1. Stan Getz & the Oscar Peterson Trio (Recorded 1957) Stan Getz, Tenor Sax * Oscar Peterson, Piano Herb Ellis, Guitar * Ray Brown, Bass Please Place Takings Surveys on Chair in Front of Room. Extra Copies Available.

2. REV. PROB 2C: Treat Custom as Law? OXYGEN: Yes v. KRYPTON: No Easy Swift/Ghen Factors Used by Whole Industry for Long Time (~YES) Problem says Almost Whole Industry Easier to Use than Existing Legal Rules (~ NO) Custom Itself Can Be Hard to Apply (See 2B) Almost Certainly Few Limits Absent Custom Trademark or Copyright Violations Require Very Close Copying of Protected Material Apply with or without Custom Might Have More General Discussion of Certainty

3. REV. PROB 2C: Treat Custom as Law? OXYGEN: Yes v. KRYPTON: No Harder Swift/Ghen Factors Affect Outsiders (Leave for You) Necessary for (Which?) Industry to Operate? Reasonableness of Custom?

4. Oil & Gas: “Escape” * Starting Point: What Hammonds calls “Escape” the industry calls “Reinsertion” * Featuring “Sybil Green” Font (reinsertions into empty spaces)

5. Oil & Gas: “Escape” Factual Setting of Hammonds & White Gas pool underneath multiple surface lots All usable gas extracted from pool Gas Co. (G) uses empty pool for storage: – G has lawful access from some point on surface – G wants to extract and reinsert at will – G does not want to pay surface Os for right to store gas in the underground parts of their lots

6. Oil & Gas: “Escape” Legal Issue in Hammonds & White [W]hether title to natural gas is lost by the injection of such gas into a natural underground reservoir White (p.97): [W]hether title to natural gas, once having been reduced to possession, is lost by the injection of such gas into a natural underground reservoir for storage purposes. “[W]hether the gas was restored to its original wild and natural statusby being replaced in a similar reservoir Hammonds (p.92): “[W]hether the gas, having once been reduced to possession …, was restored to its original wild and natural status, by being replaced in a similar reservoir of nature….”

7. Hammonds v. C. Ky. Nat’l Gas Co. URANIUM: BRIEF & BASIC INFORMATION DQ2.26-2.27

8. Hammonds v. C. Ky. Nat’l Gas Co. FActs & LEGAL CLAIM (URANIUM) Dfdt CKNG has gas it extracted from different places. Stores “vast quantities of gas” in depleted underground reservoir, a portion of which is part of Ptff H’s land. H sues for trespass. Means what here? Who (allegedly) is trespassing where?

9. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (URANIUM) Material Harm to H if CKNG stored its gas in the part of the reservoir in her land?

10. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (URANIUM) Material Harm to H if CKNG stored its gas in the part of the reservoir in her land? – Alternate Uses? Very Unlikely (Shoe Storage??) – Danger from Reinsertion: Very unlikely to have leaks or explosions b/c in original reservoir surrounded by non-permeous rock + CKNG knows it’s liable for this kind of harm – Noise/Fumes: Likely no more than from original extraction; 54-acre lot mostly not affected. Other Kinds of Harm?

11. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (URANIUM) Other Harm to H if CKNG stored its gas in the part of the reservoir in her land? – Loss of Rental Value (if she’s entitled to) – More Psychological/Abstract Harm: Unlikely to be aware of presence of gas (but see “The Princess & the Pea”) all Maybe need to protect all property rights (“Just bugs me that …”)

12. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (URANIUM) Harm to H = Loss of Property Rts & Rental Value Benefits to society if gas was stored underground rather than aboveground?

13. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.26: Cost/Benefit Analysis (URANIUM) Harm to H = Loss of Ppty Rts & Rental Value Benefits to society if gas was stored underground rather than aboveground: – Safety (See Sylvester Stallone) – Aesthetics (Try to Avoid Seeing New Jersey) – Cost Savings (No Tanks or Surface Space)  Cheaper Fuel Big Social Benefits Outweigh Harms Unless Great Value Given to Abstract Property Rights

14. Hammonds v. C. Ky. Nat’l Gas Co. DQ2.27: BARGAINING (URANIUM) Why parties were not able to bargain to a satisfactory solution in Hammonds? Ordinary Transaction Costs (see DQ1.29(b)) Unsurprising if big gap between positions: – Hammonds has little to lose from holding out – CKNG has to worry about similar deals w lots of owners of small surface lots, so unlikely to want to give much

15. Oil & Gas: “Escape” Cf. Trespass & Airline Overflights Airlines want to use empty space technically owned by surface Os – High value to airline & passengers – Little value to surface Os – Bargaining very expensive (every lot from NY  LA)

16. Oil & Gas: “Escape” Cf. Trespass & Airline Overflights Airlines want to use empty space technically owned by surface Os Solution is Federal Statute Removing Surface Rights Above X Feet Could Do Something Similar for Reinsertion – We’ll Do As Alternative to Escape ACs in DQ2.35 For Practice: Fact Comparisons: Reinsertion v. Airspace – Will Become Part of Our Standard Analysis of Takings Cases (See DQ3.03, 3.09, 3.10, 3.17, etc.)

17. Introduction to Unit Three : Constitutional Protection of Private Property Darth Fajer with Special Appearances by OXYGEN (DQ3.01-3.02) OXYGEN (DQ3.01-3.02) KRYPTON (DQ3.03-3.04) & KRYPTON (DQ3.03-3.04)

18. Unit Three : Constitutional Protection of Private Property State Regulations of Land Use Frequently Limit What Landowners Can Do With Their Land and/or Reduce Its Value. Under What Circumstances Does the U.S. Constitution Require that the State Compensate the Landowner for These Effects?

19. Unit Three : Constitutional Protection of Private Property Key Differences from Units One & Two Whole Unit is Single Line of Cases from Same Court, So Need to Work With as a Group US Supreme Court Opinions Longer & More Complex Context: – Not State Court Working with Common Law of Property – Federal Court Determining if State Law Violates US Constitution (Takes Us to DQ3.01)

20. Unit Three : Introduction DQ3.01: Role of Fed’l Court (Oxygen) When Federal Courts review state statutes to determine whether they violate the U.S. Constitution, most people believe their role does not include determining whether the statute is a good idea as a matter of policy. Why shouldn’t a Federal Court strike down a state statute because it is stupid?

21. Unit Three : Introduction DQ3.01: Role of Fed’l Court (Oxygen) Why shouldn’t a Federal Court strike down a state statute because it is stupid? Common Answers Include: Democratic Theory – State Legislature is Elected Body; Fed’l Court is Not – Bill of Rights Generally as Limit on Democracy Relative Expertise: – Legislature Can Do Better Fact-Finding – See DQ1.58 after Albers

22. Unit Three : Introduction DQ3.01: Role of Fed’l Court (Oxygen) Upshot = Default Rule is Deference to State Legislation Many Bad Laws are Constitutional State Legislatures Allowed to do Stupid Things Unless They Violate a Specific Constitutional Provision (Parent Analogy)

23. Unit Three : Introduction DQ3.01: Role of Fed’l Court (Oxygen) Parent Analogy “You Are Not Leaving the House in That!!”

24. Unit Three : Introduction DQ3.01: Role of Fed’l Court (Oxygen) Default is Deference to State Legislation States Allowed to do Stupid Things Unless They Violate a Specific Constitutional Provision Relevant Provision Here is Takings Clause of Fifth Amendment (Applicable to States through Fourteenth Amendment)

25. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause of the Fifth Amendment of the U.S. Constitution: “[N]or shall private property be taken for public use without just compensation” What sort of cases do you think the framers intended to prevent when they included this provision in the Constitution?

26. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain (Property not Elements) – Govt Deliberately Attempts to Purchase Private Property (“Condemnation”) – Takings Clause requires: – “For Public Use” (Midkiff, Kelo, etc.) – “Just Compensation” (= Fair Market Value)

27. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain (Property not Elements) – Takings Clause requires: – “For Public Use” = Concern About Govt Handing Out Prizes to Favored Individuals – “Just Compensation”

28. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain (Property not Elements) – Takings Clause requires “Public Use” and – “Just Compensation” = Concerns About – Ensuring Govt Has to Consider/Budget to Take Land – Protecting/Encouraging Investment in Land – Taking Property to Punish Disfavored Individuals – Redistributing Wealth

29. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain (Property not Elements) – Takings Clause requires “Public Use” and – “Just Compensation” = Concerns About – Taking Property to Punish Disfavored Individuals – Redistributing Wealth – Speculation re Madison & Slavery

30. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain Cases 2.Takings Cases (Elements Unit Three) – Govt Not Trying to Purchase, but to Regulate – Property Owner Claims Regulation Effectively “Takes” Property so Gov’t Must Cease or Pay (“Inverse Condemnation” Action)

31. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Clause : “[N]or shall private property be taken for public use without just compensation” 1.Eminent Domain Cases 2.Takings Cases (Elements Unit Three) – Property Owner Claims Regulation Effectively “Takes” Property so Govt Must Cease or Pay (“Inverse Condemnation” Action) – Little Historical Evidence Connecting Framers to These Claims

32. Unit Three : Introduction DQ3.02: Role of Fed’l Court (Oxygen) Takings Cases (Elements Unit Three) Property Owner Claims Regulation Effectively “Takes” Property so Govt Must Cease or Pay Left with Hard Q of When Govt Must Pay – Really No Historical Guidance – Generally Defer to State Legislative Process – Can’t Pay for All Loss of Value (Military Bases; Opium Poppies)

33. Unit Three : Introduction Relevant Considerations in Takings Cases We’ll Look at Cases & Theorists to Determine What’s Relevant Cases Complex (Like Escape Cases) – Use a Variety of Factors – Can Use Charts to Keep Track

34. Unit Three : Introduction Relevant Considerations in Takings Cases Survey of Instincts About What Facts Matter 1.% Reduction in Value 2.$$$ Amount Reduction (Loss Can Be Small % but Big $$$ or v-v) 3.$$$ Amount Left (Regardless of Loss, Is What’s Left Substantial?) 4.Return on Investment (Focus on Long Term Financial Effects to O) 5.Ban on Intended Use 6.Purpose of Regulation I’ll Let You Know Wed-Thurs How You Responded & Compare to Prior Classes

35. Unit Three : Constitutional Protection of Private Property Special Tools Recurring Hypo: “Airspace Solution to Hammonds Problem” (Introduced in DQ2.35 & 3.03) Minimum Requirement for Constitutionality: Rational Basis Review (Introduced in DQ 3.04) The “Demsetz Takings Story” (Introduced in DQ 3.05) In Class: Replace Briefs w Introductory Line of Qs for Each Case (E.g., DQ3.06, 3.12, 3.22) Four Theorists (Each Panel will Introduce One) Uranium: Joseph Sax Krypton: Richard Epstien

36. Unit Three : Introduction To Krypton for DQ3.03-3.04

37. Unit Three : Introduction DQ3.03: Airspace Solution (Krypton) “Airspace Solution to Hammonds Problem” Suppose Kentucky adopts a statute treating empty underground gas reservoirs like airspace needed for airlines. The statute: (a) allows the gas company to store its gas under Ms. Hammonds’s property without paying rent; and (b) prohibits her from extracting it.

38. Unit Three : Introduction DQ3.03: Airspace Solution (Krypton) Suppose Kentucky adopted a statute that (a) allowed the gas company to store its gas under Ms. Hammonds’s property without paying rent; and (b) prohibited her from extracting it. Suppose Ms. Hammonds then claims this is an unconstitutional taking of her property. Do you think this is the kind of harm the Takings Clause forbids? Why or Why Not?

39. Unit Three : Introduction DQ3.03: Airspace Solution (Krypton) Suppose Kentucky adopted a statute that (a) allowed the gas company to store its gas under Ms. Hammonds’s property without paying rent; and (b) prohibited her from extracting it. Suppose Ms. Hammonds then claims this is an unconstitutional taking of her property. We’ll apply the authorities we study to this problem to help see what they do.

40. Unit Three : Introduction DQ3.04: Police Power (Krypton) “Police Power” = Basic Authority of State Gov’ts Can regulate to protect/further “HSWM” Health Safety Welfare [general well-being including economic success] Morals Good lawyer can tie virtually any state law to one of these purposes

41. Unit Three : Introduction DQ3.04: Rational Basis Review (Krypton) Is Challenged Law “Rationally Related to a Legitimate State Purpose”? – Minimal Test for Constitutionality Under Due Process & Equal Protection Clauses – Applies When No Specific Constitutional Provision is Violated – Very Deferential: Gov’t Virtually Always Wins

42. Unit Three : Introduction DQ3.04: Rational Basis Review (Krypton) “Rationally Related to Legitimate State Purpose” – What is Purpose? – Is Purpose Legitimate? Arising under Police Power (HSWM) Not Just to Harm Individuals or Group – Is Law “Rationally Related” to Purpose?

43. Unit Three : Introduction DQ3.04: Rational Basis Review (Krypton) “Rationally Related to Legitimate State Purpose” – What is Purpose? – Is Purpose Legitimate? – Is Law “Rationally Related” to Purpose? Not asking if “rational” to a psychologist or economist Term of art = a rational legislator could believe the state law will help further its purpose, at least a little bit Doesn’t have to be best option or even particularly good

44. Unit Three : Introduction DQ3.04: Rational Basis Review (Krypton) Apply to Airspace Solution – What is Purpose? – Is Purpose Legitimate? Arising under Police Power Health Safety Welfare Morals – Is Law “Rationally Related” to Purpose? Could a rational legislator believe the state law will help further its purpose, at least a little bit?

45. Unit Three : Introduction DQ3.05: Demsetz Takings Story Description of How Takings Cases Arise Change leads to rising externalities Creates a demand for a change in the law. After the change, people affected by the new law complain that their property rights have been taken.

46. Unit Three : Introduction DQ3.05: Demsetz Takings Story Airspace Solution? Change leads to rising externalities Creates a demand for a change in the law. After the change, people affected by the new law complain that their property rights have been taken.

47. Unit Three : Introduction DQ3.05: Demsetz Takings Story Description of How Takings Cases Arise Change leads to rising externalities Creates a demand for a change in the law. After the change, people affected by the new law complain that their property rights have been taken. Long Term Q for You: If this story represents a common pattern among Takings cases, what does that suggest about the proper role of the Takings Clause?