Defending a Business’s Investment in a Heavily Regulated Industry
This case involved a ship owner, American Pelagic Fishing Co. (“American Pelagic”), who made a substantial investment in a large fishing ship based on a regulatory scheme that encouraged mackerel and herring fishing and obtained the required federal permits Rival fishing interests succeeded in having the regulations changed, thereby destroying the American Pelagic’s investment. American Pelagic sued the United States in the Court of Federal Claims for a regulatory taking. It prevailed in that forum, in part because of the targeted nature of the legislation that retroactively revoked its permits. The United States appealed this decision to the United States Court of Appeals for the Federal Circuit, and the Federal Circuit reversed primarily on the basis that because, prior to American Pelagic’s investment, the federal government already had complete sovereignty over the maritime zone at issue in the case (the “Exclusive Economic Zone”), American Pelagic had no cognizable property interest and, accordingly, is entitled to no relief. Potentially, this decision could be read to indicate that investors in any heavily regulated industry have no protectible property interest in their investments.
On October 7, 2004, NELF filed an amicus brief in support of American Pelagic’s request for a rehearing of this matter en banc. NELF argued, first, that the Federal Circuit’s decision represents poor public policy, as it would discourage investment in highly regulated industries. Second, NELF argued that the panel’s decision in this case was directly contrary to the recent Federal Circuit decision in Cinega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003), which held, inter alia, that “the fact that [an] industry is regulated [is not] dispositive,” and that, the mere fact of heavy regulation, “does not mean that all regulatory changes are reasonably foreseeable or that regulated businesses can have no reasonable investment-backed expectations whatsoever.” The Federal Circuit denied reconsideration en banc. American Pelagic petitioned for certiorari and NELF submitted a supportive amicus brief that focused on the Federal Circuit’s misunderstanding of the limited nature of the federal government’s sovereign rights in the Exclusive Economic Zone. On June 27, 2005, the Supreme Court denied certiorari.
This case involved a ship owner, American Pelagic Fishing Co. (“American Pelagic”), who made a substantial investment in a large fishing ship based on a regulatory scheme that encouraged mackerel and herring fishing and obtained the required federal permits Rival fishing interests succeeded in having the regulations changed, thereby destroying the American Pelagic’s investment. American Pelagic sued the United States in the Court of Federal Claims for a regulatory taking. It prevailed in that forum, in part because of the targeted nature of the legislation that retroactively revoked its permits. The United States appealed this decision to the United States Court of Appeals for the Federal Circuit, and the Federal Circuit reversed primarily on the basis that because, prior to American Pelagic’s investment, the federal government already had complete sovereignty over the maritime zone at issue in the case (the “Exclusive Economic Zone”), American Pelagic had no cognizable property interest and, accordingly, is entitled to no relief. Potentially, this decision could be read to indicate that investors in any heavily regulated industry have no protectible property interest in their investments.
On October 7, 2004, NELF filed an amicus brief in support of American Pelagic’s request for a rehearing of this matter en banc. NELF argued, first, that the Federal Circuit’s decision represents poor public policy, as it would discourage investment in highly regulated industries. Second, NELF argued that the panel’s decision in this case was directly contrary to the recent Federal Circuit decision in Cinega Gardens v. United States, 331 F.3d 1319 (Fed. Cir. 2003), which held, inter alia, that “the fact that [an] industry is regulated [is not] dispositive,” and that, the mere fact of heavy regulation, “does not mean that all regulatory changes are reasonably foreseeable or that regulated businesses can have no reasonable investment-backed expectations whatsoever.” The Federal Circuit denied reconsideration en banc. American Pelagic petitioned for certiorari and NELF submitted a supportive amicus brief that focused on the Federal Circuit’s misunderstanding of the limited nature of the federal government’s sovereign rights in the Exclusive Economic Zone. On June 27, 2005, the Supreme Court denied certiorari.
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