Cory v. Western Oil & Gas Assn.

PETITIONER: Cory
RESPONDENT: Western Oil & Gas Assn.
LOCATION: Cleburne City Hall

DOCKET NO.: 84-16
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 471 US 81 (1985)
ARGUED: Feb 26, 1985
DECIDED: Mar 27, 1985

ADVOCATES:
Dennis M. Eagan - on behalf of the Appellants
Philip K. Verleger - on behalf of the Appellees

Facts of the case

Question

Media for Cory v. Western Oil & Gas Assn.

Audio Transcription for Oral Argument - February 26, 1985 in Cory v. Western Oil & Gas Assn.

Warren E. Burger:

We will hear arguments next in Cory against Western Oil and Gas.

Mr. Eagan, you may proceed whenever you are ready.

Dennis M. Eagan:

Mr. Chief Justice, and may it please the Court:

This case is here on appeal from the decision of the Court of Appeals for the Ninth Circuit.

The lower court held invalid a leasing regulation of the California State Lands Commission.

That regulation authorized the negotiation of rent for leases of state property based upon the volume of commodities crossing the leased land.

The regulation did not prescribe rates.

The lower court concluded that such a form of rent, regardless of amount, constitutes an unreasonable burden on commerce.

It further concluded that such a form of rent constituted a tariff when used with regard to lessees engaged in interstate or foreign commerce.

And, finally the Ninth Circuit held that the Commission was limited in recovering on its ground leases not a return on its ground leases but only a recovery of the cost, its out-of-pocket costs, when charging rent.

This is a remarkable decision.

The decision accords second class status to the state as a lessor.

It means that the state in many instances will be constrained to take less in the way of rent than would another lessor in similar circumstances.

Warren E. Burger:

Do you think the result would have been the same under the reasoning of the Court of Appeals if the measurement had not been related to traveling over California territory but simply a percentage of the volume of material taken out?

Dennis M. Eagan:

Well, of course, Your Honor, this is one fact that we would like to drive home to the maximum extent possible.

The charge is not made merely for the entry of goods into the political jurisdiction of California.

It is tied explicitly only to those parcels of property limited in number which are made... privately appropriated by the lessees to their own use for commercial gain.

I really don't know what type of rent the Ninth Circuit would have considered permissible other than a non-variable, flat annual rent such as the Commission also charges.

There is a final line tossed off in the opinion concerning this is not to say that all forms of volumetric rent are forbidden, but there is really no analytical clue in the decision of the Ninth Circuit concerning what type of variable rent it would have found permissible.

It seems to me the thrust of the Ninth Circuit's decision is that any form of variable rent, at least with regard to the state and when it deals with interstate or foreign lessees, any such variable rent is prohibited to them.

William J. Brennan, Jr.:

May I ask, Mr. Eagan, is the rent calculated on the basis of volume of oil, is that it, in transit?

Dennis M. Eagan:

Well, another point, Your Honor, it is not limited to oil.

That is one commodity.

William J. Brennan, Jr.:

Or whatever goods, generally yes.

Dennis M. Eagan:

In this case, given the Plaintiffs, we are talking about oil and petroleum products.

Let me just tell you what the facts are.

I don't know quite the direction Your Honor is taking with the question.

The goods--

William J. Brennan, Jr.:

Well, you didn't expressly mention the export/import clause, did you?

Dennis M. Eagan:

--Yes, I did, Your Honor.