California Court of Appeal decides Vaquero, an interesting private-delegation case

Banzai! Can surface rights owners control the rights of those who own the mineral rights underneath? In this case, yes.

|The Volokh Conspiracy |

About two weeks ago (Nov. 19, 2019), the California Court of Appeal decided Vaquero Energy, Inc. v. County of Kern, which has interesting implications for the constitutionality of delegation of power to private parties.

Basically, what if you own the mineral rights to a plot of land but someone else owns the surface rights, and you want an oil and gas permit? If the surface owner agrees with your site plan, you get an expedited 7-day permitting process. But if the surface owner disagrees with your site plan, you get a more expensive 120-day process. This is, in theory, supposed to promote cooperation between surface and mineral rights owners. But what it means is that the surface rights owner can slow you down enormously by denying his consent to your plan—and the surface rights owner can do so for purely self-interested reasons (like getting a lot of money out of you). Is this consistent with Due Process? Is this a forbidden delegation of permitting authority to private parties?

Answering this question requires making sense of some Supreme Court precedent—the classic cases are about a hundred years old, but the law is still good. These cases are Eubank v. Richmond (1912), Thomas Cusack Co. v. City of Chicago (1917), and Washington ex rel. Seattle Title Trust Co. v. Roberge (1926). Fortunately, I wrote an article discussing these issues — The New Private-Regulation Skepticism: Due Process, Non-Delegation, and Antitrust Challenges, published in the Harvard Journal of Law and Public Policy! The court asked for supplemental briefing on this particular issue, and I'm pleased that they found my analysis useful.

The Due Process analysis is at pp. 16-27 of the case (the earlier part of the case concerns an Equal Protection challenge, easily disposed of under the rational basis test). The court mainly upheld the scheme because the surface owners don't have the ability to finally determine whether the oil and gas plans can go forward—all they can do is trigger a governmental process where the government itself will decide. That makes the scheme look more like Fuentes v. ShevinGibson v. Berryhill, and New Motor Vehicle Board of California v. Orrin W. Fox Co.—I discuss all three in my article as examples of the "mandatory-discretionary distinction", and the court discusses New Motor Vehicle Board.

I'm not taking any position here on whether the court got it right, but these sorts of delegations of power to private parties (for instance, in zoning and similar contexts) are fairly common, and courts need to sort out Due Process challenges on a regular basis. (Often, courts confuse challenges to private regulation based on the non-delegation doctrine and based on the Due Process Clause—the non-delegation doctrine didn't apply here because this is a state law case; the non-delegation doctrine applies only to delegations by Congress, while the Due Process Clause applies to all levels of government.) Glad to see someone's thinking about these things!

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  1. Suppose if a married couple agree on divorce terms, there’s an expedited process involving a quick pretty much rubber-stamp divorce decree Without a lot of fuss. But if they disagree, there’s a much longer process involving a trial plus preliminary hearings and formal legal proceedings taking weeks or months and costing thousands of dollars in lawyer’s fees.

    Under this theory, would that also be unconstitutional delegation of a state’s decision-making powers to a private party?

    If it wouldn’t be, what makes the two cases different?

    1. I can think of one immediate distinction.

      I don’t know much about family law, but I gather that today, with no-fault divorce, generally any party to a marriage can get the marriage dissolved without having to show anything in particular. Are we constitutionally entitled to such a regime? I’m not aware of cases on point, though again I may be wrong. But I’m assuming that it’s within a state’s discretion to have limits on the dissolubility of marriage.

      If that’s the case, there’s nothing presumptively unconstitutional about letting your spouse control whether (or how easily) you can get a divorce; those are just the terms of the relationship. The spouse isn’t just a random guy; it’s a special person with whom you have a relationship.

      By contrast, if we allow your neighbors to control your land-use decisions (not just slow them down procedurally as in this case, but actually veto your decisions), and there are no standards to control their self-interest, that is presumptively unconstitutional, because the constitutional baseline is that you can do what you want with your property unless some valid decisionmaker says otherwise.

      So that’s a clear distinction between land use and divorce.

      Now you might say, isn’t it significant here that you have surface rights and mineral rights on the same plot of land? Isn’t the surface owner more than just a random neighbor, and more like a spouse because there’s an inherent connection between surface and mineral rights?

      I’d need to know more about the underlying property law. But I presume that if I use my mineral rights to adversely affect your surface rights, you already have sufficient legal recourse against me. So here, we’re talking about a mineral exploitation plan that wouldn’t adversely affect your surface rights — which would put you in no better a position than the random neighbor. And even if it did adversely affect your surface rights, we could write the statute differently, where your ability to object is limited by your ability to show an adverse effect.

  2. May be worth mentioning here that the California constitution does include a provisions that prevents the Legislature from delegating local gov’t authority to a private person. That seems inapplicable in this case because a county ordinance was doing the delegating.

    Art. XI § 11. Delegation of local powers; Deposit and investment of public funds

    (a) The Legislature may not delegate to a private person or body power to make, control, appropriate, supervise, or interfere with county or municipal corporation improvements, money, or property, or to levy taxes or assessments, or perform municipal functions.

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