Friday, December 2, 2011
The New York Times today has an excellent investigative piece on oil and gas leases and how they do - and don't - protect landowners. From the article:
Americans have signed millions of leases allowing companies to drill for oil and natural gas on their land in recent years. But some of these landowners — often in rural areas, and eager for quick payouts — are finding out too late what is, and what is not, in the fine print.
Energy company officials say that standard leases include language that protects landowners. But a review of more than 111,000 leases, addenda and related documents by The New York Times suggests otherwise:
¶ Fewer than half the leases require companies to compensate landowners for water contamination after drilling begins. And only about half the documents have language that lawyers suggest should be included to require payment for damages to livestock or crops.
¶ Most leases grant gas companies broad rights to decide where they can cut down trees, store chemicals, build roads and drill. Companies are also permitted to operate generators and spotlights through the night near homes during drilling.
¶ In the leases, drilling companies rarely describe to landowners the potential environmental and other risks that federal laws require them to disclose in filings to investors.
¶ Most leases are for three or five years, but at least two-thirds of those reviewed by The Times allow extensions without additional approval from landowners. If landowners have second thoughts about drilling on their land or want to negotiate for more money, they may be out of luck.
The leases — obtained through open records requests — are mostly from gas-rich areas in Texas, but also in Maryland, New York, Ohio, Pennsylvania and West Virginia.
I found this personally interesting, as our family holds mineral right on some land in Montana, but with all the natural gas exploration happening in the Eastern U.S. this is a timely story for many.
Jamie Baker Roskie
Thursday, December 1, 2011
Thanks to Atlanta lawyer Robert Jackson for the heads' up on this amazing decision from a Carroll County judge regarding the potentially wrongful failure to modify a mortgage for homeowner Otis Wayne Phillips. My favorite part of the opinion:
This court cannot imagine why U. S. Bank will not make known to Mr. Phillips, a taxpayer, how his numbers put him outside the federal guidelines to receive a loan modification. Taking $20 Billion of taxpayer money was no problem for U. S. Bank. A cynical judge might believe that this entire motion to dismiss is a desperate attempt to avoid the discovery period, where U. S. Bank would have to tell Mr. Phillips how his financial situation did not qualify him for a modification. Or, perhaps he was qualified, yet didn't receive the modification, in violation of U. S. Bank's Service Participation Agreement (SPA). A cynical judge might think that, if the guidelines clearly prevented Mr. Phillips from getting his modification, then U. S. Bank would have trotted out that fact in mathematic equations, pie charts, and bar graphs, all on 8 by 10 glossy photo paper, with circles and arrows and paragraphs on the back explaining each winning number. [Here the judge puts a footnote begging indulgence from Arlo Gutherie for the Alice's Restaurant reference.] U. S. Bank's silence on this issue might heighten the suspicions of such a cynical jurist. I, on the other hand, am sure that nothing of the sort could be true. Maybe U. S. Bank no longer has any of the $20 billion dollars left, and so their lack of written explanation might be attributed to some kind of ink reduction program to save money. I'm sure there is a perfectly reasonable explanation for why the U. S. Bank will not print out the ONE page of figures that show Mr. Phillip's financials compared to the RAMP guidelines to clear all this up.
Jamie Baker Roskie
For all of our takings geeks out there (you know who you are), and courtesy of the ABA State and Local Government E-News briefs comes a potentially important decision on the reach of the Supreme Court's exactions jurisprudence (aka Nollan/Dolan). The case is St. Johns River Water Mgmt. Dist. v. Koontz, No. SC09-713 (Fl. Nov. 3, 2011) (and it is attached). It holds, in short, that the Nollan/Dolan line applies only to exactions requiring the dedication of real property for public use.
Some brief background on Nollan and Dolan for those who are not takings geeks: Taken together, the U.S. Supreme Court's decisions in Nollan v. California Coastal Comm'n., 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994), hold that when a regulatory entity demands a condition in exchange for authorizing a use of land that would otherwise be prohibited (known as an "exaction") the condition imposed must have an "essential nexus" with (Nollan) and "rough proportionality" to (Dolan) some anticipated impact of the proposed use of land. Both Nollan and Dolan involved situations where the regulatory authority demanded the landowner physically dedicate some portion of his or her land for public use, and the Court in both cases emphasized that the condition demanded by the regulatory authority required the landowner to forfeit the sacrosanct "right to exclude." As a result, many commentators believed that Nollan and Dolan were limited to circumstances where the "exaction" was a requirement that real property be dedicated for public use, and did not extend, for example, to requirements that landowners pay an "impact fee" or other type of monetary payment in exchange for development permission.
That interpretation, however, was rejected by one of the most significant lower court decisions to date dealing with Nollan and Dolan, the California Supreme Court's ruling in Ehrlich v. City of Culver City, 911 P.2d 429 (Cal. 1996). There, the court held that Nollan and Dolan did apply to certain types of impact fees, specifically fees imposed on a discretionary, individualized basis. The court emphasized what it saw as the underlying policy rationale of the Nollan/Dolan doctrine, to prevent regulatory authorities from using their monopoly power over the land use permitting process to extort concessions from politically powerless developers. This policy concern, the court noted, would apply equally regardless of whether the exaction was a physical dedication or an impact fee.
Now, in St Johns, the Florida Supreme Court holds to the contrary: Nolllan/Dolan apply only to physical dedications. The court reasons:
1) Nollan and Dolan themselves both involved physical dedications. And in dicta in two recent decisions, Monterey v. Del Monte Dunes, 526 U.S. 687 (1999) and Lingle v. Chevron, 544 U.S. 528 (2005), the United States Supreme Court has described Nollan and Dolan as applying to exactions requiring dedications of real property to public use.
2) Expanding the exactions jurisprudence beyond physical dedications would unduly hamstring regulatory entities in negotiating with developers and would likely result in more outright denials of development approval (which would not be subject to Nollan/Dolan at all).
Color me unpersuaded, particularly when comparing St Johns with the much more nuanced opinion in Ehrlich. Ehrlich makes a principled argument for treating physical dedications and impact fees similarly under Nollan and Dolan, although one may not necessarily agree with its principle (Developers are politically powerless? I don't think so). St Johns never articulates why physical dedications should be treated differently from impact fees under Nollan and Dolan, other than mechanically applying some pretty meager dicta in Lingle and San Remo while confining Nollan and Dolan to their facts. The St Johns court could have said something about the fundamentality of the right to exclude, as I mentioned above, but did not do so. Instead, it made a public policy argument that is less a reason to limit Nollan/Dolan to physical dedications than a reason to scrap the doctrine entirely. After all, any limitation on exactions is going to limit regulators' bargaining power and incline them toward more denials. Will a limitation on exactions involving physical dedications hamstring regulators less, or incline them to issue outright denials less frequently, than a limitation on impact fees? Or is the court more concerned about landowners' rights in the former case than the latter? The court does not say.
[Update: After taking another look at St. Johns, some brief clarification is in order. The facts in St Johns are a little convoluted. The district initially proposed an exaction that would require dedication of some real property, but the developer refused and the permit was denied. The court held that Nollan and Dolan did not apply because 1) the permit was never issued and 2) there was no dedication of real property. It is possible to read this as a single holding: Nollan and Dolan do not apply where there is no dedication of property because a permit is never issued. However, as I read the opinion, these are two separate holdings: Nollan/Dolan do not apply where a permit is not isssued; and Nollan/Dolan do not apply in the absence of an exaction requiring a dedication of real property.
Where matters get really confusing is in the court's public policy reasoning. As I mentioned in the initial post, the court says that Nollan/Dolan needs to be so limited so as to avoid unduly confining regulatory discretion and to avoid incentivizing regulators to issue more denials rather than negotiating with developers. This reasoning is apparently intended to apply to both of the holdings, although as the initial post points out, it doesn't really make sense as a basis of distinguishing impact fees from dedications. It makes more sense in explaining why Nolan/Dolan should not apply to outright denials where no negotiating is ever involved. But my underlying point remains: the court has given little reason why Nollan and Dolan should apply only to dedications. Sorry for the initial confusion.]
I had an interesting conversation this morning with Meg Mirshak, a reporter from The Augusta Chronicle. She contacted me for background on a series of stories she's doing on a proposed overlay zone that would allowed mixed-use development in a historic African-American neighborhood called Laney-Walker. The overlay as proposed is very general, but requires specific permission for uses like pawn shops and liquor stores. The community feels underinformed and is very concerned about the potential impact on their neighborhood. Also, this concept of an overlay zone is confusing to many, and the commission has delayed its vote on the overlay until January due to the confusion and to notice problems.
Mirshak asked me if I could provide examples of where overlay zoning has proved succesful, and honestly, this stumped me. We've proposed particular types of overlay zoning in some of our client communities - to require more pedestrian friendly redevelopment on aging strip corridors, for example - but the time horizon on implementing these changes is so long that I can't honestly say I know of a "successful" use of overlay zoning. Also, as I pointed out to her in a follow up e-mail, overlay zoning is really just a form, so it's kind of like asking if any type of form - buildings, novels, movies - are inherently successful. Yes, those forms can be successful or they can be a disaster, depending on how you construct them and what you're trying to accomplish. With any zoning tool the trick is to make sure they reflect the community's goals and market realities, and that they deliver what's best for the long term vibrancy of the city. And that often involves a lot of process, more process than they seem to have allowed for in Augusta.
Coincidentally, I stumbled across a blog post on Planetizen, written by an urban planner who lead a group of students to plant trees at a New Orleans school, only to be thwarted in their task by a schoolyard shooting. The post, titled "Can't Buy Me Love - or Plan for It," points out the importance of human connection in urban planning.
In my first year and a half as a working urban planner, I've consistently come back to the lessons I learned in New Orleans in 2009: For all of the innovative design that you can bring to a city, and for all of the smart planning principles that they teach you in school, there's no match for literally and figuratively digging your heels into a neighborhood, getting residents invested in the work that you're doing, and—together—building a partnership that leads to the kind of community building that can't be taught.
I can't say better than that. Here's hoping the planners in Augusta can do what it takes to get the residents invested in what they're trying to accomplish.
Jamie Baker Roskie
Wednesday, November 30, 2011
This book is a fantastic resource for anyone who has to take or give a law school exam: Open Book: Succeeding on Exams from the First Day of Law School, by Barry Friedman (NYU) and John Goldberg (Harvard). This book isn't land-use specific, but should be of general interest to all law students and teachers. I would say that practitioners will find it quite valuable, because one of the central points of the authors is that law school exams are (despite popular belief) highly relevant to what lawyers actually do in practice: issue-spotting, identifying the appropriate rule, and applying it to the facts to reach a conclusion. The blurb:
Wolters Kluwer Law and Business is known for its essential guides for law school success. Now Open Book: Succeeding on Exams from the First Day of Law School offers today’s law students more than simple exam preparation. The authors, both award-winning teachers with a wealth of classroom experience, reveal what professors really look for in exam answers. By linking exam-taking to the actual practice of law, they explain what it means to “think like a lawyer” in an exam setting, and how to get the most out of classes. Open Book also showcases a distinctive central pedagogy, “the pinball method of exam-taking,” and provides detailed examples and a wealth of concrete exam-taking techniques. Initial reviewers―including professors teaching core 1L classes, writing instructors and law school administrators―have been unanimous and enthusiastic in their praise. Numerous student reviewers have likewise remarked that it changed their study habits and their entire outlook on law school. With straightforward prose, memorable, and often humorous illustrations, and a unique insider’s perspective, Open Book: Succeeding on Exams from the First Day of Law School opens a clear path to law school success.
I'm proud to be part of the "Open Book Team" of professors who have contributed materials to the accompanying website. The other two property professors are Jim Smith and Eduardo Penalver, so I'm very honored to be in such august company. I was flattered to be asked to contribute by the authors, Profs. Friedman and Goldberg, who were both extremely popular law professors at Vanderbilt when I was a student there. But more than that, when I read the manuscript, I felt like it encapsulated so many of the thoughts that I've had about law school exams as a student, as a practitioner, and as a relatively junior professor. I really do think that it's a fantastic resource for both students and teachers for thinking about law school exams and how they relate to legal practice.
I'm guest-bloggging this week at the Open Book Blog. My first post is about my conviction that A Law School Exam is a Legal Writing Event. The more time I spend in this profession, the more convinced I am that good communication through writing is the coin of the realm. This is also related to the thinking behind my recent paper on Academic Research and Writing as Best Practices in a 'Practically Grounded' Land Use Course.
I sincerely think that this book does a great deal of work towards explaining why law school is relevant to practice, and why all lawyers need to be proficient written communicators--and this especially applies to land use lawyers, because of the individualized, multidisciplinary, and practical nature of our field.
So, today I waded into the local controversy about the possibility of a Wal-Mart in downtown Athens with an editorial in the local weekly. [Note - this article is no longer available on the original site, so this link is to a re-posted version.] Specifically, I responded to media reports that the county attorney has said the developers have vested rights to develop the property based on the amount of money they claim to have spent on site preparation. Now, Georgia has a pretty generous vested rights doctrine, but it's not that generous. As in most states, you still have to have some kind of official assurance for rights to vest. Apparently now the county attorney doesn't want to talk about it, but other folks on both sides of the issue certainly have been.
This type of controversy is not unique to Athens, apparently. A casual perusal of media reports turns up vested rights controversies over proposed Wal-Marts in Hood River, Oregon, Leon County, Florida, San Antonio, Texas, and Abingdon, Virginia. Is this some kind of trend?
Jamie Baker Roskie
Tuesday, November 29, 2011
They NYU Furman Center has released its Third Quarter New York City Housing Report:
We are pleased to share with you our latest New York City Quarterly Housing Update (Q3 2011). We find that home sales volume remained low in the third quarter of 2011, with the number of properties sold citywide four percent lower than the number sold in the third quarter of 2010.
The report finds that property values are also lagging in most of the city. Manhattan is the only borough where properties have appreciated in price over the last year. Foreclosures have continued to slow citywide, with 32 percent fewer foreclosure notices issued in the third quarter of 2011 compared to the same quarter last year. You can read the full report here, or the press release here.
Monday, November 28, 2011
My former colleague, Audrey McFarlane (Baltimore), has posted The Properties of Instability: Markets, Predation, Racialized Geography, and Property Law, 2011 Wisc. L. Rev. 855 (2011). Here's the abstract:
A central, symbolic image supporting property ownership is the image of stability. This symbol motivates most because it allows for settled expectations, promotes investment, and fulfills a psychological need for predictability. Despite the symbolic image, property is home to principles that promote instability, albeit a stable instability. This Article considers an overlooked but fundamental issue: the recurring instability experienced by minority property owners in ownership of their homes. This is not an instability one might attribute solely to insufficient financial resources to retain ownership, but instead reflects an ongoing pattern, exemplified throughout the twentieth century, of purposeful involuntary divestment of land owned by members of racial minorities, particularly Black Americans. The subprime mortgage crisis, the most current manifestation of this involuntary land loss, can be attributed to property doctrine’s policy embrace of markets and importation of contract principles such as the “freedom of contract.” This embrace of markets and contracts ignores the reality that real estate markets are racially segregated, and due to the nature of those disparate markets, easily exploitable. The current racially concentrated subprime mortgage crisis has torn the stable property image apart by revealing longstanding truths: that fraud, exploitation, and desperation are not anomalous. These truths present a disquieting reality: that the persistent and enduring experience for minorities is instability. They also present an overlooked insight that there is a dark side of property ownership: that fraud, exploitation, and desperation are the bad that enables the good of property markets. Because this “bad” is both ubiquitous and geographically situated, it suggests that stability for some within the system of property ownership is provided at the expense of instability for others. This Article argues that we should begin to pay attention to an under-theorized stick in the bundle of property rights: “the right to keep.”
DRIVE through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty parking spaces. These forlorn monuments to the real estate crash are not going to come back to life, even when the economy recovers. And that’s because the demand for the housing that once supported commercial activity in many exurbs isn’t coming back, either.
The better news:
Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.
The shift is durable and lasting because of a major demographic event: the convergence of the two largest generations in American history, the baby boomers (born between 1946 and 1964) and the millennials (born between 1979 and 1996), which today represent half of the total population.
Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.
The millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.
Lee Anne Fennell (Chicago) has posted Ostrom's Law: Property Rights in the Commons, in the International Journal of the Commons, Vol. 5, No. 1, p. 9 (2011). The abstract:
In this symposium essay, I trace some of the ways that Elinor Ostrom’s focus on situated examples has advanced interdisciplinary dialogue about property as a legal institution and as a human invention for solving practical problems. Although the richness of these contributions cannot be distilled into a single thesis, their flavor can be captured in a maxim I call Ostrom’s Law: A resource arrangement that works in practice can work in theory. I begin by highlighting the attention to detail that characterizes Ostrom’s methodology. I then examine how Ostrom’s scholarship yields insights for, and employs insights from, property theory. Next, I consider the question of scale, an important focal point of Ostrom’s work, and one that carries profound implications for law. I conclude with some observations about interdisciplinarity as it relates to research on the commons.
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