Month: June 2019

Saudi King Urges Global Coalition To “Use All Means To Stop Iran” At Emergency Summit

Perhaps sensing that the US “maximum pressure” campaign against Iran is fast deflating, with even ultra-Hawk John Bolton late this week saying American military build-up had successfully “deterred” imminent Iran threats – suggesting the crisis has been averted – the Saudis are now going on the offensive. 

Image source: AP via Al Jazeera

Saudi Arabia’s aging King Salman went on an anti-Iran tirade during an emergency meeting of Arab leaders hosted in Mecca on Thursday, saying the Shia country is the greatest threat to global security for the past four decades. He also echoed past US and Israeli charges that Tehran is currently developing nuclear and ballistic missiles in order to threaten its neighbors and extend its influence over the region. 

He said Iran’s leaders were “harboring global and regional terrorist entities and threatening international waterways.” He called for “using all means to stop the Iranian regime” from its regional “interference”. Iran for its part rejected these as “baseless accusations” and has denied it had any role in a spate of recent “sabotage” attacks in the Gulf region. 

The king further condemned Iran’s tactics to disrupt maritime trade and global oil supplies in “glaring violation of UN treaties” following Riyadh’s blaming Iranian operatives for using underwater mines to attack and “sabotage” four tankers near the Strait of Hormuz weeks ago, two of which were Saudi flagged. 

“The Iranian regime has been interfering in other countries’ affairs, developing their nuclear programs and threatening international navigation,” King Salman said during his speech, according to a translation by Saudi-owned Al-Arabiya.

The Saudis are attempting to build a strong consensus of Arab states which will stand aggressively against Iran and its allies in the region; however, these efforts could be crippled by the ongoing inter-GCC economic and diplomatic war involving Qatar. 

The US welcomed the move toward “Arab unity” to confront Iran, with a State Department spokesperson saying Thursday, “Gulf unity is essential in confronting Iran, to confronting their influence, to countering terrorism writ large, and, of course, to ensuring a prosperous future for the Gulf,” according to the AP. 

Saudi officials also blamed Iran for fueling the war in Yemen by backing Houthi rebels, which the Saudi coalition has been fighting mostly via airstrikes since 2015, resulting in what the UN has called the “world’s worst humanitarian crisis”. Visiting delegations were even shown destroyed Houthi drones and missile fragments upon their arrival in Jeddah. 

Notably, the Iraqi delegation scoffed at the summit’s anti-Iran emphasis. Iraqi President Barham Salih told the summit that stability in Iraq is paramount and that any threats to Iran’s security could spark war in the region, sending fragile post-war Iraq back into sectarian bloodshed and chaos.  

This week the Pentagon revealed that nearly 1,000 troops newly deployed to Middle East to counter the Iran threat would be stationed in Saudi Arabia and Qatar. 

Over the past week, following Trump’s extended hand for Iran’s leaders to “call me,” we’ve seen a consistent deescalation following weeks of dangerous escalation, including threats and counter-threats of military action by both sides.

Iranian President Hassan Rouhani reportedly said this week that the “road is not closed” on talks with the US if Washington drops the sanctions and returns to upholding the 2015 nuclear deal (JCPOA) – something not at all likely to happen. 

via ZeroHedge News http://bit.ly/2Z03VQc Tyler Durden

Renewables Are Set To Outprice Oil & Gas By 2020, Report

Authored by Alex Kimani via OilPrice.com,

Moore’s Law might be dead, but Swanson’s Law remains alive and well.

Swanson’s Law is the observation that solar PV panels tend to become 20 percent cheaper for every doubling of cumulative shipped volume. It’s the solar industry’s equivalent of Moore’s Law, which predicts the growing computing power of processors. But as the semiconductor industry has discovered, the observation that processing power increases exponentially at a two-year or so cadence has hit a physical limit.

Fortunately, Swanson’s Law is yet to come up against such a brick wall, and solar energy costs have continued to come down precipitously for decades–without exception. And now the renewable energy industry is about to cross a major milestone that will truly set it on the path towards becoming the world’s predominant energy source.

According to a report by the International Renewable Energy Agency (IRENA) cited by Reuters, beginning in 2020, electricity generated by solar PV and onshore wind is set to become consistently cheaper than the most cost-effective fossil fuel alternative, without subsidies.

In essence, more than 80 percent of solar PV and 75 percent of onshore wind power deployments to be commissioned next year will be cheaper than the cheapest new oil, natural gas, or coal-fired sources as per the report

This report has a pretty wide scope, having been compiled from IRENA’s own members, governments, consultancies, industry groups, business journals, auctions, and tenders. IRENA’s membership includes research institutes, project developers, utilities, and power companies across 160 countries, all of which contribute data for its Renewable Cost Database.

Swanson’s Law in Action

According to the IRENA report, the global weighted average cost of power generated using solar energy fell another 26 percent last year compared to the previous year. Bioenergy costs declined 14 percent, solar PV and onshore fell 13 percent, hydropower was 12 percent lower, while offshore wind was 1 percent cheaper last year. Costs of as low as $0.03-$0.04 per kilowatt hour (kWh) for solar PV and onshore wind have already become a reality in some parts of the globe.

IRENA estimates that the global average cost of electricity for solar PV will clock in at $0.055/kWh in 2020, then fall another 13 percent to $0.048/kWh in 2021. As for onshore wind, corresponding estimates are $0.049/kWh and $0.045/kWh in 2020 and 2021, respectively.

Road to 100% renewable energy

At the turn of the century, the idea that renewable energy could become a major source of energy during our lifetimes would have sounded incredible, even preposterous. After all, fossil fuels were just too dominant and much cheaper, while renewable energy faced seemingly insurmountable technical, cost, and integration challenges.

Yet the impossible could be about to happen.

Over the past decade, renewable energy has experienced transformative changes, enabling it to play a very significant role in our energy industry. The solar industry has in particular been a standout performer thanks to remarkable price declines by solar PVs and increasing grid flexibility.

According to data by the Solar Energy Industries Association (SEIA), U.S.’ cumulative operating solar PV capacity stood at 62.4 GW by the end of 2018–about 75 times the installed capacity just a decade ago– supplying 1 percent of the country’s electricity needs.

The future of renewable energy is looking brighter than ever. Energy company BP has projected that solar and other renewables will supply 30 percent of the world’s electricity needsby 2040 and up to 50 percent in regions such as Europe. That’s an upgrade from the firm’s last year forecast of 25 percent by 2040.

BP estimates that renewables will only take 25 years to go from 1 percent to 10 percent of global energy compared to 45 years for oil and more than 50 years for gas. The funny thing is, growth of solar has been consistently underestimated over the past decade, with actual installations outstripping projections. This means there’s a fair chance that even the most optimistic current projections might still fall short of reality a decade or two from now.

The repercussions for the global economy are bound to be enormous. Other than the potential to stop climate change in its tracks, renewable energy will likely negate at least some of the nearly $300 billion in annual energy subsidies provided by the world’s governments.

via ZeroHedge News http://bit.ly/2WaB0r6 Tyler Durden

Are You A Petty Criminal? Canada Just Stopped Prosecuting Minor Crimes

Thanks to a ‘crumbling justice system’ which has forced courts prioritize crimes by seriousness, Canadian prosecutors are now letting petty criminals walk free for crimes such as shoplifting, minor assault and fraud, according to the CBC. 

The president of Canadian Association of Crown Counsel says cases involving less serious crimes are either being dropped outright or shunted into restorative justice programs. He called it a regular occurrence, though specific numbers weren’t available.

“At some point, we have to make a decision: what crimes do you want us not to prosecute?” said Rick Woodburn, whose organization represents 7,500 Crowns across the country. –CBC

“And as you can see, it starts falling off the bottom. And sooner or later, we’re going to decriminalize, because we’re not prosecuting certain types of offences,” said Woodburn. 

Due to a 2016 Canadian Supreme Court ruling known as the Jordan decision which protects offenders from unreasonable delays through the legal system, prosecutors are now focusing on major crimes such as homicides and sexual assaults. 

In July 2016, the CSC overturned the drug convictions of Barrat Richard Jordan due to an unreasonable delay. Now – if a case is delayed by 18 months in provincial court, or 30 months in superior court, it’s considered unreasonable. 

“Lower-end charges [are] being triaged and falling off our radar, because we have to keep an eye on the bigger cases of the homicides, sexual assaults, robberies,” said Woodburn, adding that the courts have now adopted a “triage system” to manage cases by seriousness of the alleged offense. 

“When we look at our schedules, we have to make sure they’re falling within the Jordan timelines and that court time is not getting eaten up by a fraud under $200.” 

Retailers are obviously very concerned

The Retail Council of Canada which represents over 45,000 retail merchants across the country has expressed grave concerns over recent developments. 

“It’s really concerning for retailers, retailers of all sizes,” said the council’s Atlantic director, Jim Cormier. “The deterrent for theft and shoplifting in stores is, of course, often that there can be legal consequences.”

Last year, the retail council estimated that shoplifting accounts for up to $5 billion a year in losses for Canadian retailers. Cormier said shoplifting has an awful impact on retailers, and if it happens enough, it will cut into a company’s profits. 

“Less profits means less ability to hire and pay staff. You know it means less tax revenue for the cities and towns in which these retailers are doing their business,” said Cormier.  

Stephen O’Keefe, a consultant who helps companies with loss prevention, said it pains him when courts throw out shoplifting cases.

“When you have a company that experiences shrinkage in excess of their net profit, they have to shut their doors. We’ve experienced that in Canada over past years where we’ve had major brands, major retailers, who have closed their doors because they can’t absorb those shrinkage charges.”  –CBC

In order to recoup their losses, some retailers are skipping criminal court completely – instead opting to take offenders to civil court, according to O’Keefe. 

Woodburn insists that provincial governments as well as the federal government needs to set aside more money and resources for the criminal justice system – including more Crowns, judges, court staff and defense attorneys. Unless this happens, more delays and dropped cases are inevitable. 

“Judges and justices are working themselves into the ground, Crowns are drowning in workload, defence lawyers are the same,” said Woodburn. “ou see them overworked. Staff and others are working overtime just to make sure people’s rights are not being infringed, and that as it is now is unsustainable.“

via ZeroHedge News http://bit.ly/2JPrSpT Tyler Durden

The Supreme Court Should Take the Love Terminal Takings Case

Love Field.

The Supreme Court is now considering whether it wants to review Love Terminal Partners v. United States, an important takings case decided by the Federal Circuit last year. The odds against any given case being taken by the Court are almost always high. But I hope this one beats them. If allowed to stand, the Love Terminal ruling would have dangerous implications for many future cases involving takings claims against the federal government. NYU/University of Chicago law professor Richard Epstein—probably the nation’s leading takings scholar—has a good description of the somewhat convoluted facts of the case:

The deregulation movement of the late 1970s had its intended consequence of hastening competition among airlines. But it also created a backlash in one market, Dallas-Fort Worth, located in the backyard of [future] Speaker of the House Jim Wright. Wright feared that vigorous competition to the new Dallas/Fort Worth airport (DFW) would come from the Love Field airport, the home of the upstart Southwest Airlines, which was now poised for the first time to expand operations into the interstate market. Wright thought that flights from Love Field would reduce the air traffic at DFW, which in turn would reduce the revenues needed to fund the debt service on DFW bonds. So in 1979, he induced Congress to pass the Wright Amendment, which perversely restricted all flights out of Love Field outside of Texas and four contiguous states—Arkansas, Louisiana, New Mexico, and Oklahoma—to aircraft that had 56 or fewer seats….

By 2004, Southwest mounted an effective campaign to “free Love Field,” which prompted American Airlines to make Southwest an offer it could not refuse. Both companies, the two airlines concluded, would be better off by cartelizing the market by dividing a limited number of gates at Love Field and DFW between them. In order to put this plan into action, however, the two airlines, the DFW Airport Authority, and the two cities (Dallas and Fort Worth) had to reduce the capacity of Love Field. They decided to do so by getting rid of twelve state-of-the-art gates—six at the main terminal and six on Lemmon Avenue—serving Love Field, which were owned by the company Love Terminal Partners (LTP). Flights from these gates could crater the American/Southwest alliance. So these five parties (Southwest, American Air, Dallas, Fort Worth, and DFW) prevailed on Congress in October 2006 to pass the Wright Amendment Reform Act (WARA) which provided that “The City of Dallas shall reduce as soon as practicable, the number of gates available for passenger air service at Love Field to no more than 20 gates. Thereafter, the number of gates available for such service shall not exceed a maximum of 20 gates.” And shortly thereafter, Dallas condemned LTP’s gates and promptly razed them. That’s one way to ground the competition.

Sadly, an antitrust suit that LTP filed against the Five Parties Agreement was blocked on the ground that those laws were overridden when Congress blessed the deal under WARA. At this point, LTP had only one option, which was to seek just compensation for its demolished gates. In two careful opinions, in 2011 and 2016, Judge Margaret Sweeney in Federal Claims Court awarded LTP $133.5 million for the physical destruction of the gates. But LTP’s case then crashed unexpectedly on appeal when, in 2018, Judge Timothy Dyk of the Federal Circuit upended the entire operation. Judge Dyk insisted that zero compensation was required for the simple reason that LTP could not prove that the gates in question had any market value prior to their destruction: No party is entitled to compensation for the destruction of worthless property.

As Epstein and others point out, the Federal Circuit decision sets a dangerous precedent in two ways. First, the main reason why Judge Dyk concludes that LTP’s property rights had no value is that it was not making a profit at the time of the taking. But that ignores the fact that property that isn’t making any profit at time X still has value because it might become profitable in the future. There was good reason to think that the gates owned by LTP would become more profitable over time. As Epstein points out, “we know that the zero valuation put on the property by Judge Dyk has to be wrong, because if the Lemmon Avenue gates were worthless, why would the five parties secure the passage of WARA to authorize their destruction?” LTP’s competitors wanted the gates destroyed precisely because they did have value: as potential competition for other airport facilities in the area.

Many properties that do not make a profit at a given point in time still have positive market value. That value can and should be factored into the valuation of property for takings purposes. If it is not, the government can game the system simply by condemning land in a down year, when business is bad and the property in question is operating at a loss. It can then swoop in and take the property for free. Surely that result doesn’t meet the Fifth Amendment’s requirement of “just compensation.”

The second serious flaw in the Federal Circuit ruling is the holding that potential future changes in government regulatory policy cannot be factored into the valuation of property, for takings purposes. As Epstein notes (and is more fully explained in the petition for certiorari filed by LTP’s lawyers, urging the Court to take the case), there was good reason to expect that the Wright Amendment might be repealed—or at least modified—even aside from the 2006 WARA legislation. Even if it is improper for LTP to factor in the liberalization enacted by WARA itself, it surely was essential to consider the preexisting likelihood of reform.

In modern times, government regulates almost every type of land use. It stands to reason that the market value of property will often include anticipated future changes in the regulatory regime. Sometimes, that reality will actually work to the advantage of the government (in cases where the market expects future regulatory changes to reduce the property’s value). But in other cases—including this one—the market reasonably anticipates future changes that are likely to increase the property’s value. Either way, an accurate assessment of market value requires consideration of anticipated regulatory change.

Such analysis is necessarily probabilistic. Market actors’ assessment of future regulatory trends could be wrong. But the same is true of many other elements that factor into valuation, such as anticipated future market demand for a given property or the products it produces. For example, the value of farmland is in large part dependent on the anticipated future value of the crops it generates. Market participants can and do sometimes get such predictions wrong. But that does not mean that estimated future value should be ignored in calculating takings compensation.

While not as significant as its other two errors, the Federal Circuit also erred in concluding that LTP does not have a”physical takings” claim against the federal government arising from the destruction of its twelve terminals. Judge Dyk concludes that the federal government was not really involved in the physical taking, because the actual destruction was carried out by the City of Dallas. To my mind, this ignores the way in which Dallas, Forth Worth, the federal government, and two private airlines were all part of a common cabal, whose scheme to suppress competition could not have been carried out without the aid of legislation passed by Congress. Richard Epstein explains the point well in an amicus brief he authored on behalf of the Institute for Justice (a libertarian public interest law firm):

The Five-Party Agreement proves the obvious conclusion that the parties were in league to limit the exposure of the United States to any takings claim by declining to make the U.S. a full partner on the face of the agreement. But the U.S. was a full partner: It authorized the entire scheme, allowing the parties to escape the antitrust laws. It mandated the reduction in gates. Section 5(d)(1) of WARA explicitly stated that the FAA could not undertake actions “inconsistent” with the agreement or in any way “challenge” its legality.

If the five parties and the federal government are able to get away with this subterfuge, it is possible that the feds might use similar tricks to escape liability in future takings cases.

For reasons well-explained in LTP’s cert petition, the big flaw in the Federal Circuit’s ruling  is that it is at odds with existing Supreme Court precedent on the first two points discussed above. The Court has never issued a definitive ruling on exactly how to weigh anticipated future regulatory changes (an issue it could use this case to address). But it has certainly made clear that compensation is determined by “what a willing buyer would pay in cash to a willing seller.” That amount unavoidably often incorporates consideration of potential future regulatory changes.

Normally, the Court does not take cases simply for the purpose of correcting errors by lower courts. There are just too many such errors for the justices to address more than a small fraction of them. But this one is worth nipping in the bud because it will otherwise set a dangerous precedent.

The Federal Circuit has jurisdiction over appeals of all takings cases filed against the United States. If the Supreme Court allows the Love Terminal decision to stand, its errors will become binding precedent for all future takings cases against the federal government unless and until the Supreme Court decides to overrule it. That strikes me as a compelling reason to deal with this error sooner rather than later.

Overruling Love Terminal would not necessarily require the Supreme Court to reinstate the full $133 million compensation awarded by the trial court. There is plenty of room for reasonable disagreement over exactly how to value LTP’s property. What matters most from the standpoint of the public interest is correcting the two major errors made by the Federal Circuit, that might otherwise set a dangerous precedent for future cases.

NOTE: For those interested, the Inverse Condemnation blog has links to the cert petition and lower court decisions in the case here. The Federalist Society has posted a video of its recent panel on the case, featuring legal scholars George Priest (Yale) and Peter Byrne (Georgetown), prominent attorney Elizabeth Papez (Gibson Dunn), and an introduction by George Will. Prof. Byrne offered an insightful defense of the result reached by the Federal Circuit. But even he largely avoided trying to justify its problematic reasoning on the two key points discussed above.

 

 

from Latest – Reason.com http://bit.ly/2YY9QFt
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“Largest Foreign Bribery Case In History” Claims New Scalp: Former Pemex CEO

Authored by Don Quijones via WolfStreet.com,

His lawyer suggests if the price is too high, he may be willing to take his friend, former president of Mexico, down with him…

Emilio Lozoya, a former chief executive of state oil company Petróleos Mexicanos (Pemex), was issued with an arrest warrant on Wednesday for financial irregularities, in particular his alleged dealings with scandal-plagued Brazilian construction firm Odebrecht.

Lozoya, formerly a one-time senior election campaign advisor to Mexico’s current president, Enrique Peña Nieto, is accused of receiving “tips” from Odebrecht worth some $10 million in exchange for his support in obtaining public work contracts. The money allegedly passed through shell companies in the British Virgin Islands before coming to rest in private bank accounts belonging to Lozoya in Switzerland, Liechtenstein, and Monaco.

Lozoya is one of countless public figures and business leaders in over a dozen Latin American and African countries, including Venezuela, Colombia, Argentina, Peru, Angola and Mozambique, to be accused of having his pockets lined by Brazil’s largest construction company. Some of those figures have even ended up in jail, including the former CEO of Odebrecht, Marcelo Odebrecht, and former Brazil president Luiz Inacio Lula da Silva, who is accused of accepting money from Odebrecht for his family’s vacation home.

The scandal has done extensive damage to Brazil’s state-owned oil behemoth Petrobras and has so far cost Odebrecht $2.6 billion in fines, $2.39 billion of which went to Brazil, $93 million to the U.S. and $116 million to Switzerland.

But in Mexico the investigation into Lozoya’s alleged acceptance of financial inducements seemed to be going nowhere — perhaps no surprise given the former attorney general, Raúl Cervantes Andrade, is a very close friend of President Peña Nieto, who is in turn a very close friend of Lozoya’s. But now that Mexico has a new government and a new attorney general that have pledged to combat corruption at Pemex, that friendship may be about to be seriously tested as Lozoya threatens to drag Peña Nieto with him through the dirt.

“Nothing in this country moved unless there were instructions from the president,” Lozoya’s lawyer, Javier Coello said on Wednesday, adding that the ministries of finance, economy and energy all had seats on the company’s board.

Lozoya was CEO of Pemex from 2012 to 2016, during which time the company underwent a dramatic deterioration in its already poor financial performance. By early 2016 the group’s total sales had plummeted by 21%, its annual operating losses had soared to an eight-decade high of almost $30 billion, and its total debt load had grown from $64 billion in 2012 to $106 billion now.

Obviously, this was not all one man’s fault. Between 2014 and mid-2016 the price of oil plummeted, crippling the finances of many oil producing economies. The Mexican peso lost almost a third of its value against the dollar during this period.

There are a host of other reasons for Pemex’s decline, including chronic mismanagement, lack of vision, severe budget cuts, shrinking oil reserves, lack of investment resulting in poor or obsolete infrastructure, negligence and the huge tax burdens the government imposed on it in the years preceding Mexico’s oil reforms, while lavishing foreign companies with massive fiscal incentives to invest in Mexican oil fields. But there’s an even bigger reason: corruption.

Simple, plain, white-collar corruption. Or what we like to call Petro-Plunder.

A perfect case in point was the decision by Pemex’s senior management to splash out $665 million on the repurchase of two fertilizer plants that Pemex had sold to private investors many years earlier, one of which was not even close to being operational — and in fact still isn’t — while the other one operated well below capacity. This week, Alonso Ancira, the owner of the Mexican steel company that sold the inoperative plant back to Pemex, was arrested in Spain for selling the firm at a price ten times higher than its real value.

Before the purchase of the fertilizer plants, international auditors warned Pemex’s board of their dire state, but the company went ahead with the purchase anyway. Such reckless lavishness was a constant feature of Lozoya’s tenure as CEO of Pemex. As Wilbur Matthews, founder of Texas-based Vaquero Global Investment, told Reuters, “The way they were conducting business in … [those] years did not make any sense at all.” Unless, of course, their prime, or sole, guiding principle was self-enrichment.

In the short space of just three and a half years the ranks of senior managers and administrators on the company’s payroll tripled. Despite Pemex’s growing losses those managers awarded themselves generous salary rises and lucrative perks, including three executive planes and a helicopter, and 911 company cars and SUVs.

The planes and helicopter, personally requested by Lozoya himself, were supposed to be deployed in the fight against the mass theft of oil by armies of amateur opportunists and some of Mexico’s most ruthless and organized drug gangs, which is now a multi-billion dollar business in Mexico; instead, they were reportedly used to shuttle Lozoya and his fellow executives to and from luxury resorts in Mexico and the United States, at public expense (since Pemex is state-owned).

Now, Lozayo, no longer protected by his connections to government, could finally pay a price for the white collar crimes he is alleged to have committed. And if his lawyer’s latest comments are any indication, if that price ends up being too high, he may be willing to take his friend, the former president of Mexico, down with him.

via ZeroHedge News http://bit.ly/2YYMCPA Tyler Durden

The Supreme Court Should Take the Love Terminal Takings Case

Love Field.

The Supreme Court is now considering whether it wants to review Love Terminal Partners v. United States, an important takings case decided by the Federal Circuit last year. The odds against any given case being taken by the Court are almost always high. But I hope this one beats them. If allowed to stand, the Love Terminal ruling would have dangerous implications for many future cases involving takings claims against the federal government. NYU/University of Chicago law professor Richard Epstein—probably the nation’s leading takings scholar—has a good description of the somewhat convoluted facts of the case:

The deregulation movement of the late 1970s had its intended consequence of hastening competition among airlines. But it also created a backlash in one market, Dallas-Fort Worth, located in the backyard of [future] Speaker of the House Jim Wright. Wright feared that vigorous competition to the new Dallas/Fort Worth airport (DFW) would come from the Love Field airport, the home of the upstart Southwest Airlines, which was now poised for the first time to expand operations into the interstate market. Wright thought that flights from Love Field would reduce the air traffic at DFW, which in turn would reduce the revenues needed to fund the debt service on DFW bonds. So in 1979, he induced Congress to pass the Wright Amendment, which perversely restricted all flights out of Love Field outside of Texas and four contiguous states—Arkansas, Louisiana, New Mexico, and Oklahoma—to aircraft that had 56 or fewer seats….

By 2004, Southwest mounted an effective campaign to “free Love Field,” which prompted American Airlines to make Southwest an offer it could not refuse. Both companies, the two airlines concluded, would be better off by cartelizing the market by dividing a limited number of gates at Love Field and DFW between them. In order to put this plan into action, however, the two airlines, the DFW Airport Authority, and the two cities (Dallas and Fort Worth) had to reduce the capacity of Love Field. They decided to do so by getting rid of twelve state-of-the-art gates—six at the main terminal and six on Lemmon Avenue—serving Love Field, which were owned by the company Love Terminal Partners (LTP). Flights from these gates could crater the American/Southwest alliance. So these five parties (Southwest, American Air, Dallas, Fort Worth, and DFW) prevailed on Congress in October 2006 to pass the Wright Amendment Reform Act (WARA) which provided that “The City of Dallas shall reduce as soon as practicable, the number of gates available for passenger air service at Love Field to no more than 20 gates. Thereafter, the number of gates available for such service shall not exceed a maximum of 20 gates.” And shortly thereafter, Dallas condemned LTP’s gates and promptly razed them. That’s one way to ground the competition.

Sadly, an antitrust suit that LTP filed against the Five Parties Agreement was blocked on the ground that those laws were overridden when Congress blessed the deal under WARA. At this point, LTP had only one option, which was to seek just compensation for its demolished gates. In two careful opinions, in 2011 and 2016, Judge Margaret Sweeney in Federal Claims Court awarded LTP $133.5 million for the physical destruction of the gates. But LTP’s case then crashed unexpectedly on appeal when, in 2018, Judge Timothy Dyk of the Federal Circuit upended the entire operation. Judge Dyk insisted that zero compensation was required for the simple reason that LTP could not prove that the gates in question had any market value prior to their destruction: No party is entitled to compensation for the destruction of worthless property.

As Epstein and others point out, the Federal Circuit decision sets a dangerous precedent in two ways. First, the main reason why Judge Dyk concludes that LTP’s property rights had no value is that it was not making a profit at the time of the taking. But that ignores the fact that property that isn’t making any profit at time X still has value because it might become profitable in the future. There was good reason to think that the gates owned by LTP would become more profitable over time. As Epstein points out, “we know that the zero valuation put on the property by Judge Dyk has to be wrong, because if the Lemmon Avenue gates were worthless, why would the five parties secure the passage of WARA to authorize their destruction?” LTP’s competitors wanted the gates destroyed precisely because they did have value: as potential competition for other airport facilities in the area.

Many properties that do not make a profit at a given point in time still have positive market value. That value can and should be factored into the valuation of property for takings purposes. If it is not, the government can game the system simply by condemning land in a down year, when business is bad and the property in question is operating at a loss. It can then swoop in and take the property for free. Surely that result doesn’t meet the Fifth Amendment’s requirement of “just compensation.”

The second serious flaw in the Federal Circuit ruling is the holding that potential future changes in government regulatory policy cannot be factored into the valuation of property, for takings purposes. As Epstein notes (and is more fully explained in the petition for certiorari filed by LTP’s lawyers, urging the Court to take the case), there was good reason to expect that the Wright Amendment might be repealed—or at least modified—even aside from the 2006 WARA legislation. Even if it is improper for LTP to factor in the liberalization enacted by WARA itself, it surely was essential to consider the preexisting likelihood of reform.

In modern times, government regulates almost every type of land use. It stands to reason that the market value of property will often include anticipated future changes in the regulatory regime. Sometimes, that reality will actually work to the advantage of the government (in cases where the market expects future regulatory changes to reduce the property’s value). But in other cases—including this one—the market reasonably anticipates future changes that are likely to increase the property’s value. Either way, an accurate assessment of market value requires consideration of anticipated regulatory change.

Such analysis is necessarily probabilistic. Market actors’ assessment of future regulatory trends could be wrong. But the same is true of many other elements that factor into valuation, such as anticipated future market demand for a given property or the products it produces. For example, the value of farmland is in large part dependent on the anticipated future value of the crops it generates. Market participants can and do sometimes get such predictions wrong. But that does not mean that estimated future value should be ignored in calculating takings compensation.

While not as significant as its other two errors, the Federal Circuit also erred in concluding that LTP does not have a”physical takings” claim against the federal government arising from the destruction of its twelve terminals. Judge Dyk concludes that the federal government was not really involved in the physical taking, because the actual destruction was carried out by the City of Dallas. To my mind, this ignores the way in which Dallas, Forth Worth, the federal government, and two private airlines were all part of a common cabal, whose scheme to suppress competition could not have been carried out without the aid of legislation passed by Congress. Richard Epstein explains the point well in an amicus brief he authored on behalf of the Institute for Justice (a libertarian public interest law firm):

The Five-Party Agreement proves the obvious conclusion that the parties were in league to limit the exposure of the United States to any takings claim by declining to make the U.S. a full partner on the face of the agreement. But the U.S. was a full partner: It authorized the entire scheme, allowing the parties to escape the antitrust laws. It mandated the reduction in gates. Section 5(d)(1) of WARA explicitly stated that the FAA could not undertake actions “inconsistent” with the agreement or in any way “challenge” its legality.

If the five parties and the federal government are able to get away with this subterfuge, it is possible that the feds might use similar tricks to escape liability in future takings cases.

For reasons well-explained in LTP’s cert petition, the big flaw in the Federal Circuit’s ruling  is that it is at odds with existing Supreme Court precedent on the first two points discussed above. The Court has never issued a definitive ruling on exactly how to weigh anticipated future regulatory changes (an issue it could use this case to address). But it has certainly made clear that compensation is determined by “what a willing buyer would pay in cash to a willing seller.” That amount unavoidably often incorporates consideration of potential future regulatory changes.

Normally, the Court does not take cases simply for the purpose of correcting errors by lower courts. There are just too many such errors for the justices to address more than a small fraction of them. But this one is worth nipping in the bud because it will otherwise set a dangerous precedent.

The Federal Circuit has jurisdiction over appeals of all takings cases filed against the United States. If the Supreme Court allows the Love Terminal decision to stand, its errors will become binding precedent for all future takings cases against the federal government unless and until the Supreme Court decides to overrule it. That strikes me as a compelling reason to deal with this error sooner rather than later.

Overruling Love Terminal would not necessarily require the Supreme Court to reinstate the full $133 million compensation awarded by the trial court. There is plenty of room for reasonable disagreement over exactly how to value LTP’s property. What matters most from the standpoint of the public interest is correcting the two major errors made by the Federal Circuit, that might otherwise set a dangerous precedent for future cases.

NOTE: For those interested, the Inverse Condemnation blog has links to the cert petition and lower court decisions in the case here. The Federalist Society has posted a video of its recent panel on the case, featuring legal scholars George Priest (Yale) and Peter Byrne (Georgetown), prominent attorney Elizabeth Papez (Gibson Dunn), and an introduction by George Will. Prof. Byrne offered an insightful defense of the result reached by the Federal Circuit. But even he largely avoided trying to justify its problematic reasoning on the two key points discussed above.

 

 

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US Confirms It Updated Maps To Show Disputed Golan Heights As Israeli

After Israel’s Prime Minister Benjamin Netanyahu on Thursday showed off a map of Israel he received from the White House signed by President Trump, the State Department has confirmed it has officially changed its maps to show the disputed Golan Heights as Israeli territory.

The Netanyahu photo immediately generated controversy, given the US president had written the word “Nice” beside an arrow pointing to the Golan, which appeared as part of Israel. The prime minister boasted this was one of the early “updated” versions which the president had autographed. 

Via the AFP: Prime Minister Benjamin Netanyahu displays a map of Israel indicating the Golan Heights are inside the state’s borders, signed by US president Donald Trump on May 30, 2019.

Trump’s son-in-law and senior adviser Jared Kushner gifted him the map while touring the region ahead of a US-sponsored economic peace summit set to be held in Bahrain in late June, during which Trump’s so-called “Deal of the Century” plan will be unveiled, designed to achieve economic stability for the Palestinians as part of a peace plan. 

The Palestinians under President Mahmoud Abbas have declared their intent to boycott the summit, saying they weren’t even consulted and don’t agree with what’s on the agenda. And crucially, China and Russia will also stay away in solidarity with the Palestinian side, but also presumably to flex their muscles in the Middle East. 

“I know we have for sure… we updated the maps,” a State Department spokesperson said later in the day when pressed on if the US has formally changed the maps.

The White House bestowed US formal recognition on the disputed Syrian-claimed Golan as Israeli territory in late March days after Trump issued a single bombshell tweet which announced “it is time” for the US to “fully recognize Israel’s sovereignty” over the Golan Heights. 

Israel fully annexed the Golan Heights in 1981 after capturing it from Syria during the Six-Day War of 1967. The United Nations has never recognized Israeli annexation and settlement there, but has repeatedly condemned it — all of which has resulted in a Syria-Israel state of war ever since. 

via ZeroHedge News http://bit.ly/2W1ZfaN Tyler Durden