and possibly valuable interests and the regulation is working a grave diminution in value on – those property interests. But case for true investment-backed is Fatboy’s “distinct expectations” weak. Even aside from the regulation, Fatboy likely going to be able to drill in most areas wasn’t of Springfield anyway, due to the private covenants limiting disruptive commercial activity. Fatboy, in fact, was in a unique place to be aware of those restrictive covenants because of its status as homebuilder (typically one would expect the homebuilder to have a close relationship with developers, who likely put some of the covenants in place). Fatboy, of course, can counter that its investment-backed expectations were based on the possibility of doing horizontal drilling from several hundred feet away; that sort of drilling would not be affected by the private covenants. But the profitability of horizontal drilling is highly speculative at this point. And there is no evidence that Fatboy ever had any concrete plans or expectations about its ability to build in Springfield (indeed, nobody including Fatboy has as yet sought permission to drill in or – – around Springfield). Mere speculation about a hypothetical economic activity is not sufficient to justify argument that it had distinct investment-backed expectations which were Fatboy’s imposed upon by regulation. (Contrast Penn Central, where the company had clear Springfield’s plans to develop a skyscraper.) Finally, Fatboy can argue that this case falls under Lucas v. South Carolina Coastal If the regulation effects a total wipeout of property interest, then it is definitely Council. Fatboy’s a taking unless the activity being banned part of title to begin with based on wasn’t Fatboy’s background common-law principles of property law and nuisance law. arguable whether or It’s not an operation such as fracking would have been an inherent limitation on title under the common law (we can be sure that the process of extracting gas from prehistoric shale was unknown at common law!), but that question is irrelevant because the regulation does not effect a
and possibly valuable interests – and the regulation is working a grave diminution in value on those property interests. But Fatboy’s case for true “distinct investment-backed expectations” is weak. Even aside from the regulation, Fatboy likely wasn’t going to be able to drill in most areas of Springfield anyway, due to the private covenants limiting disruptive commercial activity. Fatboy, in fact, was in a unique place to be aware of those restrictive covenants because of its status as homebuilder (typically one would expect the homebuilder to have a close relationship with developers, who likely put some of the covenants in place). Fatboy, of course, can counter that its investment-backed expectations were based on the possibility of doing horizontal drilling from several hundred feet away; that sort of drilling would not be affected by the private covenants. But the profitability of horizontal drilling is highly speculative at this point. And there is no evidence that Fatboy ever had any concrete plans or expectations about its ability to build in Springfield (indeed, nobody – including Fatboy – has as yet sought permission to drill in or around Springfield). Mere speculation about a hypothetical economic activity is not sufficient to justify Fatboy’s argument that it had distinct investment-backed expectations which were imposed upon by Springfield’s regulation. (Contrast Penn Central, where the company had clear plans to develop a skyscraper.) Finally, Fatboy can argue that this case falls under Lucas v. South Carolina Coastal Council. If the regulation effects a total wipeout of Fatboy’s property interest, then it is definitely a taking unless the activity being banned wasn’t part of Fatboy’s title to begin with based on background common-law principles of property law and nuisance law. It’s arguable whether or not an operation such as fracking would have been an inherent limitation on title under the common law (we can be sure that the process of extracting gas from prehistoric shale was unknown at common law!), but that question is irrelevant because the regulation does not effect a
exam-2012-answer-memo.docx