1003.

Alternatively, should a court conduct a Penn Central

analysis, defining the denominator determines the economic

impact of a regulation -- one of the three most critical factors

identified in Penn Central as relevant to determining whether

a regulatory taking has occurred.

In Penn Central, the Court explained that in looking at

the affected property, one “does not divide a single parcel

into discrete segments and attempt to determine whether

rights in a particular segment have been entirely abrogated.”

438 U.S. at 130. Instead, a court should look at the

regulation’s effect on the “parcel as a whole” in calculating

the economic impact on a property owner. /d. at 131.

However, a quarter-century after Penn Central announced

this broad principle, this Court and the lower courts are still

struggling to define how the “parcel” or the denominator for

regulatory takings analysis should be measured.

In subsequent years, this Court itself has stated that the

“uncertainty regarding the composition of the denominator in

our ‘deprivation’ fraction has produced inconsistent

pronouncements by the Court.” Lucas, 505 U.S. at 1016, n.7.

As an example of this inconsistency, the Court compared two

of its own decisions: Pennsylvania Coal Co. v. Mahon, 260

U.S. 393, 414 (1922), and Keystone Bituminous Coal Ass’n

v. DeBenedictis, 480 U.S. 470, 497-502 (1987). Lucas, 505

U.S. at 1015-16. In Mahon, a law restricting subsurface

extraction of coal was held to constitute a taking, while under

a nearly identical law in Keystone, it did not. The deciding

factor in both cases was how the Court calculated the takings

> Penn Cent. Transp. Co. v. City of New York, 438 U.S.

104, 124 (1978).

7

denominator. Nevertheless, the Court avoided “this

difficulty” of clarifying the denominator issue in Lucas

because the nature of the claim raised and the factual findings

of the lower court made its resolution unnecessary. Jd. After

Lucas, commentators noted that the denominator problem

remained a lingering and important problem that needed the

Court’s attention. See, eg., Marc R. Lisker, Regulatory

Takings and the Denominator Problem, 27 Rutgers L.J. 663,

725 (1996) (observing that “[a]lthough the Supreme Court

has repeatedly recognized the existence of [the denominator]

problem . . . it has yet to set forth any guidelines for making

this important and often dispositive determination.”).

Moreover, almost ten years later, in Palazzolo, this Court

again recognized “the difficult, persisting question of what is

the proper denominator in the takings fraction,” but did not

explore the issue because petitioner had not raised the

argument in the state courts or in the petition for certiorari.

533 U.S. at 631. Again, commentators noted the importance

of this still-unresolved issue. See, e.g., Benjamin Allee,

Note, Drawing the Line in Regulatory Takings Law: How a

Benefits Fraction Supports the Fee Simple Approach to the

Denominator Problem, 70 Fordham L. Rev. 1957, 1960

(2002) (“[tJhe resolution of the denominator problem [still]

promises a far-reaching impact on regulatory takings

jurisprudence.”).

In the absence of clarification from this Court, the lower

courts faced with resolving the denominator issue have -- not

surprisingly -- failed to reach a consensus as to the standards

or criteria by which the denominator should be measured. As

the Petition explains, (Pet. Br. at 11-13), three legal standards

have been developed and applied by the lower courts for

resolving the issue -- (1) Unity of Ownership, which

measures the denominator by all the contiguous or nearby

property owned by the claimant; (2) Reasonable Expectation,

which utilizes state property law to determine the investor’s

8

reasonable expectations as to the division of the property;

and (3) Government Conduct, which measures the

denominator by the government regulation itself.‘ In many

instances, the outcome of the case has turned on which

standard is selected and applied by the court for this

determination. Simply stated, as a result of the inconsistent

legal frameworks the lower courts have used to determine the

denominator, a property owner may be found to have

suffered a regulatory taking in one state and awarded

compensation, while a similarly-situated property owner in a

different state may be denied relief entirely -- all based on the

different approaches employed in determining the “relevant

parcel.”

For example, in Appolo Fuels, Inc. v. United States, 381

F.3d 1338 (Fed. Cir. 2004) cert. denied 73 U.S.L.W. 3513

(U.S. Feb. 28, 2005), the Federal Circuit considered a claim

arising from a federal agency’s designation of certain land

subject to plaintiff's mining leases as unsuitable for mining.

The Court analyzed the claim under the Reasonable

Expectations concept and, on that basis, defined the “relevant

parcel” for the takings analysis as two leases bought by the

claimant as part of a discrete mining unit. Jd. at 1346. The

- result of this broad Reasonable Expectations definition was

that the claimant was denied relief altogether, both as a

categorical taking and under the Penn Central analysis. Id. at

1346, 1351.

In contrast, the Fifth Circuit in Vulcan Materials Co. v.

City of Tehuacana, 369 F.3d 882 (Sth Cir. 2004), found a

“ See John E. Fee, Unearthing the Denominator in

Regulatory Taking Claims, 61 U. Chi. L. Rev. 1535, 1544 (1994)

(describing different schools of analysis of relevant parcel

question.)

9

categorical taking in similar circumstances based on its use

of the Government Conduct approach to defining the

“relevant parcel.” In Vulcan, a city ordinance forbidding

quarrying or blasting operations within the city limits shut

down plaintiff's quarry operations within the city. Jd. at 885.

However, the plaintiff had other quarry operations outside

the city limits which were unaffected by the ordinance. The

Fifth Circuit’s use of the “Government Conduct” approach to

define the “relevant parcel” resulted in a conclusion that the

takings denominator should include only the property

interests subject to the ordinance. Because the ordinance

wholly prohibited the plaintiff's quarrying right within the

city, the court concluded that there had been a categorical

taking that left the plaintiff's “leasehold interest valueless.”

Id. at 891-92. Had the court instead adopted a Reasonable

Expectation or Unity of Ownership approach, it would have

reached the opposite result.

In fact, the determination of how to define the “relevant

parcel” has led to inconsistent results within the Federal

Circuit itself. In Florida Rock Industries, Inc. v. United

States, 791 F.2d 893, 895 (Fed. Cir. 1986), vacated on other

grounds, 18 F.3d 1560 (Fed. Cir. 1994), a property owner

purchased 1,560 acres of wetland property in Florida to

extract the underlying limestone. However, after purchasing

the property, the Army Corps of Engineers (“Corps”) passed

regulations that required owners to obtain a permit before

engaging in dredging or filling activities on certain types of

land. Id. at 895. The owner sought a permit to mine 98 acres

for a period of three years, but after consideration, the Corps

denied the request. Jd. In analyzing whether the government

had taken the owner’s property, the court looked to the 98

acres that were the subject of the regulation (Government

Conduct) and not the 1,560 acres that the plaintiff owned. Jd.

at 904.

10

In contrast, in Forest Properties, Inc. v. United States,

177 F.3d 1360, 1363 (Fed. Cir. 1999), a landowner sought to

dredge and fill approximately nine acres near a lake and

sought a permit from the Corps to commence the dredging.

The Corps ultimately rejected the permit application. /d. at

1363. In its regulatory takings analysis, the Federal Circuit

rejected the plaintiff's theory that the lake bottom acreage

and the upland parcel at issue constituted separate portions of

land. Jd. at 1365. Instead, the court, following a Reasonable

Expectation approach, looked at the economic expectations

of the property owner and its treatment of the property as a

single integrated unit to conclude that both portions of the

property should be included in the “relevant parcel”

denominator. Jd. Therefore, the court found substantial

value remaining in the land and no regulatory taking. /d. at

1366.

Similarly, cases from the Supreme Courts of Wisconsin

and Ohio highlight the inconsistencies in property protection

under the current regulatory takings jurisprudence in the state

courts. In Wisconsin, a landowner sued a municipality for its

decision to rezone and reclassify some of his real property as

a wetland conservancy that could not be developed. Zealy v.

City of Waukesha, 548 N.W.2d 528 (Wis. 1996).

Wisconsin’s lower appellate court had applied the

“anticipated investment opportunities” (Reasonable

Expectation) standard to determine the “relevant parcel” and,

on that basis, had found a compensable taking. Jd. at 532.

However, the Wisconsin Supreme Court rejected the

reasonable expectation mode of analysis, adopted the Unity

of Ownership approach, found a much larger parcel to exist,

1]

and ultimately found no categorical or partial taking. /d. at

532-35.

On the other hand, in State ex rel. R.T.G., Inc. v. Ohio,

780 N.E.2d 998, 1009 (Ohio 2002), the Ohio Supreme Court

in similar circumstances endorsed the Reasonable

Expectation approach that the Wisconsin Supreme Court had

rejected and, on that basis, found a categorical taking of

plaintiff's coal development rights. In R.7.G., the State of

Ohio had determined that a coal mining company’s surface

mining could adversely affect the aquifer that supplied water

to a village and thus designated the acres of land that affected

the aquifer as unfit for mining. Jd. at 1001. The Ohio

Supreme Court rejected Ohio’s argument that the “relevant

parcel” definition should include all of the coal company’s

contiguous property, and instead, looked to the “claimant’s

investment-backed expectations.” /d. at 1009. After

considering the economies of scale that would prevent the

coal company from mining the minimal coal outside of the

regulated area, the Ohio Supreme Court found a compensable

categorical regulatory taking. Jd. at 1011.°

These representative cases from both the lower federal

courts and the state courts illustrate the way in which the

inconsistent legal frameworks used for calculating the

* See also Animas Valley Sand & Gravel, Inc., v. Bd. of

County Comm'rs, 38 P.3d 59, 69 (Colo. 2001), where the Supreme

Court of Colorado similarly found no comparable taking after

adopting a Unity of Ownership approach.

° The Ohio Supreme Court cited with approval a decision

of the Pennsylvania Supreme Court, Machipongo Land & Coal

Co. v. Dep't of Environmental Protection, 799 A.2d 751, 768-69

(Pa. 2002), which looked at multiple factors including the owner’s

investment-backed expectations to determine the “relevant parcel.”

a a i

12

“relevant parcel,” or denominator have led to dramatically

different results for similarly situated property owners. This |

situation is particularly untenable where, as here, rights

guaranteed by our Constitution are involved. A claimant’s

ability to obtain compensation for the effect of government

regulation on his property should not turn on the fortuity of

the State or Circuit in which he or his property happens to be

located.

In attempting to apply this Court’s_ relevant

parcel/denominator jurisprudence, a state appellate court in

Illinois recently observed, in obvious frustration, that “at this

juncture . . . the Supreme Court has yet to define the factors

used to determine the ‘relevant parcel’ for takings purposes,

which is commonly referred to as the ‘denominator

problem.” LaSalle Nat’l Bank v. City of Highland Park, 799

N.E.2d 781, 793 (Ill. App. Ct. 2003). It is time for this Court

to take that step. By establishing clear guidelines and criteria

for the courts to follow in addressing the denominator issue

in takings cases, the Court would provide much needed

consistency and fairness for the Nation’s property owners.

II. THIS CASE IS AN EXCELLENT VEHICLE

FOR ADDRESSING THE RELEVANT

PARCEL/DENOMINATOR ISSUE

For several reasons, this case provides an excellent

vehicle for this Court to address the full ramifications of the

denominator determination and to provide much-needed

guidance to the lower courts. First, unlike Palazzolo, where i

the lower courts had not even addressed the denominator |

‘

issue (because of the petitioner’s failure to raise it), this case

comes to this Court with a full exploration of the issue by

both the trial court and the circuit court. Indeed, their

different conclusions as to the economic impact of the

Department of Agriculture’s regulations turned largely on the

fact that the Court of Federal Claims applied a Government

Conduct approach and the Federal Circuit applied a Unity of

13

Ownership approach in determining what the appropriate

denominator should be. The denominator issue has thus been

thoroughly aired below and is now in a posture appropriate

for resolution by this Court.

Second, this case is particularly appropriate for review by

this Court because it arises from the Federal Circuit -- the

court with authority over all cases alleging a taking by the

federal government. The sheer volume of claims affected by

a decision of the Federal Circuit on such an important issue

as the denominator question is thus far larger than those

directly affected by any state court or any other Federal Court

of Appeals. Moreover, because of its preeminent role in

federal takings cases, the decision of the Federal Circuit can

be expected to have a disproportionate influence on other

federal courts hearing claims arising under state law, as well

as on the state courts. Thus, it is particularly important that a

decision of the Federal Circuit on an issue as significant as

this not be left unreviewed by this Court.

Third, this case is an exemplar of the type of regulatory

takings case that is arising with increasing frequency in both

the state and federal courts -- one involving personal

property, rather than the real property addressed by this

Court’s earlier, limited discussions of the denominator issue.

Indeed, one of the most notable features of this Court’s

recent takings jurisprudence is the fact that, while at least

five of this Court’s regulatory takings decisions issued since

Penn Central have dealt with various types of personal

property, not one of those cases has addressed the issue of the

denominator or the “relevant parcel.” While these cases do

address the economic impact prong of Penn Central, they do

so without ever mentioning the issue of the denominator or

the “relevant parcel” -- thus leaving the lower courts to guess

whether the same denominator standards applicable to real

property (whatever they may be) are equally applicable to

personal property, or whether an entirely different approach

14

to measuring economic impact is required when personal

property is involved.

For example, in Brown v. Legal Foundation, 538 U.S.

216, 234 (2003), the Court found no economic impact on the

plaintiffs by a requirement that interest generated from a

mandatory deposit into lawyers’ trust accounts be used to

fund legal programs for the indigent, but did so without even

indicating what it regarded as the “relevant parcel” -- or

indeed whether the concept of “parcel” was relevant to its

analysis. Similarly, in Webb's Fabulous Pharmacies, Inc. v.

Beckwith, 449 U.S. 155, 163 (1980), this Court found a

compensable taking of private interpleader funds deposited in

county courts, but did so without reaching questions of

economic impact or “relevant parcel.”

The same is true of the Court’s caves touching on such

non-real property topics as pension venefits, intellectual

property rights, and the prohibition of the sale of endangered

bird parts. In none of these cases has the Court mentioned

the relevant parcel/denominator question in assessing a

regulation’s economic impact. See, e.g., Concrete Pipe and

Prods. of Cal. v. Constr. Laborers Pension Trust, 508 U.S.

602, 645 (1993) (conducting Penn Central analysis to

determine economic impact of withdrawal liability for

leaving pension plan but not defining denominator for

analysis); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1004-

14 (1984) (determining whether disclosure of trade secrets

constitutes a regulatory taking but not discussing economic

impact); Andrus v. Allard, 444 U.S. 51, 66-67 (1979)

(discussing economic impact of federal laws prohibiting sale

and possession of certain bird parts on property owners but

not discussing specific denominator context in which to view

the loss of property rights).

These cases beg the question of the context in which the

loss of these personal property rights should be viewed. In

Concrete Pipe, should a court look at the withdrawal liability

15

against the denominator of the total shares in the pension

plan or against the assets of the company? In Monsanto,

should the claimant’s trade secrets be viewed against the

denominator of the remaining (if any) trade secrets, the

intellectual property wing of the company, or the assets of

the company as a whole? In Andrus, should the prohibition

in bird parts be analyzed in relation to the remaining

functional and commercial use of the bird parts (as the Court

appeared to suggest) or against the overall resources of an

individual property owner? Or is the whole concept of a

“parcel” or a “denominator” irrelevant to a takings claim

involving personal property? And if the concept of the

“parcel” is irrelevant in personal property cases, how should

the courts determine whether the economic impact is

sufficient to constitute a taking? For example, the petitioner

in Brown was owed $4.96 in interest on his lawyers’ trust

account. 538 U.S. at 229. In contrast, Rose Acre’s claim

reaches millions of dollars.

In the absence of guidance from this Court, most recent

lower court decisions involving claims of regulatory takings

of personal property have simply skipped past the

parcel/denominator issue. See, e.g., Paradissiotis v. United

States, 304 F.3d 1271, 1276 (Fed. Cir. 2002) (determining

whether government prohibition on exercise of certain stock

options by Libyan agent was a regulatory taking); Brubaker

Amusement Co. v. United States, 304 F.3d 1349, 1358 (Fed.

Cir. 2002) (discussing challenges to Food and Drug

Administration’s regulations regarding sale of cigarettes and

smokeless tobacco from vending machines as regulatory

taking); United States Fid. & Guar. Co. v. McKeithen, 226

F.3d 412, 416 (Sth Cir. 2000) (addressing whether Louisiana

legislation changing method of assessing an insurer’s annual

contributions to a workers’ compensation fund was a

regulatory taking); US West Communications, Inc. v. MFS

Intelenet, Inc., 193 F.3d 1112, 1126 (9th Cir. 1999)

16

(dismissing on ripeness grounds local phone exchange

carrier’s claim that state utility commissions’ arbitration

terms constituted regulatory taking); Puerto Rico Tel. Co. v.

Telecommunications Regulatory Bd., 189 F.3d 1, 16-18 (st

Cir. 1999) (involving a telephone company’s regulatory

takings-based challenge to local regulatory decision

mandating refund to company’s customers); Meriden Trust &

Safe Deposit Co. v. FDIC, 62 F.3d 449, 454-55 (2d Cir.

1995) (discussing whether Federal Deposit Insurance

Company’s finding that state bank and trust company was

cross-liable under federal law for liabilities of commonly

controlled insured institution was regulatory taking); Yancey

v. United States, 915 F.2d 1534, 1540-41 (Fed. Cir. 1990)

(finding Fifth Amendment taking of turkeys affected by

government quarantines); Mibbs, Inc. v. South Carolina

Dep’t of Revenue, 524 S.E.2d 626, 628 (S.C. 1999)

(discussing whether county’s ban on cash payouts from video

poker machines constituted a regulatory taking); US West

Communications, Inc. v. Public Utils. Comm’n, 505 N.W.2d

115, 126-27 (S.D. 1993) (stating that public utilities

commission’s deprivation of telephone company’s right of its

own facilities to haul telephone traffic constituted regulatory

taking).’ These courts’ “unexplained assumptions” about the

“relevant parcel” fail to present a legal rationale for takings

determinations and undermine the Fifth Amendment’s

’ One commentator has noted that “[t]ypically, a court

overlooks the problem of identifying the relevant parcel .. .

because . . . the court makes unexplained assumptions about the

dimensions of the parcel and then immediately shifts its attention

to the economic analysis.” Laura M. Schleich, Takings: The Fifth

Amendment, Government Regulation, and the Problem of the

Relevant Parcel, 8 J. Land Use & Envtl. L. 381, 395, 402 (1993)

(proposing “moment of regulation” alternative to relevant parcel

analysis).

17

protection against individuals bearing public burdens that “in

all fairness and justice . . . should be borne by the public as a

whole.” Armstrong, 364 U.S. at 49. Given the proliferation

of government regulatory actions affecting property other

than real estate, regulatory takings claims arising from such

actions on the part of both the federal and the state

governments are bound to continue and even to increase --

thus highlighting the need for this Court to address this issue

in the personal property context.

In the case at bar, the Federal Circuit recognized that the

“methodologies used to determine how much of an affected

owner’s property constitutes the relevant ‘parcel’ in real

estate takings cases are not, of course, directly applicable to a

case such as the present,” involving personal property. Rose

Acre Farms, Inc. v. United States, 373 F.3d 1177, 1186 (Fed.

Cir. 2004). Nevertheless, it rejected the lower court’s use of

a Government Conduct approach, as well as each of the

alternative theories propounded by the claimant -- including

an alternative theory specifically designed for situations

involving personal property. Jd. at 1186-88 (discussing Rose

Acre’s definition of the “relevant parcel”). Therefore, the

Court concluded that, as a matter of law, it was required by

this Court’s decisions in Penn Central and Keystone (both

real property cases) to apply a “parcel as a whole” concept in

which the denominator consists of all the eggs produced on

all three farms owned by Rose Acre that had been affected by

the regulations at issue. Pet. Br. 14-15.

The Federal Circuit thus took a concept derived from real

property cases and applied it to a personal property context in

which it makes no sense. Under that court’s extreme version

of a “common ownership” approach, the existence of a

compensable taking of discrete items of personal property

would depend on the size of the claimant’s overall business.

Thus, as applied to the government regulations here at issue,

a small egg producer, with all of its affected chicken houses

18

located on a single farm, who suffered precisely the same

financial loss from the effects of the same Government

actions on precisely the same number of eggs produced in the

same number of houses, would have sustained a compensable

taking and been entitled to the $6 million judgment awarded

by the trial court. On the other hand, solely because it is a

large producer with numerous chicken houses scattered over

multiple farms, Rose Acre will apparently be denied any

compensation whatsoever. This result flies in the face of the

concept of equality of treatment under the law that lies at the

heart of our constitutional jurisprudence.®

At this stage of the proceeding, an exhaustive analysis of

the relative merits of the various approaches to the

parcel/denominator that have been developed to date by the

lower courts -- along with other potential approaches to

performing the economic impact analysis required by Penn

Central -- is unnecessary amd perhaps even inappropriate.

The key point is simply that there is an urgent need for this

Court to address the issue, so as to give the lower courts the

guidance they so plainly need.

® See John E. Fee, The Takings Clause as a Comparative

Right, 76 S. Cal. L. Rev. 1003, 1031 (2003) (noting that the

amount of property an owner has should not define the

denominator and ultimately, the case in its entirety).

19

CONCLUSION

For the reasons stated herein, the petition for certiorari

should be granted.

Respectfully submitted,

NANCIE G. MARZULLA BETTY JO CHRISTIAN

ROGER J. MARZULLA Counsel of Record

DEFENDERS OF DAVID S. LEE

PROPERTY RIGHTS STEPTOE & JOHNSON LLP

1350 Connecticut Ave.,N.W. 1330 Connecticut Avenue, N.W.

Suite 410 Washington, D.C. 20036

Washington, D.C. 20036 (202) 429-3000

(202) 822-6770

Counsel for Amici Curiae

April 29, 2005