Thursday, March 26, 2015
Some weeks ago, I blogged here about water rights and shortages in drought-ridden California. Of course, California is not the only state where contractual water rights interface with development and public health concerns.
In Ohio, shale driller Gulfport Energy recently filed suit against the town of Barnesville for rights to extract water for Gulfport’s fracking operations. Gulfport had a contract with Barnesville entitling it to draw water from a local reservoir at one cent per gallon. Under the contract, Gulfport would be able to draw the water unless the village determined that such action would endanger public health. Water rights were subsequently also issued to another driller. In the fall of 2014, the village told Gulfport to stop drawing water from the reservoir because of too low water levels. Gulfport’s suit now asks for adequate assurances of performance of the water contract to ensure that it can continue its fracking operations.
Whether that is a good idea is another story. From a short-term perspective: yes, we need energy preferably domestically sourced to avoid international supply interruptions and the geopolitical problems that are associated with importing energy raw materials. But fracking and fossil fuel production in general are associated with other severe problems including heavy water usage in the case of fracking. Such water, the argument goes, is better used for other things such as farming and household consumption.
Business as usual for fracking companies may not be the best idea seen from a societal point of view. Contracts rights are only a small part of this much bigger problem. However, time seems to have come for governments to incorporate escape clauses not only for “public health concerns” into water contracts, but also for drought concerns. This is not always done, as the above case shows, but such a relatively easy step could help solve at least some contractual disputes. In times of increasing temperatures and decreasing rainfall in some areas, such contract drafting may well make sense.
Thursday, March 5, 2015
The official portrait of former President Bill Clinton has been completed. See it here. It was painted in the “conservative realistic style” … maybe a little too realistic and not sufficiently conservative?
According to the artist, Nelson Shanks, the bluish shadow of a person that you see on the mantelpiece next to Clinton is that of Monica Lewinski in her infamous blue dress. You got that right: the artist himself has admitted that he purposefully scarred the picture just as the Lewinsky scandal scarred Clinton’s second term. The artist has apparently caught quite some flak for having done this. Regardless of artistic freedom and setting aside all thoughts about the scandal per se, what is, after all, at issue here is a contract for artwork depicting a former President of the United States of America. A bit more respect may have been in order. This was not any regular client having a portrait done; it’s in effect the entire nation that commissioned this work. Perhaps a subjective satisfaction clause would have been in order here. Even if it had been any “regular” client, deliberately depicting one’s paying client in a highly controversial light seems to me to be in questionable taste.
On the other hand, the argument has been made that if the artist had been held to certain contractual stipulations, the portrait of the 42nd President would have been “stiff and untrue.”
That’s not the case? Take a look and judge for yourself. While much has been made of Clinton holding an actual, gash, newspaper – so retro – the strange positioning of his fingers on his hip looks more bizarre to me. An indication of his alleged two-sided look at what constituted “the truth” in certain contexts? To me, it looks more like the V sign for, perhaps, Clinton’s ultimate victory over at least some of the political and other challenges he faced.
Wednesday, February 11, 2015
Property development is often considered a way for local communities to earn more taxes and evolve with times in general. But when construction and other development is approved in geologically risk areas such as flood zones and things go awfully wrong, is this a mere property and contracts issue, or may criminal liability lie?
In France, the answer is the latter. The former mayor of the small French seaside town La Faute-sur-Mer was just sentenced to jail for four years for deliberately hiding flood risks so that he and the town could benefit from the “cash cow” of property development, a French court has held. His deputy mayor received a two-year sentence in the same plot.
In 2010, the cyclone Xynthia hit western Europe and knocked down seawalls in the French town, leading to severe floods and 29 deaths.
Wait… a cyclone in France? Yes. Climate change is real and it’s here. Unless we do something about it (which apparently we don’t), things will only get worse. As on-the-ground steps that could prevent extreme results such as the above are often simply ignored or postponed while more and more research is done and money saved at various government scales, lawsuits will necessarily follow. The legal disciplines, including contracts law, will have to conform to the new realities of a rapidly changing climate. For starters, we need to seriously question the wisdom and continued desirability of constructing more and more homes in coastal and other flood prone areas. Ignoring known risks is, well, criminal.
Monday, February 2, 2015
Giles Cuniberti, The International Market for Contracts: The Most Attractive Contract Laws. 34 Nw. J. Int'l L. & Bus. 455 (2014)
Robert W. Emerson, Fortune Favors the Franchisor: Survey and Analysis of the Franchisee's Decision whether to Hire Counsel, 51 San Diego L. Rev. 709 (2014)
Shelby D. Green, Contesting Disclaimer-of-Reliance Clauses by Efficiency, Free Will, and Conscience: Staving off Caveat Emptor, 2 Tex. A&M L. Rev 1 (2014)
Cameron S. Hamrick & Michelle E. Litteken, CICA Stay Overrides at the Court of Federal Claims: What Government Contractors Need to Know, 43 Pub. Cont. L.J. 687-713 (2014)
James W. Nelson, GAO-COFC Concurrent Bid Protest Jurisdiction: Are Two Fora Too Many? 43 Pub. Cont. L.J. 587 (2014).
Aaron S. Ralph, Transaction Management: A Systemic Approach to Procurement Reform, 43 Pub. Cont. L.J. 621 (2014)
Steven M. Seigel, War Claims and Private Security Contractors: The Strategic and Regulatory Benefits of Paying Host-Nation Claims against U.S. Contractors, 43 Pub. Cont. L.J. 653 (2014)
Heather K. Way, & Lucy Wood. Contracts for Deed: Charting Risks and New Paths for Advocacy. 23 J. Affordable Housing & Commun. Dev. L. 37 (2014)
Paul S Davies
Accessory liability in the private law is of great importance. Claimants often bring claims against third parties who participate in wrongs. For example, the ‘direct wrongdoer’ may be insolvent, so a claimant might prefer a remedy against an accessory in order to obtain satisfactory redress. However, the law in this area has not received the attention it deserves. The criminal law recognises that any person who ‘aids, abets, counsels or procures’ any offence can be punished as an accessory, but the private law is more fragmented. One reason for this is a tendency to compartmentalise the law of obligations into discrete subjects, such as contract, trusts, tort and intellectual property. This book suggests that by looking across such boundaries in the private law, the nature and principles of accessory liability can be better understood and doctrinal confusion regarding the elements of liability, defences and remedies resolved.
Paul S Davies is an Associate Professor in Law at the University of Oxford and a Fellow of St Catherine’s College, Oxford.
January 2015 9781849462877 302pp Hardback RSP: £55
Discount Price for Contracts Prof Blog Readers: £44
Please click here to order online. When ordering online please type the reference 'CONTRACTSPROFBLOG' in the voucher code field and click ‘apply’ to receive the discount.
If you have any questions please contact Hart Publishing
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Monday, January 12, 2015
A misplaced comma (or something) cost an Oregon Ducks fan his premium seats to the college football championship game. According to this report from The Oregonian, a University of Oregon alumnus found premium tickets to the game (which he knew were selling for $4000) for $400 on StubHub. When, he placed his order, StubHub indicated that he would be charged $16,59.36, but his credit card was charged $16,059.36. He protested, and StubHub refused to honor the purchase, removing the charge and offering $1600 in StubHub vouchers, which the angry Duck says he will not use. He blows off some steam in a blog post, with observations about obnoxious terms and conditions.
In a sign of the times, MasterCard has filed suit in the Southern Distroct of New York against Nike, according to this report from Bloomberg.and Oregon Live (you have to go through a short survey to read it), for having poached a few of its cyber-security experts. MasterCard is suing the employees for breach of contract and Nike for tortious interference. Nike denies all wrongdoing.
We could not have made this up: The St. Louis Post-Dispatch reports that the Devin James Group (DLG), a public relations firm, is suing another public relations firm, Elasticity. Apparently, Elasticity hired DLG to help represent the City of Ferguson in the aftermath of the shooting of Michael Brown. Elasticity fired DLG when it discovered that DLG's owner had a criminal record. Mr. James was convicted in 2006 for having shot an unarmed man. He claims he did $50,000 of work for which he has not been paid.
In another chapter in the dangers of state governments hiring private companies to handle public services, NJ.com reports that Hewlett Packard will refund New Jersey $7.5 million to get out of its contract to deliver a unifed system to administers the state's public assistance program. The Christie administration and HP agreed last year to suspend work on the project and they entered into a separation agreement in which each side agreed not to sue the other for breach of contract. The state is now looking for a new partner. In the meantime, it "continues to hobble along on its 1980s-era mainframe system," according to NJ.com.
Finally, an interesting conflict between a franchise and a large franchisee. Wendy's is requiring its franchisees to make technology upgrades and renovate stotes. DavCo, which operates 152 Wendy's restaurants is refusing to do so, claiming that Wendy's lacks the authority to require the changes. According to the Baltimore Sun, Wendy's has filed suit to terminate DavCo's franchises.
Tuesday, December 9, 2014
As indicated in this story,* CNN.com is greatly invested in the story of Morten Storm, who claims that he is a Danish double-agent who infiltrated Al Qaeda in the Arabian Penninsula (AQAP) and thus helped the U.S. target and kill AQAP operative and U.S. citizen Anwar al-Awlaki.
Storm (and his CNN co-authors) have quite a story to tell. Among other things, he claims that the United States promised him $5 million for helping the U.S. in its al-Awlaki operation. Although Storm is clearly an international man of mystery, there is little mystery on the question of whether he would have any luck on a claim against the U.S. for breach of a promise to pay $5 million. The U.S. would undoubtdedly point to the Totten case, as updated in Tenet v. Doe, and courts will find the claim non-justiciable.
NB: When you click on this site, you will see the following browsewrap banner across the top:
If you do not want to spend an hour or two parsing CNN's terms and don't want to be bound to terms that you have not read or cannot understand, do not "continue to use" CNN's site (whatever that means).
Hat tip to my student, Brandon Carter.
Tuesday, December 2, 2014
Ilya Shapiro at the Cato Institute posted last week about Century Exploration v. United States, decided by the Federal Circuit on March 14, 2014. Century Exploration (Century) acquired a lease for an oil field in the Gulf of Mexico. It paid $23 million up front, plus $50,000 per year of the lease. Century sought to protect itself against possible changes in applicable laws governing such leases through a contractual provision that no changes in law, other than reulgations created pursuant to the Outer Continental Shelf Lands Act (OCSLA), would affect Century's rights under the lease.
In the wake of the Deepwater Horizon fire, Congress passed the Oil Pollution Act (OPA), which required oil exploration companies to develop worst case scenarios and certify that they have reserves adequate to address such worst cases. Using a methodology required by the Interior Department, Century would have to have $1.8 billion on hand to deal with such a worst case. When Century could not prove that it had such funds, the government sought to cancel the lease. Century brought suit, relying on the contractual provision that protected it against regulatory changes, such as those promulgated pursuant to the OPA. Ilya Shapiro questions whether the directives from the Interior Department even qualify as government regulations, as they were sent via e-mail by "a civil servant in the Interior Department." The government filed for summary judgment, and both the Court of Federal Claims and the Federal Circuit sided with the government.
The Federal Circuit acknowledged that this case involves a lease provision nearly identical to that at issue in Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604 (2000). However, in this case, the Federal Circuit found that the new regulations were actually promulgated pursuant to the OCSLA rather than the OPA. As such, they were within the carve-out to the contractual provision protecting Century against regulatory changes. In short, the Federal Circuit found this case distinguishable from Mobil Oil because of the nature of the regulations at issue.
To see in detail why the Cato Institute disgrees with that holding, you can have a look at its amicus brief. Ilya Shapiro provides the following summary:
First, it is vital to the smooth operation of the government and the health of the economy that private entities are confident that the government will honor its contractual promises. Federal spending on contracts has totaled roughly $500 billion annually since 2008—or 15% of the federal budget. If businesses and individuals have no reason to believe that the government will live up to its business obligations, they’ll have no reason to work with it. The Federal Circuit’s decision, which condoned the government’s flagrant breach of its contract with Century, sets a bad example and must be reversed.
Second, and quite simply, words have meaning—in the Constitution, in statutes, and yes, in contracts. A “regulation” is a formal rule adopted and issued by an authorized agency, in accordance with strict procedural protocols. It’s not a casual email. Giving informal government policy documents created by civil servants the full weight of the law is unconstitutional, undemocratic, and unsustainable.
Monday, November 24, 2014
File this under "Nice!" According to this report in the Durham Herald Sun, the parents of a child who has been prohibited from attending his private school, the Mount Zion Christian Academy, are suing the school for breach of contract. The allegations of breach are based on the fact that the child's parents are paying tuition, but their son is forbidden to attend his school.
And what has the child done to earn this suspension? Nothing! His parents were informed that the child would not be permitted to attend school becasue his father had traveled to Nigeria, and the school did not want to risk the spread of ebola. The school took these precautions despite the fact that:
- there is no ebola in Nigeria;
- the father had no contact with anyone with ebola;
- the father was screened at the airport and cleared.
The superintendent of schools failed to appear at a hearing and a judge ordered the school to allow the child to return
According to this story from the Spokane Spokesman Review, an Idaho judge has thrown out as invalid a $60 million contract that the state entered into with Education Networks of America (ENA) and Qwest to provide a broadband network that would link every Idaho high school. The plaintiff in the case, Syringa, had partnered with ENA on one of the two bids on the contract, but when the state awarded the contract to ENA, it cut Syringa out of the allocation of work in the contract. The court found this a violation of state procurement law.
Sandra Troian a physicist at CalTech, has filed a complaint against the school, alleging violations of the California whistleblower protection statute and breach of contract, among other things. Troian alleges that she had reported that the school had been infiltrated by a spy who was sending classified information to the Israeli government. Troian alleges that the school ignored her because it did not want to endanger a large contract with Jet Propulsion Laboratories. She further alleges that the school has retaliated against her for blowing the whistle.
Wednesday, November 19, 2014
Megan Bittakis, Duty under Negligent Breach of Contract Claims, 62 Drake L. Rev. 619 (2014).
Hong-Sik (Justin) Chung, Government Procurement in the United States--Korea Free Trade Agreement: Great Opportunities for Both Sides? 34 Nw. J. Int'l L. & Bus. 299 (2014).
James E. DeFranco, The Penalty for Failing to Submit to an Examination under Oath, 38 S. Ill. U. L.J. 261 (2014).
David K. DeWolf, The Development of Insurance Bad Faith in Washington, 49 Gonz. L. Rev. 479 (2013/2014).
William E. Foster & Emily Grant, Memorializing the Meal: An Analogical Exercise for Transactional Drafting, 36 U. Haw. L. Rev. 403 (2014).
Adam J. Hirsch, Formalizing Gratuitous and Contractual Transfers: A Situational Theory, 91 Wash. U. L. Rev. 797 (2014).
David A. Hoffman, Whither Bespoke Procedure? 2014 U. Ill. L. Rev. 389.
Cliff Holmes, The Unconstitutionality of the Close the Contractor Fraud Loophole Act of 2008, 66 Baylor L. Rev. 362 (2014).
Paul F. Kirgis, Bargaining with Consequences: Leverage and Coercion in Negotiation, 19 Harv. Negotiation L. Rev. 69 (2014).
Anjanette H. Raymond, Yeah, But Did You See the Gorilla? Creating and Protecting an Informed Consumer in Cross-Border Online Dispute Resolution, 19 Harv. Negotiation L. Rev. 129 (2014).
Monday, November 10, 2014
According to this report on the International Business Times website, two children, through their mother, are suing Malaysia Airlines for breach of contract and negligence in connection with their father's death on Flight MH370. Plaintiffs allege that the airline breached a safety agreement that it entered into with their father and the other passengers on the flight.
As reported here in the Bellingham Herald, the Indiana Supreme Court heard arguments on October 30th about the state's contract with IBM to privatize its welfare services. The state was so disappointed with IBM's performance that it cancelled the contract three years into a $1.3 billion, ten-year deal. Friend of the blog, Wendy Netter Epstein (pictured), has written about this case in the Cardozo Law Review.
Sunday's New York Times Magazine has a cover story pondering whether lawyers are going to do to football what they did to tobacco. As an example of what this might look like we have this case filed on October 27, 2014 on behalf of Julius Whittier and a class of plaintiffs who played NCAA football from 1960-2014, never played in the NFL, and have been diagnosed with latent brain injury or disease. Mr. Whittier suffers from early-onset Alzheimer's. The complaint alleges, among other things, breach of contract, based on NCAA documents requiring each member instittuion to look after the physical well-being of student athletes.
Wednesday, October 8, 2014
Wednesday, October 1, 2014
In a recently unsealed ruling, the U.S. Court of Claims has awarded $1.1 million in damages for breach of contract to a former undercover Drug Enforcement Administration ("DEA") informant who was kidnapped in Colombia and held captive for more than three months.
Here's a flavor from the opening paragraphs of the 52-page decision:
This breach-of-contract action comes before the Court after a trial on damages. In its decision addressing liability, the Court determined that the Drug Enforcement Administration (“DEA”) breached an implied-in-fact contract and its duty of good faith and fair dealing by failing to protect Plaintiff, an undercover informant. During an undercover operation in Colombia, Plaintiff, known as “the Princess,” was kidnapped and held captive for more than three months. Plaintiff claims that her kidnapping and prolonged captivity caused the onset of her multiple sclerosis and seeks compensatory damages in the amount of $10,000,000 for financial losses, inconvenience, future medical expenses, physical pain and suffering, and mental anguish arising from Defendant’s breach.
Because Plaintiff demonstrated that Defendant’s breach of contract was a substantial factor in causing the Princess’ kidnapping and captivity, and triggering her multiple sclerosis, the Court awards the Princess the value of her life care plan, $1,145,161.47. Plaintiff failed to prove any other damages.
The decision covers a number of issues related to damages. For example, the court holds that it was reasonably foreseeable at the time of contracing that a DEA informant would be kidnapped in Colombia and suffer resulting health issues:
The inquiry under foreseeability in this case is whether Plaintiff's damages, namely her multiple sclerosis and the ensuing costs of her medical care, were reasonably foreseeable at the time of contract formation. Anchor Sav. Bank, FSB, 597 F.3d at 1361; Pratt v. United States, 50 Fed. Cl. 469, 482 (2001) (“Whether damages are foreseeable is a factual determination made at the time of contract formation.”) (citing Bohac v. Dep't of Agriculture, 239 F.3d 1334, 1340 (Fed.Cir.2001)). Hence, Plaintiff must show that both the kidnapping, her ensuing health problems, and consequential financial costs of medical care constituted the type of loss that was reasonably foreseeable when the parties formed their implied-in-fact contract.
Plaintiff has established that her kidnapping was reasonably foreseeable at the time the contract was entered into. From the outset ASAC Salvemini voiced concerns for the Princess' safety, and DEA moved her family because of the dangers of her operation as part of her agreement to work with DEA. Evidence revealed that kidnappings were not uncommon in Colombia at the time. 2007 Tr. 270 (Princess); 2007 Tr. 1523 (Warren) (“[W]e got the report [the Princess] had been abducted. That was not an unusual report in Colombia then or now unfortunately.”). Plaintiff established that harm to undercover informants, including injury and death, were reasonably foreseeable consequences of a breach at the time of contract formation.
Knowing, as DEA did, of the dangers inherent in undercover operations aimed at highechelon Colombian traffickers, especially kidnapping in Col ombi a–a “hot spot”–the Princess' kidnapping and resultant harm to her health was a reasonably foreseeable type of injury at contract formation. The Court recognizes that DEA likely did not specifically foresee that the injury would be multiple sclerosis, but this is not a requirement for a showing of foreseeability. Anchor Savings Bank, FSB, 597 F.3d at 1362–63 (noting that “the particular details of a loss need not be foreseeable,” as long as the mechanism of loss was foreseeable) (quoting Fifth Third Bank v. United States, 518 F.3d 1368, 1376 (Fed.Cir.2008)).
Not the ordinary intrigue of the average contracts case.
SGS-92-X003 v. U.S., No. 97-579C (Ct. of Fed. Claims, filed Aug. 30, 2014)(republished Sept. 26, 2014).
Wednesday, September 17, 2014
Thursday, August 7, 2014
It is not often that the Supreme Court of the United States entertains a contract issue (which is, coincidentally, one of the main reasons it is such a delight to teach contract law). The Supreme Court did, however, recently settle a contract dispute of its own.
The curious case of the trapezoidal windows at the U.S. Supreme Court is closed.
Documents filed recently in lower courts indicate that a contentious seven-year dispute over mistakes and delays in the renovation project at the high court has been settled.
“Everybody was worn out by the litigation,” Herman Braude of the Braude Law Group said this week. Braude represented Grunley Construction Company, the main contractor for the modernization project on the nearly 80-year-old building. “All good things have to come to an end,” he said.
The most contested feature of the litigation was the belated discovery by contractors that more than 150 large windows, many of which look out from justices’ chambers, were trapezoidal—not strictly rectangular. The building's persnickety architect, Cass Gilbert, designed them that way so they would appear rectangular from below, both inside and outside the building.
But Grunley and its window subcontractor failed to measure all four sides of the windows before starting to manufacture blast-proof replacements, so some of them had to be scrapped.
Grunley claimed it was not obliged to make the measurements, asserting that the government had “superior knowledge” of the odd shape of the windows that it should have shared with contractors. The company asked for an extra $757,657 to compensate for the extra costs of fabricating the unconventional windows.
But the federal Contract Appeals Board in 2012 rejected Grunley’s claim, stating: “We find inexcusable the firms’ failure to measure a necessary component of the windows prior to installation.”
Grunley appealed to the U.S. Court of Appeals for the Federal Circuit and placed other contract disputes before that court and the U.S. Court of Federal Claims. Both sides eventually agreed to settlement negotiations.
In February, both parties reported to the federal circuit that “the parties are now in the final process of closing out the underlying construction contract and settling various requests for equitable adjustment.” They also told the federal circuit that “the settlement discussion are at a very high level between the parties … and are being primarily led by the principals of each party, not the litigation counsel.”
Subsequent orders by both courts have dismissed the litigation, but no details of the settlement are available on the docket of either court.
Attempts to obtain details of the settlement have been unsuccessful so far. The Architect of the Capitol—the congressional agency that has jurisdiction over the Supreme Court building and was the defendant in the litigation—did not respond to a request for comment. The U.S. Department of Justice’s civil division, which handled the litigation for the architect's office, did not respond as of press time, and neither did anyone from the Supreme Court.
Braude, Grunley's attorney, was reluctant to give details. “The dollar figure doesn’t matter,” he said. But when pressed, Braude said his client “got some” of the $15 million in extra compensation it was seeking from the government, beyond its original $75 million contract for the work.
“Everybody agreed to an adjusted contract price that recognizes the budget limitations of the government,” Braude said, adding that the settlement was “satisfactory to all parties. Nobody was jumping for joy, but everybody was a little happy.” Braude also said the Supreme Court signed off on the settlement.
John Horan of McKenna Long & Aldridge, an expert on government contract disputes, said there is no general rule about the confidentiality of settlements, and sometimes “the government doesn’t go out of its way to make settlements public.” But a document spelling out terms of the agreement is sometimes made part of the public record or can be obtained through the Freedom of Information Act, he said. The Supreme Court and the Architect of the Capitol, an arm of Congress, are exempt from the FOIA.
The modernization project at the Supreme Court broke ground in 2003 and the target completion date was 2008, though some follow-up work is still underway. The court's aging infrastructure—including one of the oldest Carrier air-conditioners in existence—was the trigger for the project, which has cost an estimated $122 million overall.
More here. Great basis for an exam hypo. And, wow! -- to be the attorney that sues the Supreme Court!
Tuesday, July 8, 2014
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Wednesday, June 11, 2014
Ian Ayres & Alan Schwartz, The No-Reading Problem in Consumer Contract Law, 66 Stan. L. Rev. 545 (2014)
Steven J. Brams & Joshua R. Mitts, Law and Mechanism Design: Procedures to Induce Honest Bargaining, 68 N.Y.U. Ann. Surv. Am. L. 729 (2013)
Andrea M. Matwyshyn, Privacy, the Hacker Way, 87 S. Cal. L. Rev. 1 (2013)
Julianna Thomas McCabe, et al., Recent Developments in Appellate Advocacy. 49 Tort Trial & Ins. Prac. L.J. 53 (2013)
Wednesday, June 4, 2014
Mary Simmons Mendoza, Managing Environmental Risks in Transactions. 43 Tex. Envtl. L.J. 305 (2013)
Meredith M. Render, Complexity in Property, 81 Tenn. L. Rev. 79 (2013)
Adam G. Yoffie, There's a New Sheriff in Town: Commissioner-Elect Adam Silver & the Pressing Legal Challenges Facing the NBA through the Prism of Contraction, 21 Jeffrey S. Moorad Sports L.J. 59 (2014)
Friday, May 23, 2014
By Myanna Dellinger
In California, the Bureau of Reclamation is in charge of divvying up water contracts in the California River Delta between the general public and senior local water rights owners. Years ago, it signed off on long-term contracts that determined “the quantities of water and the allocation thereof” between the parties. About a decade ago, it renewed these contracts without undertaking a consultation with the Fish and Wildlife Service (“FWS”) to find out whether the contract renewals negatively affected the delta smelt, a small, but threatened, fish species. The thinking behind not doing so was that since the water contracts “substantially constrained” the Bureau’s discretion to negotiate new terms, no consultation was required.
Not correct, concluded an en banc Ninth Circuit Court of Appeals panel Ninth Circuit Court of Appeals panel recently. By way of brief background, Section 7 of the Endangered Species Act (“ESA”) requires federal agencies to ensure that none of their actions jeopardizes threatened or endangered species or their habitat. 16 U.S.C. § 1536(a). Among other things, federal agencies must consult with the FWS if they have “some discretion”"some discretion" to take action on behalf of a protected species. In this case, since the contractual provision did not strip the Bureau of all discretion to benefit the species, consultation should have taken place. For example, the Bureau could have renegotiated the pricing or timing terms and thus benefitted the species, said the court.
In 1993, the delta smelt had declined by 90% over the previous 20 years and was thus listed as a threatened species under the ESA. Of course, fish is not the only species vying for increasingly scarce California water. Man is another. The current and ongoing drought in California – one of the worst in history – raises questions about future allocations of water. Who should be prioritized? Private water right holders? People in Southern California continually thirsty and eager to water their often overly water-demanding garden plants? Industry? Farmers? Not to mention the wild animals and plants depending on sufficient levels of water? There are no easy answers here.
The California drought is estimated to cost Central Valley farmers $1.7 billion and 14,500 jobs. While that seems drastic, the drought is still not expected to have any significant effect on the state economy as California is no longer an agricultural state. In fact, agriculture only accounts for 5% of jobs in California. Still, that is no consolation to people losing their jobs in California agriculture or consumers having to pay higher prices for produce in an increasingly warming and drying California climate.
The 1974 movie Chinatown focused on the Los Angeles water supply system. 40 years later, the problem is just as bad, if not worse. The game as to who gets water contracts and for how much water is still on.
Friday, May 16, 2014
Kevin E. Davis, moderator; Nicholas Bliss, Chantal Kordula, Kent Rowey, Ana Karina Esteves de Souza, & Carlos Umana, panelists, Public Private Partnerships in International Energy & Infrastructure Project Finance, 9 N.Y.U. J.L. & Bus. 729 (2013)
David G. Epstein, Timothy Archer & Shalayne Davis, Extrinsic Evidence, Parol Evidence, and the Parole Evidence Rule: A Call for Courts to Use the Reasoning of the Restatements Rather than the Rhetoric of Common Law, 44 N.M. L. Rev. 49 (2014)
Franco Ferrari, moderator; Matthieu de Boisseson, Inka Hanefeld, Mark Kantor, Ryan Reetz & Laurence Shore, panelists, Multi-Party Arbitration Issues in International Project Finance Arbitration, 9 N.Y.U. J.L. & Bus. 759 (2013)
Inka Hanefeld, Arbitration in Banking and Finance, 9 N.Y.U. J.L. & Bus. 917 (2013)
Stephen A. Plass, Using Pyett to Counter the Fall of Contract-Based Unionism in a Global Economy, 34 Berkeley J. Emp. & Lab. L. 219 (2013)
Val Ricks, Consideration and the Formation Defenses, 62 U. Kan. L. Rev. 315 (2013)
Arpan A. Sura & Robert A. DeRise, Conceptualizing Concepcion:The Continuing Viability of Arbitration Regulations, 62 U. Kan. L. Rev. 403 (2013)