Here is a transcript are a transcript of the remarks I delivered today at the 2019 Brigham-Kanner Property Rights Conference. I was honored to join lawprof Henry Smith and Florida Supreme Court Justice (ret.) Ken Bell (who authored the Florida court’s opinion in Stop the Beach Renourishment which was challenged as a “judicial taking”) to speak about “Public Resources and Private Rights” (moderated by Professor Katherine Mims Crocker). After paying our respects to 2019 B-K Prize winner Professor Steven Eagle, we each addressed some part of the question.

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The New New Property

As always, I bring to you tidings of “aloha” from the state where the legislature thought it was a going to reduce the price of residential housing by taking fee simple interests from “A” and giving them to “B,” the leaseholders

Where now, the median price for a single-family, two bedroom, one bath, single wall house hovers just shy of $800 grand. 

And the state where the legislature thought that limiting the amount of rent gas companies could charge to their franchisees would somehow magically translate into lower gas prices at the pump for consumers

Where now, the price of gas is close to the highest in the nation — although sorry, Californians, you may have us beat — at or near $4 bucks a gallon. 

And in what may be a case of one-out-of-three-ain’t-bad (so you don’t write us off completely), our modest little jurisdiction is also responsible for at least one Supreme Court decision that we as property advocates really appreciate — Kaiser Aetna v. United States, 444 U.S. 164 (1979) — where the Court both affirmed that the right to exclude is one of those fundamental rights that is immune from interference by regulation unless first compensated, but also in one of the overlooked holdings of that case put in the context not of a fundamental right because it was recognized by state (Hawaii) law, but one sourced in the actions of Corps of Engineers personnel who had confirmed via a Section 10 Rivers and Harbors Act regulatory permit that Kaiser Aetna possessed the right to keep others out of the navigable marina it created:

While the consent of individual officials representing the United States cannot “estop” the United States, it can lead to the fruition of a number of expectancies embodied in the concept of “property” expectancies that, if sufficiently important, the Government must condemn and pay for before it takes over the management of the landowner’s property.

I mention Kaiser Aetna because it is a good lead in to my portion of this panel, which is focusing on “Public Resources and Private Rights.” While we mostly speak of “property” as a private right, thanks in large part to our late colleague Charles Reich, whose place in the popular zeitgeist was secured by “The Greening of America,” but whom we lawyers will always remember as the author of the influential article “The New Property.” (And when I say “influential,” I mean it is the most-cited article published by the Yale Law Journal. Ever.) 

That article got us to thinking about property in a different way: not exclusively as an instrument of private rights – most exemplified by the right to exclude – but as maybe something that looked a bit more like the commons. Things like government benefits, contracts, licenses, and in what may be the most famous instance, Board of Regents v. Roth, a government job. In that case a poor sap teaching at a state college who lacked tenure. (I feel your pain, brother.)

As we know the Court concluded that Professor Roth, who although he did not possess tenure, if he could show he possessed “new” property, could not be dismissed before the college conducted a hearing. In short, as what we might call Due Process Property. 

In the property rights context, we’ve seen similar rulings from the lower courts – most prominently the Second Circuit in Brody v. Port Chester (ask Dana Berliner about that one), the Tenth Circuit in M.A.K. Investment (before they declare your property blighted, they’ve got to tell you), and from my home court in Kellberg v. Yuen

How have government-granted or government-recognized “property” rights translated beyond the scope of individually-owned property? And can these Due Process property rights be translated to the language of takings-and-compensation property?

Two recent decisions highlight the differences. The first is from my home jurisdiction’s Supreme Court.

Now you might think that given the amount I give the business to my home court – Professor David Callies studied the opinions of our court over a 10 year time frame and revealed that it ruled in favor of environmental and similar plaintiffs nearly 90% of the time – that when our court issues a decision recognizing a new breed of “property” that I might rejoice. And it is a right that, as far as we can tell, no other court, state or federal, has ever recognized. 

The court concluded the Sierra Club possesses a constitutional property right in a “clean and healthful environment” entitling the organization to certain procedural protections under the state constitution’s due process of law clause. The ruling allowed the Club to intervene in a Public Utilities Commission petition regarding a power purchase agreement for a now-defunct electric plant on Maui. 

Here’s that again in case it didn’t quite sink in: the court recognized a property right in a clean and healthful environment

Maui Electric filed an application with the State PUC, seeking the Commission’s approval of an agreement between the utility and Hawaiian Commercial and Sugar Company which, if approved, would allow a rate increase to account for the additional production charges associated with the Puunene Plant, a coal-powered facility on former sugar lands in central Maui which transformed bagasse, the byproduct of sugar production, into electric power. We use the past tense because by the time the Supreme Court decided the case, the plant had closed, following the recent closure of the sugar plantation. No sugar plantation, no sugar, no bagasse. 

Sierra Club asked the PUC to intervene in the administrative process under the PUC’s rules, asserting its own rights as well as several of its Maui members. The power plant, the petition asserted, would “impact Sierra Club’s members’ health, aesthetic, and recreational interests. Sierra Club also asserted its organizational interest in reducing Hawaii’s dependence on imported fossil fuels and advancing a clean energy grid.” 

Pretty vague stuff, and to me, more like policy questions than something best resolved by an adjudicative proceeding, but under existing judicial standing rules in similar cases in original jurisdiction actions brought in Hawaii courts, nothing too far from the norm. We’re not subject to Article III standing requirements, and the Hawaii Supreme Court’s state standing doctrine can best be summarized as “come on in the water’s fine.”  There’s little doubt that if this were a case brought in a Hawaii trial court, that Sierra Club adequately alleged judicial standing. Anyone questioning that conclusion need only recall the Superferry case in which the Hawaii Supreme Court held that Sierra Club had standing to raise an environmental challenge to the now-defunct inter-island ferry because the ferry threatened the organization with four types of injury: (1) endangered species could be adversely impacted by a high-speed ferry; (2) the Superferry could increase the introduction of alien species; (3) surfers, divers, and canoe paddlers who used a state operated harbor could conceivably suffer adverse impacts; and (4) the threat of increased traffic on the road next to the harbor entrance. Again, that’s a pretty vague butterfly-effect logic to gain standing. But for better or worse, that’s the current state of Hawaii’s standing law. 

However, the Maui Electric case was not an original jurisdiction action, it was an administrative proceeding in the Commission under the PUC’s admin rules, governed by a different standard, one based in the Hawaii Administrative Procedures Act. Under the APA, an outsider may intervene in a “contested case” (an quasi-judicial adjudicative administrative process) when an agency rule or a statute gives the party a seat at the table, or when intervention is required by law because the agency is adjudicating that party’s rights (in this case, the law was the Hawaii Constitution’s due process clause).

And here, the Sierra Club alleged both that PUC statutes and the Hawaii Constitution’s procedural due process of law protections gave it the right to intervene in the agency proceedings: 

Sierra Club argued that its members were concerned that the Puunene Plant relied too heavily on coal in order to meet its power obligations under the existing agreement and also that its members were concerned “about the public health and visibility impacts of burning coal.”

Neither the PUC nor the court of appeals bought the Sierra Club’s theory. The Commission denied intervention and decided Maui Electric’s application without the Club’s presence. The Club appealed to the Intermediate Court of Appeals which agreed with Maui Electric and dismissed the appeal for lack of jurisdiction. It concluded that because Sierra Club was not “aggrieved” by the decision by the PUC (because it correctly excluded the Club from the admin case), the appellate court did not have jurisdiction.

So up to the Hawaii Supreme Court they went, on the same two theories: the Club should have been allowed to intervene, either because the PUC’s governing statutes gave it the right to do so, or because due process required it because the Club’s property was at stake in the PUC proceeding. After rejecting a claim of mootness, three of our five justices got to the constitutional question: does the Hawaii Constitution recognize Sierra Club’s environmental concerns as a property interest entitling it to procedural due process?

The majority based its conclusion on Article XI, section 9 of the Hawaii Constitution (a provision added by the 1978 constitutional convention):

Each person has the right to a clean and healthful environment, as defined by laws relating to environmental quality, including control of pollution and conservation, protection and enhancement of natural resources. Any person may enforce this right against any party, public or private, through appropriate legal proceedings, subject to reasonable limitations and regulation as provided by law.

That, the majority held, created a legitimate claim of entitlement to a clean and healthful environment, and thus it is a property right. It “is a substantive right guaranteed to each person.” The majority noted that the court had earlier held that Native Hawaiian rights — a right also found in the Hawaii Constitution — are “property” rights, and that environmental concerns are no different. As a self-executing right, it is a legitimate entitlement —

We therefore conclude that HRS Chapter 269 is a law relating to environmental quality that defines the right to a clean and healthful environment under article XI, section 9 by providing that express consideration be given to reduction of greenhouse gas emissions in the decision-making of the Commission. Accordingly, we hold that Sierra Club has established a legitimate claim of entitlement to a clean and healthful environment under article XI, section 9 and HRS Chapter 269.

After reaching the conclusion that Sierra Club owns property in a clean and healthful environment, it was all over but the shouting and the majority held by applying the Professor Roth test, that the PUC had a duty to provide a hearing before it deprived the Club of its property:

The risks of an erroneous deprivation are high in this case absent the protections provided by a contested case hearing, particularly in light of the potential long-term impact on the air quality in the area, the denial of Sierra Club’s motion for intervention or participation in the proceeding, and the absence of other proceedings in which Sierra Club could have a meaningful opportunity to be heard concerning HC&S’s performance of the Agreement.

Finally, in a footnote, the majority made it clear that the result is immune from future legislative tinkering. This is a ruling based on the Hawaii Constitution, and thus no mere legislature can mess with it too much. 

Two justices disagreed, arguing this was a stretch, and one of those Pandora’s Box situations:

Respectfully, the Majority’s expansive interpretation of what constitutes a protected property interest in these circumstances may have unintended consequences in other contexts, such as statutes where the legislature has mandated consideration of specific factors by executive agencies when implementing a statute.

The dissent concluded the majority’s result was unnecessary, because it was more of a policy choice than a judicial decision, and ultimately, if denied administrative intervention in the PUC, Sierra Club could deploy the loose standing rules which we mentioned earlier in this post, and institute an original jurisdiction action.

So is this property, New Property, or what we might call New New Property? 

The biggest question I have about the majority’s conclusion is this: if the most fundamental aspect of owning “property” is the right to exclude others from the res, how in the world do members of the public have the right to exclude other members of the public from a clean and healthful environment? 

As the U.S. Supreme Court held in the aforementioned Kaiser Aetna, and Nollan “[w]e have repeatedly held that, as to property reserved by its owner for private use, ‘the right to exclude [others is] ‘one of the most essential sticks in the bundle of rights that are commonly characterized as property.” (Or maybe Stevie Wonder said it better when he sang “this is mine, you can’t take it.”

Either way, the ability to keep others off of what you own — and have the law back you up — is one of the defining sticks in the bundle of rights which we call property.

Thus, I don’t think the court adequately grappled with the real foundational question built into the arguments — should these types of environmental concerns even be shoehorned into the concept of “property” as that term has been used for thousands of years? Doesn’t “property” as used in the Hawaii Constitution’s due process clause mean private property? After all, as far as we can tell, every other time this court has dealt with property in Hawaii’s due process clause, it has either expressly defined, or implicitly assumed, that the property interest at stake was private property, and not a right that looks more like something “owned” collectively by everyone. Essentially what the majority accomplished was a subtle redefinition of property from a private right to a public resource. 

So what’s on the horizon? I’m thinking the second shoe to drop is going to be “public trust” rights. As Professor Callies has written on the Hawaii form of the public trust which goes well beyond the Roman and English concepts, if the notion of public property is extended to the public trust, there’s a danger that this background principle could well eclipse – or indeed swallow up completely – the notion of private property. 

And our court is just one vote shy of concluding that Native Hawaiian rights – a form of cultural property – qualify as constitutional property.  Australia’s High Court has recently concluded that the property rights first recognized in the Mabo v. Queensland decision lead to a requirement for compensation when those rights were expropriated. Real money, even if it is Australian dollars. And since we’re here in the south what does the recognition of cultural property mean for things like those troublesome Confederate monuments that sit there on courthouse lawns (and across the street from certain law schools)? Is there a cultural property right for them to remain, or to be paid compensation to leave? 

As if responding to the Hawaii Supreme Court, the following year, the DC Circuit – applying Pennsylvania’s similar constitutional provision – came to the opposite conclusion

The court held that the Pennsylvania Constitution’s Environmental Rights Amendment’s guarantee of “clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic [sic] values of the environment” was not a liberty or property interest triggering the Fourteenth Amendment’s due process protections. 

The case was a challenge by Riverkeeper to the Federal Energy Regulatory Commission’s enabling statute, which requires FERC to recover its costs from the industries it regulates. Riverkeeper asserted this makes it more likely that FERC will approve pipelines. 

The court first concluded that Riverkeeper had standing. And it quickly dismissed its claim to possess a liberty interest because the ERA’s rights are not “essential to the orderly pursuit of happiness by free men,” and “the right to a healthy environment can[not] itself fairly be described as a ‘liberty’ interest.” 

The court subjected Riverkeeper’s “property” claim to a bit more analysis. State law defines property, and Pennsylvania’s ERA “guarantees” certain things, and even calls them “rights.” The court concluded, however, that the ERA’s rights are “vague and indeterminate.” Slip op. at 8. And the rights it recognizes do not have “some acertainable monetary value.”  Most importantly, the question is whether the rights look like “any traditional conception of property.”

The court held that because the ERA recognizes the rights as belonging to “the people,” it failed this latter test:

Most importantly, the Environmental Rights Amendment creates no right to exclude—or anything like it. To the contrary, its first sentence vests the single “right” at issue collectively in “[t]he people,” its second sentence confirms that “Pennsylvania’s public natural resources are the common property of all the people,” and its third sentence requires the Commonwealth to conserve and maintain environmental resources “for the benefit of all the people.” Moreover, although the Supreme Court of Pennsylvania has held that the Amendment is judicially enforceable by private individuals, it has also confirmed that the right the Amendment creates is shared equally by all Pennsylvanians.

In other words, no Pennsylvanian may exclude any other from the right to clean air, pure water, and a preserved environment. So, the Amendment protects not private property rights, but public goods. In that respect, it is like “the right that we all possess to use the public lands”—which for due-process purposes “is not the ‘property’ right of anyone.”

The court concluded that “[t]he amendment is unlike traditional or even new property in yet other respects. For one thing, the right to a preserved environment cannot be bought or sold—and thus has no ‘ascertainable monetary value,’ as the Supreme Court’s ‘property-as-entitlement cases have implicitly required.'”

So which is it, and maybe more critically what defines “property?” State law, notions of natural law or fundamental rights?

On that, I’d like to touch on one more recent decision, which will naturally lead us into a discussion of one of my favorite metaphysical law cases, Stop the Beach Renourishment (yes, we’re going to dive into judicial takings in a moment).

This is a case from the Ninth Circuit. The plaintiffs filed a class action alleging that state officials failed “to return interest that was allegedly skimmed from their state-managed retirement accounts.” The District Court denied class action status and granted the State summary judgment, concluding the case was “potentially unripe” because the State had not finished the process of administrative rulemaking, which might, in the court’s view, address the plaintiffs’ claims for interest.

The Ninth Circuit – somewhat surprisingly, given its reputation —  reversed. The State argued that because the Washington Court of Appeals held that the statute at issue didn’t require the payment of interest, there was no “property” that was taken when the state officials kept the interest. If it ain’t property under state law, the state argued, it ain’t “property.” 

Not quite, held the Ninth Circuit. Interest on principal is one of those “core” and “traditional” property rights that a state simply cannot disavow:  

There we observed that “constitutionally protected property rights can—and often do—exist despite statutes . . . that appear to deny their existence.” Citing the Supreme Court’s opinion in Phillips, we noted that “a State may not sidestep the Takings Clause by disavowing traditional property interests long recognized under state law.” We then held that there is “a ‘core’ notion of constitutionally protected property into which state regulation simply may not intrude without prompting Takings Clause scrutiny.” This “core” is “defined by reference to traditional ‘background principles’ of property law.” In that case, we concluded that interest income earned on an interest-bearing account falls within this class of fundamental property rights. 

In short, while state law usually defines property, there are certain sticks that transcend a state’s ability to redefine them out of existence. 

Before we move to Justice Bell and Stop the Beach Renourishment, let me say this. First, thank you to Lynda Butler for again asking me to be here. I’ve said before that being in this room is like being at the Super Bowl for property law. This is Yankee Stadium in October, the Champs Elysees or Wimbledon in July (although with the stellar talent in the room, I kind of feel like the poor sap up matched up with Venus Williams). Second, hearty congratulations to Professor Eagle. His regulatory takings treatise is one of those rare ones that is on what I call my “back” bookshelf. The books within reach when you turn around at your desk. A well-deserved recognition for your wonderful work and scholarship. 

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