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Walk Softly Stranger ... Grappling with Governance over the Northwestern Hawaiian Islands

Walk softly.

Walk softly, stranger.

The land on which you stand is Holy ground ...

a place of unspoiled beauty, colored by the hand of God.

And you who stand upon this land will someday too

remember sun-washed sands and quiet days, and

moments crystallized in time.

Walk softly, stranger, 

for you stand on Holy ground.

[A testimonial to the beauty of Northwestern Hawaiian Islands left by a Coast Guardsman on East Island, French Frigate Shoals, as published in  Yamase, State-Federal Jurisdictional Conflict over the Internal Waters and Submerged Lands of the Northwestern Hawaiian Islands, 4 U. Haw. L. Rev. 139 (1982).

The federal government is considering the expansion of the existing Papahanaumakuakea Marine National Monument from its existing boundaries seaward to the boundaries of the Exclusive Economic Zone.

Civil Beat has run several articles on this proposal (here,here,here and earlier this week here).

The federal government has struggled for over a hundred years with the management and protection of the resources of these islands.  The Yamase article above is the most concise analysis, albeit dated now, of a cross-jurisdictional argument between the federal government and the State of Hawaii regarding who can enforce what on these islands.  The Burns and Nixon administrations came close to an agreement.  

Broadly speaking, there are different statutory mechanisms to create governance regions in the ocean.  Marine Sanctuaries can be created under the National Marine Sanctuaries Act, 16 U.S.C. 1431 et seq.; the State of Hawaii can, subject to federal navigational servitude, act within its waters to create marine protected areas, like Hanauma Bay.  Finally, like President T. Roosevelt,President George W. Bush, the Antiquities Act gives the President the power to designate marine monuments.

The governance impact of the creation of a sanctuary, a state preserve or a monument all depend on the authority imbued in the creating authority and it is important to note that each statute gives the approving authority powers, i.e. express powers and rule-making powers.  

President Theodore Roosevelt himself added to the mix when he signed Executive Order 1019 which for decades formed the demarcation of jurisdiction between the Department of the Interior and Department of Commerce. [Mariner's Note to Executive Order Signers - if you say the 100 fathom curve or say 12 nautical miles from land, it makes it easier to enforce].

[Image courtesy of: U.S. Department of the Interior - From Yearbook of the United States Department of Agriculture, 1911, Google Books scan, on page 156., Public Domain, https://commons.wikimedia.org/w/index.php?curid=10630075]

As to the Walk Softly poem, that appears to originate from Coast Guardsman Harry Emmett Finch who was stationed at a Coast Guard LORAN station on French Frigate Shoals.

Stay tuned.

Supreme Court - Insular Areas are Not States

Hawaii's position as the 50th State provides an interesting vantage to view the governance of those territorial areas that are within the United States but are not a state.  Since the late 1890's, the United States has been vexed by the metaphysical question:  how do we classify those persons living in geographic areas under the control of the United States. With the U.S. victory in the Spanish American War, the United States became more of a global imperial power as it acquired such far flung territories as  Puerto Rico, the Philippines and Guam. The annexation of Hawaii in 1898 occurred during this time of American expansion.

Our New Possessions by Trumbull White (1898):

After the physical acquisition of the lands, the constitutional and statutory status of the peoples inhabiting these areas had to be addressed.  The Supreme Court addressed those issues in a series of cases beginning with the Insular Cases (posted here).  The shorthand?  The full panoply of Constitutional rights did not protect the residents of the insular areas and Congress had plenary authority to legislate, by statute, the treatment of residents of those areas under U.S. Code.

Consider this month's case involving whether a criminal defendant who was prosecuted by the federal government unconstitutionally faced a second prosecution in violation of the Double Jeopardy Clause of the Constitution.  The Supreme Court said that he did.  The case is Puerto Rico v. Valle case (my earlier post here) and the Supreme Court said:

Puerto Rico boasts “a relationship to the United States that has no parallel in our history.” Examining Bd., 426 U. S., at 596. And since the events of the early 1950’s, an integral aspect of that association has been the Commonwealth’s wide-ranging self-rule, exercised under its own Constitution. As a result of that charter, Puerto Rico today can avail itself of a wide variety of futures. But for purposes of the Double Jeopardy Clause, the future is not what matters—and there is no getting away from the past. Because the ultimate source of Puerto Rico’s prosecutorial power is the Federal Government—because when we trace that authority all the way back, we arrive at the doorstep of the U. S. Capitol—the Commonwealth and the United States are not separate sovereigns. That means the two governments cannot “twice put” respondents Sánchez Valle and Gómez Vázquez “in jeopardy” for the “same offence.” U. S. Const., Amdt. 5. We accordingly affirm the judgment of the Supreme Court of Puerto Rico. 

Had Puerto Rico been considered a constitutional "state", then the Double Jeopardy Clause would not apply.

So, it is entirely within the discretion of the Congress to determine when the governments of the insular areas would be afforded "statehood" treatment.  Consider the Puerto Rico bond case, Puerto Rico v. Franklin California Tax-Free Trust, In this case, Congress included Puerto Rico in the definition of State in the Bankruptcy Code, but it excluded Puerto Rico as entitled to the protections of Chapter 9 (municipal bankruptcy provisions).  As the Supreme Court said:

The Federal Bankruptcy Code pre-empts state bankruptcy laws that enable insolvent municipalities to restructure their debts over the objections of creditors and instead requires municipalities to restructure such debts under Chapter 9 of the Code. 11 U. S. C. §903(1). We must decide whether Puerto Rico is a “State” for purposes of this pre-emption provision. We hold that it is. The Bankruptcy Code has long included Puerto Rico as a “State,” but in 1984 Congress amended the definition of “State” to exclude Puerto Rico “for the purpose of defining who may be a debtor under chapter 9.” Bankruptcy Amendments and Federal Judgeship Act, §421( j)(6), 98 Stat. 368, now codified at 11 U. S. C. §101(52). Puerto Rico interprets this amended definition to mean that Chapter 9 no longer applies to it, so it is no longer a “State” for purposes of Chapter 9’s pre-emption provision. We hold that Congress’ exclusion of Puerto Rico from the definition of a “State” in the amended definition does not sweep so broadly. By excluding Puerto Rico “for the purpose of defining who may be a debtor under chapter 9,” §101(52) (emphasis added), the Code prevents Puerto Rico from authorizing its municipalities to seek Chapter 9 relief. Without that authorization, Puerto Rico’s municipalities cannot qualify as Chapter 9 debtors. §109(c)(2). But Puerto Rico remains a “State” for other purposes related to Chapter 9, including that chapter’s pre-emption provision. That provision bars Puerto Rico from enacting its own municipal bankruptcy scheme to restructure the debt of its insolvent public utilities companies. 

Finally, the Supreme Court denied certiorari in the Tuaua v. United States case (posted last year here).  This case sought to clarify the status of residents of American Samoa who are not included in the definition of "citizen" under the Immigration and Nationality Act, but are considered "nationals".  As stated by the D. C. Circuit Court of Appeals:

In our constitutional republic, Justice Brandeis observed, the title of citizen is superior to the title of President. Thus, the questions “[w]ho is the citizen[?]” and “what is the meaning of the term?” Aristotle, Politics bk. 3, reprinted in part in READINGS IN POLITICAL PHILOSOPHY 55, 61 (Francis W. Coker ed., 1938), are no less than the questions of “who constitutes the sovereign state?” and “what is the meaning of statehood as an association?” We are called upon to resolve one narrow circumstance implicating these weighty inquiries. Appellants are individuals born in the United States territory of American Samoa. Statutorily deemed “non-citizen nationals” at birth, they argue the Fourteenth Amendment’s Citizenship Clause affords them citizenship by dint of birthright. They are opposed not merely by the United States but by the democratically elected government of the American Samoan people. We sympathize with Appellants’ individual plights, apparently more freighted with duty and sacrifice than benefits and privilege, but the Citizenship Clause is textually ambiguous as to whether “in the United States” encompasses America’s unincorporated territories and we hold it “impractical and anomalous,” see Reid v. Covert, 354 U.S. 1, 75 (1957), to impose citizenship by judicial fiat—where doing so requires us to override the democratic prerogatives of the American Samoan people themselves. The judgment of the district court is affirmed; the Citizenship Clause does not extend birthright citizenship to those born in American Samoa.

So, the takeway?  The full panoply of Constitutional protections, including the 14th Amendment, flow from statehood. So does the right to have one's vote for President counted in the Electoral College.  Statehood matters.  Absent the sovereignty flowing from statehood, the residents of these areas are left to the statutory whim of Congress, 

Don't get me started on the Trust Territory of the Pacific Islands.  That'll be for another day.  

 

 

Legal Profession in Hawaii - the Numbers

The Hawaii State Bar Association just released its statistics for the Hawaii license renewals for 2016.  It is an interesting snapshot of the legal profession in Hawaii and specifically the demographics of attorneys.  

Did you know that Hawaii has 93 judges?  903 government attorneys?

Hawaii has 4,858 active attorneys and 2,948 inactive attorneys.  With the state's population at 1.42 million, this equates to 3.4 attorneys per 1,000 resident.  But, if you take out judges, government attorneys and in-house counsel, that rate is 2.3 private practice attorneys per 1,000 residents.

On the gender front, of the 3,862 non-judge/non-government attorneys, 1,375 are women, or 35%.  33% of judges are women and 48% of government attorneys are women.

On the age front, over 60% of private practice attorneys are over the age of 50, including 6 who are over 90.

And, attorneys reported providing 186,215 hours of pro bono service to the community.

Attorneys are licensed by the Supreme Court of Hawaii, pictured below.

 

Why We Love the West Coast - Fish, Antitrust and the Federal Arbitration Act

“When you collect marine animals there are certain flat worms so delicate that they are almost impossible to catch whole for they will break and tatter under the touch. You must let them ooze and crawl of their own will onto a knife blade and lift them gently into your bottle of sea water. And perhaps that might be the way to write this book-to open the page and let the stories crawl in by themselves.” - John Steinbeck, Cannery Row.

We can't say that any decision of a federal appeals court has the same lure as a Steinbeck novel, but we couldn't stop thinking of Cannery Row when we read this one.  The Ninth Circuit just issued an opinion in a case where several fishermen sought to enjoin the merger of two seafood processors citing federal antitrust laws.  The Court affirmed the trial court's preliminary injunction against the sale.  The opinion is Boardman v. Pacific Seafood Group, et al. and the decision can be found here.  Oh, and the Federal Arbitration Act is thrown in, too.

Several years ago, fisherman brought an lawsuit seeking to stop a merger of two fish industry processors - the buyers of fish from the fishing vessels.  That lawsuit ended in settlement that contractually addressed the fishermen's concerns about the anti-competitive aspects of the merger.  The settlement included a provision that the acquiring company, Pacific Seafood, would provide 60 days notice before attempting to acquire the target company, Ocean Gold.

In 2015, the acquiring company, Pacific Seafood, gave notice that it intended to acquire Ocean Gold's stock.  The fishermen argued that such a merger would increase Pacific Seafood's "market power in seafood input markets" significantly giving rise to a claim of decreased competition in the West Coast market.  The trial court found that the merger would lessen competition and enjoined the stock sale until the lawsuit could be tried.  The Ninth Circuit affirmed this decision.

Separate from the antitrust issues, the Court analyzed the arbitrability of the dispute since the settlement agreement in the first case had an arbitration provision.  The settlement agreement in the earlier litigation included the following provision:

The February 9, 2006 Agreement between Pacific Seafood Group and Ocean Gold Seafoods, will not be renewed in 2016. In the event that the [sic] Pacific Seafood and Ocean Gold intend to enter into any new agreement that requires Pacific Seafood Group to act as the exclusive marketer of any seafood product produced by Ocean Gold Seafoods, Pacific Seafood and Ocean Gold shall first give 60 days’ notice to class counsel and the Oregon Department of Justice and an opportunity to object to the agreement. In the event of an objection to the new contractual arrangement, Judge Hogan shall determine whether the proposed new agreement is pro-competitive and if so, it may be approved.

The Court found that the current dispute was not covered by this agreement making the current claims not arbitrable.  There is a separate issue as to whether federal judges or magistrate judges can be arbitrators with the majority indicating that use of federal judges as arbitrators may not be authorized under federal law.  N.7.

The dissent would have compelled this matter to be arbitrated in the first instance.

It isn't Steinbeck, but we usually do not have insights into the economics of the commercial fishing industry, so we will be watching this one.

Pay Attention Grammarians - SCOTUS Tackled the Last Antecedent Rule

This blog usually doesn't cover criminal matters unless they involve piracy or the ocean environment.  But, last year's case about the meaning of the word "vessel" has us on the watch for cases involving, well..., grammar.

The Supreme Court handed down a decision today which attempted to address what Congress means when it lists a string of nouns or conditions followed by a modifier at the end. Does the modifier only modify the last condition or does it modify all three?  If Congress wanted to modify all three, how would it write the list of conditions?

The case is Lockhart v. United States and it involved the construction of a criminal statute providing for a mandatory minimum sentence for defendants convicted of possession of child pornography when the defendant has a prior conviction "under the laws of any State relating to aggravated sexual abuse, sexual abuse, or abusive sexual conduct involving a minor or ward."  

The defendant argued that the "involving a minor or ward" language modified all three of the preceding offenses.  The government argued that the condition only modified the last offense.

The Supreme Court found that the "involving a minor or ward" language only modified the last condition, citing the Rule of the Last Antecedent.  The defense cited the statutory interpretation maxim of the series qualifier rule.

The majority opinion authored by Justice Sotomayor puts it this way:  

For example, imagine you are the general manager of the Yankees and you are rounding out your 2016 roster. You tell your scouts to find a defensive catcher, a quick-footed shortstop, or a pitcher from last year’s World Champion Kansas City Royals. It would be natural for your scouts to confine their search for a pitcher to last year’s championship team, but to look more broadly for catchers and shortstops.

The dissent authored by Justice Kagan puts it this way:

Imagine a friend told you that she hoped to meet “an actor, director, or producer involved with the new Star Wars movie.” You would know immediately that she wanted to meet an actor from the Star Wars cast—not an actor in, for example, the latest Zoolander. Suppose a real estate agent promised to find a client “a house, condo, or apartment in New York.” Wouldn’t the potential buyer be annoyed if the agent sent him information about condos in Maryland or California? And consider a law imposing a penalty for the “violation of any statute, rule, or regulation relating to insider trading.” Surely a person would have cause to protest if punished under that provision for violating a traffic statute. The reason in all three cases is the same: Everyone understands that the modifying phrase— “involved with the new Star Wars movie,” “in New York,” “relating to insider trading”—applies to each term in the preceding list, not just the last.

What do you think?  

And the public wonders why the statute books are so voluminous. 

Hawaii Legislature Ponders Rail Impact Fund...um, excuse me but why not just change HRS Ch. 101?

The Hawaii Legislature is considering a bill to establish a business mitigation relief pilot program to assist some business impacted by Honolulu's rail project.  The bill is H.B. 2518 and while the aim of this bill is to mitigate the negative impacts of the construction of the rail project through Honolulu's urban core, there are some issues to consider.

First, by way of background, no Hawaii court has ever held that landowners are entitled to business interruption damages when their property is condemned, directly or inversely.

Hawaii's Constitution, Art. 1, Section 20 provides:

Private property shall not be taken or damaged for public use without just compensation.

Hawaii does provide a landowner for lost profits as a component of land value but we have not found a case the provides for business interruption damages, lost revenues or lost goodwill in Hawaii jurisprudence.  See Honolulu v. Market Place, Inc., 55 Haw. 226 (1973).   

As a side note, in the wake of Honolulu's Chinatown fires following outbreaks of the Bubonic Plague, the Territory of Hawaii established a Fire Claims Commission "to provide for the ascertainment and payment of all claims which may be made by persons whose property was destroyed by fire in the years A. D. 1899 and 1900, under orders of the board of health."  In Re Brash, 19 Haw. 522 (1909).  The Commission was expressly not authorized to pay claims for "no claim for speculative or consequential damage or for loss of rent or use of property, or loss of profits through the interruption of business," or, omitting immaterial portions, "no claim * * * for loss of * * * use of property." Id. at 524.     

Most states do not provide for business interruption damages as a component of just compensation, but some do provide for these types of damages, sometimes called going-concern or loss of goodwill damages, by statute.  See Coleman v. Escambia County, 405 So. 2d 227, 228 (Fla. Dist Ct. App. 1981)(under Florida law, if a business has been operating for more than five years on the property at issue, a property owner may recover the going-concern value of his or her business); see also Cal. Civ. Proc. Code 1263.510 et seq. (business owner shall be compensated for loss of goodwill).

So far so good, if the Hawaii State government wants to mitigate the impacts of rail construction on landowners, that sounds like a good thing.

But, it notes that the assistance provided by the City government for relocation benefits may not be adequate and creates a pilot program to provide up to $50,000 in benefits for SOME impacted landowners.  The bill states, "A business shall be eligible to receive assistance through the business mitigation relief pilot program if the business: 

(1) Is a for-profit business or non-religious non-profit organization;

(2) Is located immediately adjacent to the rail corridor or directly affected by the rail construction;

(3) Meets the technical qualifications to participate in the program, including number of employees, time in business, and ability to provide financial records;

(4) Is solvent; provided that a business in bankruptcy, as a documented result of rail construction, shall be considered solvent as long as the business is filing for bankruptcy to reorganize, rather than to liquidate; and

(5) Is in good standing with all local, state, and federal taxing and licensing authorities.

Some landowners are NOT eligible for the program:  (1) Businesses engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs; (2) Businesses generating over sixty per cent of revenues from the sale of alcoholic beverages; (3) Businesses with any products or services of a sexual nature representing over fifty per cent of their revenue; or (4) National retailers or outlets, unless operated by a single owner under a franchise agreement.

Huh? Saving aside the Equal Protection, Interstate Commerce, and Dormant Commerce Clause issues with some of these distinctions, these landowners are hurt by virtue of their unfortunate luck of owning land and operating a business near a major infrastructure project, so it doesn't seem rational to distinguish between types of businesses operated on that land.

But, perhaps the broader question is why not just provide, like California does, a statutory authorization to provide non-speculative business losses associated with the condemnation/inverse condemnation?  Or, if the people of Hawaii do not want these businesses along the rail right of way to disproportionately suffer by virtue of the rail construction, then shouldn't all similarly situated property owners enjoy the same right?

We think a simple change to Haw. Rev. Stat. Ch. 101 would accomplish this result AND put the cost of those losses on the condemning agency and not the Hawaii Department of Business, Economic Development and Tourism.

Hawaii Real Estate Litigation Update 2015 - HSBA Real Property and Financial Services Section

Last year, Gregory W. Kugle and I provided our annual Hawaii real estate litigation update for the Hawaii State Bar Association's Real Property and Financial Services Section.  The outline, with links to the cases, is provided below and a video of the presentation is conveniently on YouTube.  So, consider yourself updated on what happened in Hawaii real estate litigation in 2015.

 

 

 

HSBA Real Property and Financial Services Section

Litigation Update – Nov. 20, 2015

12:00 p.m. – 1:00 p.m.

Gregory W. Kugle and Mark M. Murakami

Hawaii

Land Use/Development Litigation – Surfrider Foundation v. Zoning Board of Appeals; Prof. Callies on Kyo-Ya: https://www.youtube.com/watch?v=x-CQsYX9Wy4.

 

Administrative Appeals – Doe v. Attorney General (Finality requirement for Ch. 91 appeal), more analysis here; Mauna Kea Anaina Hou v. Bd. Of Land and Natural Resources (TMT contested case).

Quiet Title/Foreclosure/Lease Cancellation – Ka‘upulehu Land LLC v. Heirs and Assigns of Pahukula (quiet title);  JP Morgan Chase Bank v. Young (attorney affirmation text); Lui-Dyball v. Hawaiian Homes Comm’n (homestead lease cancellation); Ross v. Wahinehookae (quiet title).

Shoreline – Gold Coast Neighborhood Assn. v. State of Hawaii ;

Condemnation/Regulatory Takings – James v. City and County (HRS Ch. 101 order of possession); Aina Lea.

Fraudulent Transfer -   Schmidt v. HSC, Inc.

Municipal Government/Preemption -  Ruggles v. Yagong. 

National Cases with Potential Impacts in Hawaii

Right to Enter Statutes -  Virginia statute not a facial taking, here; California statute pends with California courts here.

 

San Jose’s Inclusionary zoning ordinance here.

 

Clean Water Act, “Waters of the United States” Rule here.

 

SCOTUS on New Deal Price Controls here.

 

Next year?  Hoopili, Koa Ridge, TMT and more.  Stay tuned.

American Law Institute Eminent Domain and Land Valuation Litigation - Substantive Motions

Aloha everyone:

These are my slides for my presentation on Motions Practice in Eminent Domain Trials. 

American Law Institute Eminent Domain Seminar Presentation 2016 from DamonKey

 

Hope you enjoyed the seminar.

HSBA Real Property Section - Litigation Update 2014

In preparing for our 2015 presentation, we discovered that the 2014 version wasn't posted to our blog yet.  And, thanks to the HSBA Real Property Section, we even have video! 

Enjoy and stay tuned for video of tomorrow's presentation. Aloha.  

Annual Hawaii Real Estate Litigation Update - HSBA Real Property Section

Full disclosure:  most of my practice involves LAND and not the ocean.  We live on an island after all.

In any event, on Friday, my partner Greg Kugle and I will be providing our annual Real Estate Litigation Update to the HSBA's Real Property and Financial Services Section. This is about our third time providing the update and last year it even made it to youtube  (Materials from last year's talk available here.)  

Details:

• Date: Friday, November 20, 2015 (like tomorrow)
• Time: 12 noon - 1:00 p.m.
• Location: HSBA Conference Room, 1100 Alakea Street, 10th Floor, Honolulu
• Cost: FREE for RPFSS members. 

As a teaser, we will cover Hawaii decisions from the last year involving land use, administrative appeals, quiet title, shoreline, reg takings and condemnation, and preemption. We will also cover decisions from other jurisdictions which have an impact on Hawaii property law practice.