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SUPREME COURT DOCKET REPORT


 

1999 Term, Number 4 / October 12, 1999

The Supreme Court granted certiorari today in two cases of interest to the business community. Amicus briefs in support of the petitioners in these cases are due on November 26, 1999; amicus briefs in support of the respondents are due on December 27, 1999. Any questions about these cases should be directed to Donald Falk (202-263-3245) or Eileen Penner (202-263-3242) in our Washington office.

1. Taylor Grazing Act — Livestock Grazing Privileges and Range Improvements. The Taylor Grazing Act ("TGA") authorizes the Secretary of Interior to designate public lands "chiefly valuable for grazing and raising forage crops" and to issue "permits to graze livestock" in these "grazing districts." 43 U.S.C. §§ 315, 315b. Because applicants for permits historically have outnumbered available rangelands, the TGA charges the Secretary with allocating grazing rights according to set priorities. Livestock owners are entitled to such "preference" in obtaining permits "as may be necessary to permit the proper use of lands." The TGA also states that "[s]o far as consistent with the purposes of [the Act], grazing privileges recognized and acknowledged shall be adequately safeguarded." Id. §§ 315b, 315m. The Supreme Court granted certiorari today in Public Lands Council v. Babbitt, No. 98-1991, to determine whether the Secretary's 1995 grazing regulations — which replace historically adjudicated "grazing preferences" with variable "permitted uses" — are consistent with these statutory mandates. The Court will also pass on the validity of two other Department of Interior regulations: a "range improvements" rule, which grants the United States title to future structural range improvements constructed and paid for by private grazing permittees; and a rule providing that "permits to graze livestock" need not be limited to persons "engaged in the livestock business." 43 U.S.C. § 315b.

For decades prior to 1995, the Secretary interpreted the term grazing "preference" as the maximum quantity of forage that a permittee could graze in a given year. Grazing preferences were adjudicated on a case-by-case basis and, once determined, carried over from one permit term to the next. Although permittees' allotments of grazable forage might vary annually from their preference — typically, on account of weather-related changes in the range's condition — the preference served to stabilize the industry by promoting orderly use of the range and guaranteeing permittees the right to graze a relatively predictable number of stock. Thus, lenders commonly accepted ranchers' preferences as security for loans financing their operations.

In 1995, Secretary of Interior Bruce Babbitt redefined "grazing preference" to mean only "a superior or priority position against others for the purpose of receiving a grazing permit." 43 C.F.R. § 4100.0-5 (1995). Whereas the prior rule tied grazing preferences to the historical adjudications of the amount of forage a given property could sustain, the new rule regulates forage as a "permitted use," defined as the forage allocated by an applicable "land use plan." Id. § 4100.0-5. Although permittees retain a right to preference when their permits come up for renewal, the amount that they historically have been entitled to graze is now subject to change on the basis of discretionary land-use planning decisions. Not surprisingly, many lenders will no longer consider grazing permits as security for loans.

Petitioners, a coalition of nonprofit ranching and farming organizations whose members are among the Nation's 28,000 grazing permittees, brought suit to challenge the Secretary's 1995 "preference" and "permitted use" rules, as well as various other grazing regulations. The district court in Wyoming, Judge Brimmer, struck down the regulations and enjoined their enforcement. 929 F. Supp. 1436 (D. Wyo. 1996). Emphasizing that the TGA requires that "'recognized and acknowledged'" grazing privileges "'be adequately safeguarded'" (id. at 1441 (quoting 43 U.S.C. § 315b)), the court held that the 1995 rule impermissibly would allow the Secretary to change a permittee's grazable forage "[w]ith a mere stroke of his pen" (id. at 1441).

A divided panel of the Tenth Circuit reversed. 167 F.3d 1287 (1998). The majority reasoned that Congress's mandate that grazing privileges "be adequately safeguarded" is satisfied "to the extent that parties aggrieved by the Secretary's decisions have the right to challenge them." Id. at 1302. Judge Tacha dissented. Because land use plans are designed to accommodate a host of competing uses, she explained, the result of the 1995 "permitted use" rule "is that the agency has nearly unfettered discretion to * * * increase or decrease permittees' maximum allowed forage use." Id. at 1314. The Tenth Circuit denied rehearing by a vote of 5-5.

This case will be of interest to all businesses that hold leases or permits to use public lands — including ranch, mining and forestry operations — as well as to the lending institutions that finance such operations. The Supreme Court's decision will address the scope of the Department of Interior's powers over public lands and likely will determine both whether grazing permits remain viable as security for agricultural financing and whether permittees will retain significant incentives to make structural improvements to the public rangelands.

Mayer, Brown & Platt represents the Petitioners.

2. Fifth Amendment Privilege Against Self-Incrimination — Use of Documents Obtained Pursuant to an Immunized Act of Production. The Supreme Court granted certiorari today in United States v. Hubbell, No. 99-166, to decide under what circumstances the act of producing subpoenaed documents constitutes a testimonial communication within the meaning of the Fifth Amendment and whether the contents of subpoenaed documents produced pursuant to an immunity order under 18 U.S.C. § 6003 are ever entitled to Fifth Amendment protection.

The Office of Independent Counsel served a subpoena duces tecum on Webster Hubbell, demanding production of business and financial records relating to Hubbell, his family, and his sole proprietorship. Hubbell resisted the subpoena by invoking his Fifth Amendment privilege against self-incrimination. The Independent Counsel obtained from the district court an order pursuant to 18 U.S.C. § 6003, compelling Mr. Hubbell to produce all responsive documents under protection of immunity. Hubbell complied with that order. The Independent Counsel then used the documents produced by Hubbell to secure an indictment against him on several tax-related charges.

Hubbell moved to dismiss the indictment, arguing that the Independent Counsel could not use the documents compelled under the grant of immunity to build a case against him. The Independent Counsel responded that Hubbell's production of the subpoenaed materials was not testimonial in nature — and thus did not implicate the privilege against self-incrimination — since the government already was aware of the existence of the general class of materials sought in the subpoena and of Hubbell's possession of those materials. The Independent Counsel also argued that even if Hubbell's act of producing the documents was sufficiently testimonial to be entitled to protection, the grant of immunity only prohibited the government from using Hubbell's compliance with the subpoena to establish the existence, location, and authenticity of the documents. According to the Independent Counsel, the grant of immunity did not bar the government from using the contents of the documents themselves, which were created prior to issuance of the subpoena.

The district court dismissed the indictment, agreeing with Hubbell that the indictment violated his Fifth Amendment privilege. 11 F. Supp. 2d 25 (D.D.C. 1998). While the court acknowledged that the Fifth Amendment generally does not protect the contents of documents that a witness has voluntarily prepared (id. at 35), it held that in Hubbell's case production of documents in response to the § 6003 immunity order amounted to a compelled testimonial admission that such incriminating documents existed (id. at 35-36) and that such compelled testimony infected the contents of the documents themselves.

The District of Columbia Circuit vacated the dismissal of the indictment and remanded with instructions to supplement the record in one respect. 167 F.3d 552 (1999). The court of appeals held that the production of documents in response to a subpoena is generally testimonial, communicating the facts that the documents exist, are possessed by the holder, are authentic, and are believed by the holder to be responsive to the subpoena. Id. at 567-568, 575. However, that testimony is entitled to Fifth Amendment protection only when it "communicates something of substance to the state." Id. at 568; see also id. at 576. Where the government already has knowledge of the information that would otherwise be conveyed by production, the Fifth Amendment is not implicated. Id. at 569. Thus, the court held, the disclosure of the existence of documents subpoenaed over a claim of privilege is a communication entitled to Fifth Amendment protection unless the government shows that it already knew "with 'reasonable particularity'" about the documents' existence and hence, the information disclosed by the compelled testimony was a "'foregone conclusion.'" Id. at 579 (quoting Fisher v. United States, 425 U.S. 391, 411 (1976)). Rejecting the view advanced by the Independent Counsel, the court observed that the government cannot satisfy its "reasonably particularity" burden by showing simply that it was aware that the defendant possessed the categories or classes of material identified in the indictment. Id. at 571.

The court of appeals directed the district court to apply the "reasonable particularity" standard on remand. Pending these further findings of fact, the District of Columbia Circuit declined to decide whether Hubbell's act of production was sufficiently testimonial to preclude the government's use of the contents of the documents, or any information derived therefrom, to prosecute Hubbell. However, the court did observe that any such use would be limited by the Supreme Court's decision in Kastigar v. United States, 406 U.S. 441 (1972), which held that a § 6003 immunity order must leave "the witness and the prosecutorial authorities in substantially the same position as if the witness had claimed the Fifth Amendment privilege.'" 167 F.3d at 582 (quoting Kastigar, 406 U.S. at 462)). In this regard, the court of appeals held that if the government fails to establish that either the existence or the defendant's possession of the subpoenaed material was indeed a "foregone conclusion," it would be prohibited from using not only the "testimony" flowing from the act of production, i.e., the facts of existence and possession, but also the otherwise nonprivileged contents of the documents, about which the government would not have known but for the compelled privileged testimony. Id. at 585.

The Supreme Court's grant of certiorari in this case provides the Court with an opportunity to clarify the "foregone conclusion" doctrine and whether Kastigar forbids the government's use of the contents of subpoenaed documents where the defendant's testimonial "act of production" has been compelled by a grant of immunity. This case is of obvious interest to members of the business community who may be targeted by a government subpoena seeking the production of business records, appointment calendars, and other documents in connection with white collar, securities, tax and other document-intensive investigations. If the Court adopts the views of the District of Columbia Circuit, the government would be limited in its ability to use documents obtained in exchange for a grant of immunity to build a case against those who produced them.



This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.




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