Opening day of the Supreme Court’s new term on Monday will focus on hearings about two kinds of property rights: the right to build on private property when that might lead to pollution of a nearby waterway (a modern dispute about the environment) and the right of state governments to take ownership of private financial items when the actual owners cannot be found (an issue with ancient roots going all the way back to the rights of the French and English monarchs in the 14th Century).
For the first time since March 2020, the Court’s hearings will be open to the public. The Court continued to hold hearings during the covid pandemic, but it did so remotely with the courthouse closed. However, as it did during the pandemic, the Court will continue to broadcast “live” the hearings’ audio (no video) on its homepage, supremecourt.gov The audio also will be broadcast by C-Span TV at its site, c-span.org/supremecourt
First hearing Monday: Sackett v. Environmental Protection Agency. The hearing is scheduled for one hour, beginning at 10 a.m.
Background: For more than 15 years, an Idaho couple and the federal government have been locked in a legal conflict over the couple’s plan to build a home near Priest Lake in Bonner County. The controversy has been to the Court once before; ten years ago, the Justices cleared the way for Michael and Chantell Sacket to sue the EPA after it claimed their plan might lead to pollution of a waterway in violation of the Clean Water Act of 1972.
Their .63-acre plot is not lakeside, but a part of it has soggy ground, which EPA considers to be wetlands that may carry pollutants of construction materials into a nearby drainage ditch or into a small stream that empties into a “waterway.” The agency has insisted that the Sacketts modify their plan to prevent pollution.
They returned to lower court, but then lost and are now pursuing a new appeal to the Justices. The EPA tried to head off Supreme Court review, arguing that it is no longer making demands on the couple and, in any event, is working on a new definition of what is a “waterway” protected under the 1972 law. The Court granted review anyway.
Congress passed the Clean Water Act to prevent pollution of the nation’s “navigable waters,” which the law defines as “the waters of the United States.” What that phrase means – especially as to wetlands — has been uncertain since the Supreme Court, splitting by a 4-1-4 vote in a 2006 decision in the case of Rapanos v. U.S., failed to muster a definitive majority behind a definition.
Three of the Justices still on the Court were among a group of four who would have ruled that the only thing that qualifies as a “waterway” covered by the law is a flowing stream or river and that a wetland is subject to the law only if it has a continuous surface connection to that kind of waterway. That was not a majority view. None of the other six Justices involved in that ruling remains on the Court.
In their new appeal, the Sacketts urged the Court to adopt the view of those four Justices in 2006, noting that such a definition would eliminate any authority for EPA to challenge their plan to build their home. A federal appeals court had adopted a definition more favorable to EPA, concluding that wetlands are subject to the federal law if they have a “significant nexus” to a navigable stream or lake. That court found that the wetlands on the property lay only 30 feet from a small stream that feeds into a creek that feeds into Priest Lake. The fact that a road separates the Sacketts’ property from the lake does not mean the wetlands are not adjacent to a waterway, that court concluded.
The question before the Court: In agreeing to hear the Sacketts’ appeal, the Justice bypassed their plea to adopt the more restrictive definition from the 2006 Rapanos case. Instead, it chose to decide whether the appeals court had adopted the right test for judging when wetlands are regulated under the federal law. That freed the Court to explore more widely the reach of the 1972 law.
Significance: In deciding to re-phrase a legal issue it is prepared to decide, which the Court is entirely free to do, it may have intended to signal that it regards this dispute as broader than the desire of the Sacketts to get permission to go ahead with their home-building project. While some Justices may have had sympathy for the Sacketts’ long legal struggle, the nation’s highest court does not sit just to resolve one discrete dispute.
There is a distinct possibility that some of the Justices view this case as another opportunity to test the newly established “major questions doctrine,” which limits the power of federal regularly agencies – like EPA – to adopt sweeping policies when they carry out laws passed by Congress.
Having been told that the EPA was working on a new approach of the “waters of the United States” phrasing in the Clean Water Act, some Justices may have wanted to use the Sacketts’ case to provide meaningful guidance without waiting to see what EPA actually does. Tomorrow’s hearing may help clarify where the Justices are headed on this issue.
Second hearing Monday: Delaware v. Pennsylvania and Wisconsin, combined with Arkansas (and other states) v. Delaware. These cases are joined for a one-hour hearing, to begin when the first hearing is over.
Background: These cases are what the Court calls “Original” cases, because they involve one of the specific kinds of legal disputes that the Constitution assigns solely to the Supreme Court to decide, with no action in lower courts. These two cases came under that Article III requirement because they are disputes between U.S. states.
Those who wrote the original Constitution were well aware of how the Congress that existed under the old Articles of Confederation had been unable to resolve disputes between states (there was no federal judiciary under that system), and so assigned that task directly to the new Supreme Court they were creating.
As is typical for Original cases, these two have taken a long time just to reach the hearing stage; they have been pending before the Justices since 2016. The Court, to assist it in considering the case, typically assigned to a lower federal judge – acting as a “special master” – the task of sorting out the facts and the legal issues and recommending a decision.
These cases have now reached the point where the Justices will react to the special master’s report, issued in June of last year – a report that favors the claims of the 30 states that are challenging the state of Delaware and urged the Justices to rule against Delaware.
At the center of the dispute is a concept, centuries old in the Western legal tradition, known as “escheat.” That word comes from Anglo-French roots, and is usually translated as “that which falls to one” or, less awkwardly, “taking custody of.” Its usage in 14th Century Europe meant that kings or queens, as sovereigns, became the owners of unclaimed lands or estates.
For nearly six decades in America, the Supreme Court has been dealing with the concept of “escheat” primarily when the unclaimed property was not in the form of land or buildings, but rather involved financial instruments or transfers – money orders, travelers’ checks, some bank checks – when the person or entity entitled to collect the money cannot be located.
There are three kinds of law that have helped sort out when a state government can claim ownership of such presumably abandoned financial rights.
First, each of the 50 states, plus Washington, D.C., and U.S. territories, has its own “escheat” laws that determine when an unclaimed property is deemed to have been abandoned, and thus subject to take over by the state, and controls the process. Second, the Supreme Court has fashioned federal “common law” legal principles regarding “escheat” – that is, court-made law, not enacted in legislation by Congress. Third, there is a special 1974 federal law passed by Congress. That law was prompted by a desire to avoid having one state – like Delaware – claiming windfalls of unclaimed property under the common-law principles established by the Supreme Court.
Delaware sometimes has been favored because it is the corporate home of so many business firms, and the home state of a company has often determined the outcome of an “escheat” dispute under the common-law approach.
The dispute between Delaware and 30 other states now turns on which state has the legal right to claim ownership of a particular form of online money transfer, known as a “Moneygram” (issued by a Texas company that has Delaware as its home state) when the supposed payee cannot be found. It appears that millions of dollars are at stake.
If a bank or other financial institution holds such a financial item and knows or can find out who is entitled to the money, that, of course, controls who can collect it. But when that person or entity is not known or cannot be found, there are three basic options to determine which state can “escheat” (become owner of) the item: (1) the state of the last known address of the purchaser, if known, or (2) the state where the issuer is incorporated, or (3) the state where the instrument was purchased.
The first of those two items were established (in that order) by a Supreme Court decision in 1965, and the third was enacted by Congress in 1974 in a law titled “Disposition of Abandoned Money Orders and Travelers Checks Act,” usually shortened as the ‘Federal Disposition Act,” or FDA. Recall that Congress enacted that law in direct response to complaints that the common-law approach heavily favored Delaware.
In the cases now before the Court, Delaware is claiming that it has the right to “escheat” the Moneygrams because that company is a Delaware corporation (item 2 above). The 30 other states are claiming that the FDA controls the outcome, so the state where those items were purchased (item 3 above) can claim the value of the Moneygrams.
The special master recommended that Delaware’s claim should fail, and the other states’ should win.
The special master also suggested that the Court not make any specific effort to define the scope of all of the words in the FDA, leaving that to future disputes based on different factual scenarios. On that specific point, the American Bankers Association and a group known as the Unclaimed Property Professionals (a group made up of institutions holding such financial items) have urged the Court to give more clarity by spelling out just what the FDA means.
The question before the Court: Does the 1974 law control the decision in this case, because the Moneygrams at issue clearly are the kind of financial instrument that that law was meant to cover, or does the Supreme Court’s common-law formulation control? Will the Court go beyond the specific recommendation of the special master, and clarify the scope of the FDA?
Significance: Uncounted millions of dollars’ worth of financial instruments remain in the hands of institutions that issued them or where they were deposited, and that alone makes the outcome here of major economic consequence.
Because of the breadth of this case, it also becomes more important that the Court lay down some clear-cut rules at least on what the FDA is to cover. But, because of the Court’s fundamental capacity to define federal common-law concepts, as it has done in this particular field since 1965, it does seem to have an opportunity here to make its own judgment about which states might be more entitled to claim the proceeds, so long as it does not openly diverge from what Congress has decreed in the FDA. It is a general legal concept that written statutory law displaces court-made common-law precepts on the same subject.
On Tuesday, the Court will hear the question of how much power the federal Voting Rights Act gives federal courts to require creation of congressional election districts to enhance the voting power of minorities. In a second case, it will consider whether military veterans should be allowed more time after they leave the service to claim benefits based on disability, if they miss a deadline to claim those benefits.
