Police in Portland, Ore., received tips that Tyrone Lamont Allen was the man who committed robberies of four banks and credit unions. One problem. Allen’s forehead and right cheek have fairly large tattoos. No witnesses described the robber having tattoos. The solution? Cops used Photoshop to remove Allen’s tattoos from photos they showed to witnesses in a lineup. Some of those witnesses, looking at the altered photos, picked Allen out of the lineup as the robber. Cops didn’t tell Allen’s defense attorney what they did. He only found out because he noticed the altered photo in material prosecutors gave him. He has asked the court to throw out those witnesses IDs.
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State elections in the German states of Brandenburg and Saxony are on September 1. AfD could win both of them.
The anti-immigration, anti-euro AfD party took the lead in Brandenburg in three of the last five polls in Brandenburg and is within striking distance in Saxony.
Brandenburg Polls
Saxony Polls
CDU pulled ahead in the tow most recent polls but with so many parties in play, the results are within the margin of error of an AfD win.
All eyes are on eastern Germany as elections take place in Saxony and Brandenburg on Sunday, September 1st.
And, for the first time in German history, the Alternative for Germany (AfD) could win in state elections – and make it extremely difficult for the established parties to form a government.
The elections will also send shockwaves to Berlin where the so-called grand coalition between Angela Merkel’s Christian Democrats (CDU/CSU) and the centre-left Social Democrats (SPD) is already on shaky grounds.
Brandenburg’s government is currently run by a coalition between the SPD and The Left, who have governed together since 2009, with Dietmar Woidke from the Social Democrats as state premier.
Parties have said they will not work with the AfD, so after the vote they will be scrambling around to try and form a coalition that would stop the group from coming to power.
The AfD in Brandenburg is making waves over their use of campaign posters – not for the first time. For this election, the slogan is “Wende 2.0”. Wende (turnaround) describes the period of political change when the Berlin Wall fell and Germany was reunified. Many have slammed the party for appropriating German history for their own gain.
With slogans such as “Vollende die Wende” (complete the turnaround), the party is implying that if voters opt for them, they can finish the work of those who led the Peaceful Revolution.
The AfD has also been slammed for displaying former SPD Chancellor Willy Brandt on its electoral campaign posters.
The posters show Brandt captioned with his quote: “Dare to be more democratic!” Underneath the caption is the AfD’s logo alongside “Vote for the AfD!” and “We’re writing history!”
Choking on More Europe
Even Germany is choking on more Europe.
It’t going to take a strange coalition to form a majority after the next election.
via ZeroHedge News https://ift.tt/32adIVF Tyler Durden
With more than $2.48 trillion AUM, UBS Global Wealth Management is one of the world’s largest asset managers. And now, for the first time since the financial crisis, the Swiss bank has dropped its rating on equities to ‘underweight’ as it braces for a recession spurred by a worsening trade war and slowing economic growth in Europe, Bloomberg reports.
The Swiss asset manager cut its equity positioning relative to investment-grade bonds, said Global Chief Investment Officer Mark Haefele, to reduce its exposure to all of the factors mentioned above.
More specifically, the change incorporates a new underweight position in emerging-market stocks.
“Risks to the global economy and markets have increased, following a renewed escalation in U.S.-China trade tensions,” Haefele said.
UBS had resisted turning outright bearish on stocks,even as the the trade war between the world’s two largest economies intensified, leading up to President Trump on Friday declaring his plans to raise tariffs on $250 billion of Chinese goods to 30% from 25%.
“With talks between the US and China dominating market moves over the near term, investors should brace for higher volatility,” Haefele said.
“We believe it is prudent to take action to neutralize part of this event risk.”
Additionally, UBS has been recommending clients go long gold for months now, and lately, it raised its price target on the precious metal to $1,600/oz, per BBG.
Haefele reiterated that emerging-market stocks are the most vulnerable because they are “the most exposed to heightened market volatility.”
via ZeroHedge News https://ift.tt/2ZD9xEh Tyler Durden
Compared to the same period from January to July in 2018, the occurrence of explosive incidents and bombings in Sweden sky-rocketed 45 percent this year.
Statistics revealed by authorities show that Sweden saw 120 explosive events, whereas that same number from 2018 was only 83. Different sources report different numbers for the entire length of 2018, however. According to paper Dagens Nyheter, 157 explosions took place across the country in 2018 while the Crime Prevention Council BRÅ reported 108 instances of destruction via explosion last year.
The numbers differ but all of the organizations agree that 2019 has seen a rise in bombings.
Criminologist Sven Granath detailed on the explosions, explaining:
Yes, unfortunately, it has increased. Why we do not know, this may be due to the increase in gun violence at the national level. In individual locations, there may be one or more conflicts between criminal networks, but it is very difficult to know.
“You can really only speculate. It may be stolen from a building site and sold, or maybe smuggled in,” Granath continued, noting that investigators never know for certain what materials were used in the explosions or what their origins were.
According to police, the nature of explosions have shifted in recent years. At one point, hand grenades were more common in Swedish bombings but now dynamite, stolen from construction sites, has become the new norm.
Experts claim that the explosions are likely linked to organized crime and could be increasing due to stricter regulations on firearms in Sweden.
Sweden’s southern city of Malmö has been faced with a high number of explosion cases in the last several years with 58 cases in 2017, 45 last year, and 23 so far this year. Notably, the city saw three explosions in the span of just 24 hours earlier this year.
It seems that authorities willingly bury their head in the sand regarding the similar correlation of an increase in migrants and refugees as bombings and explosions also rise. Experts and officials can call it “organized crime” if it makes them feel better, but it is wholly ignoring the true problem at hand.
The reality of the situation is that the importation of third-world invaders into a once prosperous and stable first-world country has turned it into an unsafe and tumultuous battle zone where the threat of explosions place high in the minds of citizens.
After all, you reap what you sow – and Sweden is doing that, tenfold.
via ZeroHedge News https://ift.tt/2MDxIfq Tyler Durden
One of the most unusual stories to start the week is coming from VladTime, a Russian news agency, who reported Russian Special Forces have been exercising with American M4 carbines this month, with additional reports of how some of these soldiers are currently buying western weapons.
Military officers of the 45th Spetsnaz Airborne Brigade, a special reconnaissance and special operations military unit of the Russian Airborne Troops, said soldiers practiced shooting targets, reloading, and assembly and disassembly of the M4 last week.
Officers said NATO Response Forces have been familiarizing and training with Russian weapons for some time. The latest move to train forces with western carbines is a direct result of NATO testing Russian assault rifles.
According to one officer, special forces units were surprised by the accuracy of the M4 and even said, it’s more comfortable to shoot than the AK-74M, the main service rifle in use in the Russian Army. These elite soldiers said the ergonomics and compactness of the American assault rifle were appealing.
“It should be noted here that it was precisely such courses on familiarizing with foreign weapons that preceded the mass appearance of American and German rifles with FSB special forces. The special forces officers who appreciated the advantages of modern Western weapons, with the permission of the leadership, began to purchase them with their own money,” VladTime said (translated via Google).
Another officer of the special forces told the publication that upper command has been speaking with local gunsmiths to make the Kalashnikov rifles more like western carbines. The report goes on to say special forces are already acquiring modern Western rifles and carbines, ahead of the possibility that upper command approves the use of these weapons.
The main reason Russian Special Forces like the M4 firing a 5.56 X 45 NATO round, versus the Kalashnikov AK-47 firing a 7.62X39, is that the weapon is more lightweight, ergonomic, and more accurate.
via ZeroHedge News https://ift.tt/2zlc4UC Tyler Durden
Higher Ground, the production company founded by Michelle and Barack Obama, has released the first of a planned seven-film series on Friday.
American Factory chronicles the opening of a Chinese factory near Dayton, Ohio, where a GM plant closed in 2008. It’s reasonable to suppose that the point was to alarm us about the wiles of global capitalism. Oddly, the film might have the opposite effect on many viewers. It certainly did for me.
The documentary opens with a prayer on the day the plant closes as tearful workers see the last vehicle come off of the production line. A few years later, Fuyao Glass announced its intent to open a glass-production facility in the shuttered facility. One of our first glimpses is of a question and answer as American employees of the Chinese firm speak about the goals of the firm to prospective employees: they plan to employ several thousand people in all capacities, but mostly blue-collar work of the type that disappeared when the local GM plant shut down. One prospect asks if this will be a union shop. No, he is told. The plan is to be non-union.
Perhaps because of their proximity to widespread unemployment, everyone who heard that answer nods in agreement. This new factory is the only game in town, and the best news most of these out-of-work machinists and factory hands have heard in years.
Initially, most of the senior managers are Americans, but alongside the American workers are a group of Chinese workers. Also initially, most of the U.S. workers are deeply appreciative of the new opportunity. We follow one who, since the closing of the GM plan, has been reduced to living in her sister’s basement. Others have been out of work for some time, barely getting by on part-time work and odd jobs.
We don’t know how much of the documentary’s production choices were under the specific direction of the former president. Mr. Obama is sometimes astonishingly tone-deaf, as when, despite his regular trafficking with the global warming/climate change crowd — and more specifically in light of their incessant warnings about massive impending changes in sea levels and coastlines — he nevertheless purchased a $15 million estate on Martha’s Vineyard. If this is a story largely seeking to highlight differences in workplace culture, that objective is vastly overshadowed by the incredible arc that the formerly unemployed workers’ attitudes travel over a fairly short amount of time.
Initially, the woman who has been living in her sister’s basement has moved into an apartment. She extols her reacquired independence. Other employees bemoan their non-union pay and conditions but seem contented; they or friends and family have lost houses, have seen communities torn apart, and know firsthand the double impact of the so-called Great Recession and increasing competition from China. But even that wears off over time.
The work is sometimes dangerous, and the pay is lower than many of the workers have previously received, and before long thankfulness is replaced by myopia. Despite the company’s warnings, there are rumblings about unionization, and a United Automobile Workers agitator is caught walking through the private workspace with a “Union Yes” sign held aloft. The ineffectiveness of American managers to quash the unionization efforts leads to their sudden termination, and the Chinese CEO threatens to close the plant if it continues.
The same workers who, a short time before, were deeply appreciative of their unlikely bounty then begin to badmouth the company. Some are meeting secretly with union officials. Ultimately employees hold a vote, and the result is somewhat surprising.
There are two particularly telling moments in the film.
In one, a Chinese manager teaches a class on how to deal with Americans, whom the Chinese line employees are training. Americans, he explains, need constant encouragement. It’s a hilarious and somewhat cringeworthy section.
In another, an employee at a local union hall complains to a cheering crowd that while he earned $27,000 last year, his nail-polishing daughter earned $40,000. Apparently, this man is unaware that there is absolutely no prohibition against his learning to paint nails for higher compensation — and with a daughter who does so, he has ready access to a highly cost-effective apprenticeship.
Despite intense lobbying and enthusiasm, the union effort is defeated. A number of the labor organizers are fired; most just sheepishly return to their duties. In one of the last scenes, we overhear plans to automate many of the jobs at the factory, which would eliminate more positions. There’s no way of knowing whether this was the plan all along or whether the shift in workers from contentment to intrigue was a key part of the decision-making calculus of the Chinese owners, but it wouldn’t be surprising if the collective bargaining bid accelerated automation plans. None of this is surprising, especially given Fuyao’s clearly stated position against collective bargaining from the very beginning.
It’s difficult for people to unlearn things they’ve grown up seeing, they’ve been told for decades, and for which they have apparent confirmation: the idea that union work naturally paid well and provided a generous raft of benefits was feasible in decades when international competition was virtually nonexistent. Throughout the ’50s, ’60s, and early ’70s, owing to the need for most of the rest of the world to rebuild after World War II, the establishment of the Iron Curtain, and the spread of collectivism throughout Asia, billions of potential competitors were simply out of the global mix. The dollar was king, and all of the major financial centers were in the Western Hemisphere.
But this period was an anomaly, even if wishful thinking sought to enshrine it as an indication of intrinsic American superiority: by the ’70s and ’80s, what was true all along finally became practicable. Markets opened, information began flowing, capital aggregated, and most of all people in other parts of the world proved that they were willing and able to do the work that Americans firmly believed only we could do. And our upstart labor competitors were willing, indeed appreciative of, the opportunities that sprung up.
There’s a common refrain from labor unionists and union members: the American worker is the best in the world — better than any of his international counterparts. It’s a feel-good, self-congratulatory sentiment, but it crumbles upon even superficial consideration. Here, it’s empirically untrue: the Chinese workers alongside Fuyao’s American employees work harder, for longer hours — they’re often at the factory working on evenings, weekends, and holidays, and do so for less pay and fewer benefits. This may not make them better people, but it absolutely makes them better employees and thus better economic prospects for firms. Even they, though, have limits, and machines are more efficient and productive.
The Obamas may have intended to make a film about workplace culture clashes. However, as it turns out, American Factory is at its core a damning snapshot of American labor entitlement. In an era where painful truths about the declining relevance of blue-collar work and the potential of automation are becoming evident in many fields, it will undoubtedly remain instructive over time. The events depicted are not a fleeting glimpse of a changing past, but an indication and warning of a rapidly oncoming future.
via ZeroHedge News https://ift.tt/2Zo6b8Q Tyler Durden
Industrial metals such as copper continue to stagnate this year as major funds take an increasingly bearish view on global macro.
The spot price of Comex copper on Friday fell 1.23% to 2.535, the lowest level in at least 115 weeks, dating back to the summer of 2017.
Copper dropped 3.34% this past week amid new fears the US economy is quickly slowing. IHS Markit’s flash reading for the manufacturing purchasing managers index, recorded 49.9 for August on Thursday, the first contraction since 2009. This is an indication a manufacturing recession could be imminent, seems plausible since a freight recession across is already underway; explains how the Trump bump in the economy has been exhausted and reveals further why President Trump is demanding 100bps rate cuts, quantative easing, and emergency payroll taxes: it’s because the cycle is rolling over. We even mentioned last week how President Trump might hold an emergency meeting next week with advisors and top donors about how a mild recession could materialize before the 2020 election.
In the last 89 days, copper is down nearly 15% from its high in April.
On a longer perspective, copper crashed -58% from early 2011 to January 2016. Copper prices eventually troughed at 1.94 around mid-January 2016, as global central banks pumped the world with liquidity in 2016, and then the Trump administration in 2017 and 2018 injected fiscal stimulus into the domestic economy, which helped copper prices soar 62% until June 2018. Prices then plunged into late summer and fall of 2018, by 21% as the world realized a global slowdown was developing.
The rollercoaster in prices, up and downs, created a massive head and shoulder pattern that could be completed in 2H19, or at least some time in 1H20. This would be due to another growth scare that could shock world markets. If copper was to break the head and shoulders neckline, a possible retest of 2016 levels, around 2-2.15, could be likely.
In textbook commodity market fashion, the price slump has been associated with a J.P.Morgan Global Manufacturing PMI plunging to sub 50, a harbinger that a global manufacturing recession could be imminent, or is already underway.
The Wall Street Journal said, “Net bearish bets on copper in futures markets hit their highest level in around three years earlier this month, a sign that investors have grown increasingly pessimistic on the outlook for the metal in the midst of slowing global growth and a weakening Chinese economy.”
China is the world’s largest copper user, accounting for almost 50% of global demand.
So when copper prices slump, it’s also a proxy of the health of the Chinese economy.
Earlier last week, Fathom Consulting, a global independent macro research consultancy, said its proprietary China Momentum Indicator 2.0 has slowed to 4.6% in June, the lowest reading since Aug. 2016.
There is also a growing gap between the China Momentum Indicator 2.0 at 4.6% and official GDP data at 6.2%. Might suggest China’s economy hasn’t yet bottomed, could continue to decline through 2H19 into 1H20.
And on Friday, to make matters worse for the global macro outlook, China’s Ministry of Finance said in a statement that it would levy retaliatory tariffs on another $75BN in US goods with rates anywhere between 5 and 10%, with the tariffs set to be implemented in two batches, one at midnight on Sept 1 and another at midnight on Dec 15.
Additionally, China said it would resume 25% tariffs on US autos, stating that “China’s adoption of tariff-adding measures is a forced move to deal with US unilateralism and trade protectionism.”
Then in a retaliatory move, President Trump announced starting Oct 1, the existing 25% tariffs on $250BN in Chinese goods would rise to 30%, and the 10% tariffs on $300 billion in Chinese goods set to begin on Sept 1 will be 15%.
With that being said, the global macro outlook looks set to deteriorate further into 1H20, sending copper prices tumbling much further.
via ZeroHedge News https://ift.tt/2NCGwSv Tyler Durden
Companies in the United States, and more specifically, Silicon Valley, are building a social credit system for individuals. Much like the social credit system communist China uses to control its population, this authoritarian control is different in one way: it is being done by corporations as opposed to the government.
Make no mistake though, the corporations building a social credit system in the U.S. are already another arm of the government. They are lobbying and using the money made to get certain politicians elected. This is the very definition of crony corporatism. If anyone thinks we live in a democracy or constitutional republic, they are either wholly uninformed, brainwashed or willfully ignorant.
China’s tyrannical social credit system is a technology-enabled, surveillance-based nationwide program designed to nudge citizens toward better behavior (or government-approved behavior). The ultimate goal is to “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step,” according to the Chinese government
According to Fast Company, China’s social credit system has been characterized in one pithy tweet as “authoritarianism, gamified.” And it’s already here in the United States.
While many Westerners are disturbed by what they read about China’s social credit system, they need to realize that they live under a system that is similar. Such systems are not unique to China. In fact, a parallel system is developing in the United States, in part as the result of Silicon Valley and technology-industry user policies, and by surveillance of social media activity by private companies. Big Tech is helping advance totalitarian control over the population by censoring information they deem goes against the government’s agenda.
For example:
The New York State Department of Financial Services announced earlier this yearthat life insurance companies can base premiums on what they find in your social media posts. That Instagram pic showing you teasing a grizzly bear at Yellowstone with a martini in one hand, a bucket of cheese fries in the other, and a cigarette in your mouth, could cost you. On the other hand, a Facebook post showing you doing yoga might save you money.
Airbnb can disable your account for life for any reason it chooses, and it reserves the right to not tell you the reason. The company’s canned message includes the assertion that “This decision is irreversible and will affect any duplicated or future accounts. Please understand that we are not obligated to provide an explanation for the action taken against your account.” The ban can be based on something the host privately tells Airbnb about something they believe you did while staying at their property. Airbnb’s competitors have similar policies.
It’s now easy to get banned by Uber, too. Whenever you get out of the car after an Uber ride, the app invites you to rate the driver. What many passengers don’t know is that the driver now also gets an invitation to rate you. Under a new policy announced in May: If your average rating is “significantly below average,” Uber will ban you from the service.
You can be banned on WhatsApp if too many other users block you. You can also get banned for sending spam, threatening messages, trying to hack or reverse-engineer the WhatsApp app, or using the service with an unauthorized app.
An increasing number of societal “privileges” related to transportation, accommodations, communications, and the rates we pay for services (like insurance) are either controlled by technology companies or affected by how we use technology services all while Silicon Valley’s rules for being allowed to use their services are getting stricter. All of the companies participating in these types of behavioral controls want one thing, and it’s the same thing the government wants: power over people.
via ZeroHedge News https://ift.tt/2MDiszp Tyler Durden
Flooding in Houston caused by Hurricane Harvey. (LM Otero/AP)
CNN has an interesting article describing ongoing litigation in which thousands of Houston property owners whose lands were deliberately inundated by the US Army Corps of Engineers in the aftermath of Hurricane Harvey in 2017 are suing for compensation under the Takings Clause of the Fifth Amendment:
Two days after Hurricane Harvey made landfall in Texas in August 2017, as historic rainfall submerged parts of Houston, the Army Corps of Engineers released water from two reservoirs into a river running through one of the country’s richest zip codes.
The water crept out of Buffalo Bayou and into West Houston’s Energy Corridor, home to numerous energy companies and residential neighborhoods. It inundated Kyle Haines’ home, drowning his 71-year-old husband, Bob. It left Maria Sotolongo’s home nearly uninhabitable….
Two years later, they’re still trying to recapture the sense of security that was swept away with their possessions….
Hundreds of West Houston property owners are suing the federal government, claiming the Corps flooded their homes to save the rest of the city. They allege the government owes them for effectively taking their property to store water from the reservoirs, in violation of a Fifth Amendment right which says the government can’t take private property for public use without just compensation….
In the litigation against the Corps, the two are part of a group of property owners whose homes were downstream of the reservoirs. The downstream cases are being tried separately from lawsuits involving properties that were upstream or behind the reservoirs because they involve different circumstances and legal arguments…
A trial for the upstream plaintiffs concluded in May, and closing arguments are scheduled for September in Washington. The next hearing in the downstream trial is scheduled for October.
Each trial is starting with a small group of plaintiffs who serve as “test cases” for the larger pool of property owners, said lawyer Rand Nolen, lead counsel for the downstream cases.
Sotolongo and Haines are not part of the test cases, but the outcome will affect them all the same, Nolen said.
Even if the property owners prevail, it will be a long time before they see a dime, given appeals, Nolen said.
“What’s at stake is the plaintiffs’ financial security for years to come,” he said. “Many borrowed money to repair their homes. Some had to sell homes for pennies on the dollar. They suffered huge financial losses.”
In addition to the huge stakes for the many thousands of people affected by the Corps’ actions, these cases are also likely to set important precedents for future situations where the government deliberately floods or otherwise destroys private property in order to manage natural disasters, or perhaps for other purposes. I described the key issues at stake in this 2017 post:
In its unanimous decision in Arkansas Game and Fish Commission v. United States (2012), the Supreme Court rejected the Obama administration’s dubious argument that temporary flooding of property by the government can never qualify as a taking. But the Court’s decision was far from a model of clarity when it comes to the question of how to figure out whether a given case of deliberate temporary flooding should be considered a taking or not….
The plaintiffs understandably deride this “one flood free” rule, and urge the courts to reject it. It makes little sense to claim that a one-time flood can never be a taking regardless of how deliberate it was or how much damage it inflicts. In this instance, the damage to at least some of the homes and businesses was severe, and the deliberate flooding that caused it should be considered a taking…
It is difficult to predict which way the judiciary will ultimately rule on these cases. The Arkansas Game and Fish standards are far from clear and the courts have a history of siding with the government in many ambiguous takings cases….
This dilemma highlights a weakness in the Arkansas Game and Fish test that the Supreme Court should eventually fix by ruling that deliberate flooding is automatically a taking, at least if it inflicts significant damage on private property. I made this point in my 2013 article on [Arkansas Game and Fish]…
Since I wrote my 2017 post on the Houston flooding cases, the litigation has gradually progressed. In May of last year, the Court of Federal Claims issued a preliminary ruling in the “upstream” cases rejecting the federal government’s motion to dismiss them before trial. Among other things, Judge Charles Lettow’s opinion rejects the Justice Department’s “one free flood” argument as inconsistent with Arkansas Game and Fish (see pp. 13-14). While this was just a preliminary opinion enabling a trial to go forward, it strongly suggests that Judge Lettow will ultimately resolve this issue in favor of the property owners. He also rejected a number of other arguments offered by the federal government. We have not yet had a ruling on the “one flood free” argument in the case involving downstream Houston cases.
Meanwhile, trials are proceeding in both cases, focused in part on issues of causation (the federal government claims that many of the affected property owners’ land would have been damaged as much or more even if the Corps of Engineers had not flooded it.
In December, a Texas state appellate court issued a ruling siding with property owners in a similar case involving deliberate flooding of land by the state government’s San Jacinto River Authority (also during Hurricane Harvey). The Texas decision does not bind the federal courts, of course. But it addresses very similar issues, and might be a persuasive precedent for federal judges.
In my view, the causation issues in the Houston cases are often genuinely difficult, and it is understandable that the government would contest this question in many of the cases. By contrast, the federal government’s “one flood free” argument is much less defensible. If it prevails, the government would have a blank check to flood private property in many circumstances, without having to pay compensation. If the Obama administration had deliberately flooded thousands of homes and then trotted out a dangerous theory like “one flood free” in order to avoid having to pay compensation, conservatives would have been outraged.
Even when the flooding and destruction of property is for a good reason (such as preventing even worse flooding elsewhere), that’s no justification for denying compensation. I summarized the reasons why in my 2017 post:
[T]he fact that the flooding might have been a good policy (or at least the lesser of the available evils under tragic circumstances) does not mean there was no taking. As the Supreme Court famously put it in a 1960 case, the whole point of the Takings Clause’s just-compensation requirement is to “bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Even if the “public burden” is entirely justified, that does not mean it should be inflicted on the property owners, as opposed to “the public as a whole.” That is true when the government takes property to build a highway or military base that benefits the general public. It is equally true when it floods some people’s property to prevent potentially greater devastation elsewhere.
Whatever else happens in these cases, hopefully the courts will ultimately reject “one flood free” and make clear that deliberate flooding that inflicts grave damage on private property is a taking. At this point, I am guardedly optimistic the courts will come down on the right side of the takings question, based on developments so far. But the trial court rulings are likely to be appealed, and the issue might even get to the Supreme Court. So it is still too early to make any definitive predictions.
As the CNN article makes clear, another painful aspect of these cases – sadly not unusual for federal court litigation – is how long they have dragged on (almost two years, with a long time probably still left to go, if we include likely appeals). During that time, the victims continue to suffer without any compensation.
In addition, as the article notes, the person whose husband was killed in the government-induced flooding may not be able get compensation for his spouse’s death, which cannot be addressed by a takings claim (takings cases are for loss of property rights, not loss of life). I am not sure what, if any legal remedy might be available to him. This issue is not within my expertise,as a takings scholar, so perhaps there is a possible remedy I am overlooking.
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Flooding in Houston caused by Hurricane Harvey. (LM Otero/AP)
CNN has an interesting article describing ongoing litigation in which thousands of Houston property owners whose lands were deliberately inundated by the US Army Corps of Engineers during Hurricane Harvey in 2017 are suing for compensation under the Takings Clause of the Fifth Amendment:
Two days after Hurricane Harvey made landfall in Texas in August 2017, as historic rainfall submerged parts of Houston, the Army Corps of Engineers released water from two reservoirs into a river running through one of the country’s richest zip codes.
The water crept out of Buffalo Bayou and into West Houston’s Energy Corridor, home to numerous energy companies and residential neighborhoods. It inundated Kyle Haines’ home, drowning his 71-year-old husband, Bob. It left Maria Sotolongo’s home nearly uninhabitable….
Two years later, they’re still trying to recapture the sense of security that was swept away with their possessions….
Hundreds of West Houston property owners are suing the federal government, claiming the Corps flooded their homes to save the rest of the city. They allege the government owes them for effectively taking their property to store water from the reservoirs, in violation of a Fifth Amendment right which says the government can’t take private property for public use without just compensation….
In the litigation against the Corps, the two are part of a group of property owners whose homes were downstream of the reservoirs. The downstream cases are being tried separately from lawsuits involving properties that were upstream or behind the reservoirs because they involve different circumstances and legal arguments…
A trial for the upstream plaintiffs concluded in May, and closing arguments are scheduled for September in Washington. The next hearing in the downstream trial is scheduled for October.
Each trial is starting with a small group of plaintiffs who serve as “test cases” for the larger pool of property owners, said lawyer Rand Nolen, lead counsel for the downstream cases.
Sotolongo and Haines are not part of the test cases, but the outcome will affect them all the same, Nolen said.
Even if the property owners prevail, it will be a long time before they see a dime, given appeals, Nolen said.
“What’s at stake is the plaintiffs’ financial security for years to come,” he said. “Many borrowed money to repair their homes. Some had to sell homes for pennies on the dollar. They suffered huge financial losses.”
In addition to the huge stakes for the many thousands of people affected by the Corps’ actions, these cases are also likely to set important precedents for future situations where the government deliberately floods or otherwise destroys private property in order to manage natural disasters, or perhaps for other purposes. I described the key issues at stake in this 2017 post:
In its unanimous decision in Arkansas Game and Fish Commission v. United States (2012), the Supreme Court rejected the Obama administration’s dubious argument that temporary flooding of property by the government can never qualify as a taking. But the Court’s decision was far from a model of clarity when it comes to the question of how to figure out whether a given case of deliberate temporary flooding should be considered a taking or not….
The plaintiffs understandably deride this “one flood free” rule, and urge the courts to reject it. It makes little sense to claim that a one-time flood can never be a taking regardless of how deliberate it was or how much damage it inflicts. In this instance, the damage to at least some of the homes and businesses was severe, and the deliberate flooding that caused it should be considered a taking…
It is difficult to predict which way the judiciary will ultimately rule on these cases. The Arkansas Game and Fish standards are far from clear and the courts have a history of siding with the government in many ambiguous takings cases….
This dilemma highlights a weakness in the Arkansas Game and Fish test that the Supreme Court should eventually fix by ruling that deliberate flooding is automatically a taking, at least if it inflicts significant damage on private property. I made this point in my 2013 article on [Arkansas Game and Fish]…
Since I wrote my 2017 post on the Houston flooding cases, the litigation has gradually progressed. In May of last year, the Court of Federal Claims issued a preliminary ruling in the “upstream” cases rejecting the federal government’s motion to dismiss them before trial. Among other things, Judge Charles Lettow’s opinion rejects the Justice Department’s “one free flood” argument as inconsistent with Arkansas Game and Fish (see pp. 13-14). While this was just a preliminary opinion enabling a trial to go forward, it strongly suggests that Judge Lettow will ultimately resolve this issue in favor of the property owners. He also rejected a number of other arguments offered by the federal government. We have not yet had a ruling on the “one flood free” argument in the case involving downstream Houston cases.
Meanwhile, trials are proceeding in both cases, focused in part on issues of causation (the federal government claims that many of the affected property owners’ land would have been damaged as much or more even if the Corps of Engineers had not flooded it.
In December, a Texas state appellate court issued a ruling siding with property owners in a similar case involving deliberate flooding of land by the state government’s San Jacinto River Authority (also during Hurricane Harvey). The Texas decision does not bind the federal courts, of course. But it addresses very similar issues, and might be a persuasive precedent for federal judges.
In my view, the causation issues in the Houston cases are often genuinely difficult, and it is understandable that the government would contest this question in many of the cases. By contrast, the federal government’s “one flood free” argument is much less defensible. If it prevails, the government would have a blank check to flood private property in many circumstances, without having to pay compensation. If the Obama administration had deliberately flooded thousands of homes and then trotted out a dangerous theory like “one flood free” in order to avoid having to pay compensation, conservatives would have been outraged.
Even when the flooding and destruction of property is for a good reason (such as preventing even worse flooding elsewhere), that’s no justification for denying compensation. I summarized the reasons why in my 2017 post:
[T]he fact that the flooding might have been a good policy (or at least the lesser of the available evils under tragic circumstances) does not mean there was no taking. As the Supreme Court famously put it in a 1960 case, the whole point of the Takings Clause’s just-compensation requirement is to “bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Even if the “public burden” is entirely justified, that does not mean it should be inflicted on the property owners, as opposed to “the public as a whole.” That is true when the government takes property to build a highway or military base that benefits the general public. It is equally true when it floods some people’s property to prevent potentially greater devastation elsewhere.
Whatever else happens in these cases, hopefully the courts will ultimately reject “one flood free” and make clear that deliberate flooding that inflicts grave damage on private property is a taking. At this point, I am guardedly optimistic the courts will come down on the right side of the takings question, based on developments so far. But the trial court rulings are likely to be appealed, and the issue might even get to the Supreme Court. So it is still too early to make any definitive predictions.
As the CNN article makes clear, another painful aspect of these cases – sadly not unusual for federal court litigation – is how long they have dragged on (almost two years, with a long time probably still left to go, if we include likely appeals). During that time, the victims continue to suffer without any compensation.
In addition, as the article notes, the person whose husband was killed in the government-induced flooding may not be able get compensation for his spouse’s death, which cannot be addressed by a takings claim (takings cases are for loss of property rights, not loss of life). I am not sure what, if any legal remedy might be available to him. This issue is not within my expertise,as a takings scholar, so perhaps there is a possible remedy I am overlooking.
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