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Rendering Unto Caesar

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					                    by Thomas Brom




Rendering Unto Caesar
                                                                                           than insisting on a trial. But there are




O
                    N A TRIP TO THE UNITED KINGDOM IN SEPTEMBER,
                    Pope Benedict XVI publicly apologized for not acting                   canonical trials going on now.”
                    swiftly to stop the sexual abuse of children by priests in             CANONICAL TRIALS
                    Europe and the United States. “For all of this,” Benedict              Canonical proceedings are inquisitional
                    said, “We are in a moment of penitence.”                               rather than adversarial, adjudicated by
                                                                                           a presiding judge and two collegiate
    But the Pope’s apology came on the      wrongs. Frictions between the systems          judges. Criminal allegations contested
heels of a reassertion of the Roman         are unavoidable.                               by the accused are conducted accord-
Catholic Church’s authority to adjudi-          “Sure, there’s tension,” says Jeff R.      ing to the Code of Canon Law. (1983
cate charges of clergy sexual abuse         Anderson, a principal in Jeff Anderson         CODE c. 1501–1670; c. 1717–1731;
within its canonical forums. In April       & Associates in St. Paul, Minnesota.           and c. 1732–1739.)
the Holy See’s Congregation for the         “Sometimes there are parallel investiga-           According to DiNardo, a prosecutor—
Doctrine of the Faith (CDF) posted on       tions going on, with competing depo-           called the Promoter of Justice—presents
the Vatican’s website a “Guide to Under-    sitions. How do you protect witnesses          evidence that has been gathered by an
standing Basic CDF Procedures Con-          in those situations? In one recent case,       Auditor through witnesses, documents,
cerning Sexual Abuse Allegations.”
Months later it released new guide-         “There is an inherent conflict of interest.
lines, “Norms Concerning the Most
Serious Crimes,” to update the Vatican’s     They may call it a criminal proceeding,
procedures for prosecuting clergy sex-       but it’s really an obstruction of justice.”
ual abuse cases.                                                         —ANDREA LEAVITT, ATTORNEY
    The U.S. Conference of Catholic
Bishops and the Canon Law Society of        the canonical court wouldn’t permit us         or other means. The accused is repre-
America then sponsored a seminar on         to represent our client, so we hired a         sented by an Advocate, who possesses at
the new procedures in Washington,           canon lawyer to do it.”                        least a licentiate in canon law. Most U.S.
D.C. The Very Reverend Lawrence A.              Andrea Leavitt, a San Diego sole prac-     constitutional rights, including the right
DiNardo of the Diocese of Pittsburgh        titioner, has represented plaintiffs in doz-   to remain silent, do not apply. “The court
reviewed the essential documents,           ens of sexual abuse cases. “Even if the        has some power over witnesses within
including the 1983 revised Codes of         canonical court is competent, there is an      the community of the faithful,” Lena
Canon Law and Pope John Paul II’s           inherent conflict of interest because the      says. “While the Bishop cannot compel
2001 Motu Proprio, which gave the           Church has liability,” she says. “They         testimony, witnesses can feel a strong
CDF original jurisdiction over allega-      may call it a criminal proceeding, but it’s    sense of duty or obedience to testify.”
tions of the sexual abuse of a minor.       really an obstruction of justice.”                 Rules of evidence in federal and state
    DiNardo’s tutorial outlined a paral-        The canonical trials are held in secret,   civil or criminal proceedings also do
lel judicial universe largely unknown       so no one really knows how many are            not apply. “Though evidentiary privi-
to practitioners in “civilian” criminal     occurring or have occurred in the past.        leges exist, there are no rules of exclu-
and civil law systems. Each of these        “There have been very few canonical            sion, such as a hearsay rule,” Lena says.
has its own statute of limitations, rules   trials in the past 40 years,” says Jeffrey     “Hearsay goes to the weight of the evi-
of procedure, and standard of proof.        S. Lena, a Berkeley sole practitioner          dence rather than to admissibility.”
Each serves distinct but overlapping        who represents the Holy See in the                 At the discretion of the presiding
constituencies—the community of the         United States. “There are various cul-         judge, witnesses may or may not be
faithful, the public safety, and a plain-   tural reasons for that—many of the             represented by a “consulting attorney,”
tiff’s right to seek damages for civil      accused ‘plead out,’ for instance, rather      who also must be a canon lawyer. “The

                                                                                                  CALLAWYER.COM NOVEMBER 2010      11
FULL DISCLOSURE

instructing judge commonly denies               CRIMINAL TRIALS                                CIVIL TRIALS
witness requests for representation,”           In order to qualify for federal funding, all   In 2002 California’s Legislature responded
                  .
says Thomas P Doyle, a canon lawyer             50 states have some form of mandatory          to the growing number of clergy sexual
for 26 years who lives in Maine and             reporting law for child abuse and neglect.     abuse cases by amending the Code of
has represented chief complaining wit-          In 1996, the California Legislature added      Civil Procedure to allow victims who
nesses in ten canonical trials. “The            clergy to the list of those required to        confront their childhood abuse in adult-
atmosphere is intimidating, and the             report known or suspected instances of         hood to file suit against third parties up
language of the court is confusing.             child abuse to child protective agencies.      to three years after they discover the
There’s very little sensitivity to what         (Cal. Penal Code § 11166(d).) The penal        roots of their trauma. (Cal. Code Civ.
the witness is going through. At one            code protects these mandatory reporters        Proc. §§ 340.1(a) and (b).) The state
trial in Pennsylvania, I could tell the         from suffering any sanction for comply-        Supreme Court is currently considering
witness was having a severe emotional           ing with the statute. (§ 11672.)               a Los Angeles case that asks whether
reaction talking about his sexual abuse.            But the Penal Code provisions              the amended code section applies ret-
He went outside the hearing room and            include an exception that protects the         roactively (Quarry v. Doe 1, 170 Cal.
vomited all over, and I told the court,         confidentiality of privileged communi-         App. 4th 1574 (review granted as No.
‘There’s your testimony.’ ”                     cations between parishioners and priests       S171382 Jun. 10, 2009)).
    At the outset of the trial, according       in the confessional. (Cal. Penal Code §            For plaintiffs lawyers, the holy grail
to Doyle, all participants—judges, advo-        11166(d)(1).) “The reporting of clergy         is gaining access to documents and depo-
cates, witnesses, and the accused—are           sexual abuse allegations is about as good      sitions from canonical trials that may
obliged to sign an oath of “pontifical          as Bernie Madoff’s reporting to the            have occurred decades ago. “Those tran-
secret.” The penalty for breaking that          SEC,” says John Manly, a principal at          scripts can turn a lawsuit into a multi-
oath could be excommunication. “I               Manly & Stewart in Newport Beach               million-dollar case, and it will never go
advise witnesses to refuse to sign,” Doyle      who represents dozens of plaintiffs in         to trial,” says Patrick J. Wall, a canonical
says. “Despite the pressure, the canonical      child sexual abuse cases. “Failure to          lawyer and former priest who works at
court cannot refuse to hear testimony           report clergy abuse has become a pattern       Manly & Stewart as a consultant.
from a witness who refuses.”                    and practice, and apparently there are             In a high-profile federal case, plain-
    A Notary for the diocese then sees          no consequences. Some bishops are try-         tiffs attorney Anderson has acquired
that trial documents are appropriately          ing, but they are up against institutional     the canonical trial record of a priest
signed and sealed. In a canonical court         arrogance and resentment that sexual           laicized in the 1960s for serial child sex-
the standard for determining guilt is           abuse claims are overblown. You can see        ual abuse. Last year the Ninth Circuit
“moral certitude,” defined by DiNardo           it in how some of the bishops act.”            let an Oregon state law claim go for-
as “a practical judgment on the part of             In June, a redacted version of Man-        ward against the Holy See, holding that
the judge based on the available proofs,        ly’s deposition of Cardinal Roger              the priest had acted within the scope of
considered as a whole and not a collec-         Mahony, taken in a civil case earlier in       his employment (Doe v. Holy See, 557
tion of isolated factors.”                      the year, was made public (Clergy Cases         .3d
                                                                                               F 1066 (9th Civ. 2009) cert. denied,
    According to the Q&A on canonical           I, No. BC 376766 (Los Angeles Super.           130 S. Ct. 3497 (2010)).
trials by the U.S. Conference of Catholic       Ct. final redaction stipulated June 15,            Because the stakes in civil cases are
Bishops, penalties upon conviction              2010)). Asked by Manly why he had              so high, requests for canonical trial doc-
range from suspension from priestly             not reported allegations of clergy sex-        uments can take years. “According to
duties to “a life of prayer and penance”        ual abuse made by two men in 2000,             the 2001 Norms, canon law prosecutors
or dismissal, referred to as a “dispensa-       Mahony replied, “The two men were              are instructed to send all materials to
tion from the obligations of the clerical       adults. They were not children, so there       Rome through the papal nuncio’s diplo-
state.” The priest is no longer counted as      was no longer suspected child abuse.”          matic pouch,” Wall says. “There, Cardi-
a cleric, but remains within the Church         Mahony testified that he could recall          nal William Levada at the CDF decides
in a different legal status. “I’ve never seen   about 50 cases of abuse reported to            whether to assert original jurisdiction, or
damages awarded to a victim” of clergy          authorities from 1997 to 2002, many            to permit the local bishop to prosecute.
sexual abuse, Doyle says.                       reported by religious orders rather than       Everything takes time—there’s no five-
    Both the verdict and any imposed            by the archdiocese.                            year civil rule in the canonical system.”
penalty may be appealed to the CDF in               Says Manly, “The archdiocese’s view             But the Holy See’s Lena says, “I can’t
Rome. Appeals may take years, and a             is that it has no obligation to report         think of a case when the canonical record
decision of the supreme tribunal is final.      abuse if the allegations are made by an        was not produced in civil proceedings.”
    Doyle estimates that 200 to 300             adult. I think that’s a misreading of the          According to Wall, the biggest
canonical trials are in progress around         statute. If I were the U.S. Conference of      change since promulgation of the 2001
the United States, though most of those         Catholic Bishops, I would be very wor-         Motu Proprio is the overlap between
involve marriage annulments.                    ried for my exposure.”                                                    Continued on page 58



12   NOVEMBER 2010 CALLAWYER.COM
Continued from page 12

the canonical and civilian systems.
    “I would describe canonical trials as
a true conflict-of-laws issue,” he says.
“Sometimes we’re opposed from three
different sides—defense lawyers who
represent the accused in criminal pro-
ceedings, civil proceedings, and canon-
ical proceedings. Defense lawyers fear
that more civil discovery could increase
their clients’ criminal exposure.”
    Both Wall and Doyle advise prosecu-
tors and plaintiffs attorneys on matters
of canon law. Civilian defense attorneys,
Wall says, now work in many of Cali-
fornia’s chancery offices. “And because
the CDF in Rome can offer local dio-
ceses special dispensation, civilian law-
yers may serve as advocates and judges
in canonical trials.”
    Occasionally, a disciplined priest
strikes back in state court. Robert Stepek,
a laicized priest in Chicago, sued Ander-
son and his clients for defamation based
on statements made by witnesses in the
canonical trial. The witnesses counter-
sued, filing claims against the Catholic
Bishop of Chicago. The Church then
moved to dismiss, asserting that under
the First Amendment the circuit court
lacked subject matter jurisdiction over
claims arising solely from statements
made in a canonical trial. In an interme-
diate appellate court, the Church pre-
vailed. The Supreme Court of Illinois
refused to hear the case, thereby effec-
tively extending First Amendment pro-
tection to members of a religious body
who testify in canonical trials. (See Ste-
pek v. Doe, 392 Ill. App. 3d 739, appeal
denied, 233 Ill. 2d 600 (2009).)
    If civilian advocates and First Amend-
ment rights can be grafted onto canonical
trials, can due process, evidentiary rules,
and the right to jury trials be far behind?
And as dioceses move more swiftly to
investigate accusations, can conflicts
with criminal investigators be avoided?
Finally, what is the point of having three
overlapping systems for adjudicating
claims of sexual abuse by clergy?
    A millennium after Henry II famously
battled Thomas à Becket over civil
authority, the Church is still reluctant to
render unto Caesar what is Caesar’s. CL

58   NOVEMBER 2010 CALLAWYER.COM
                    by Thomas Brom




Wiretapping Wall Street

O
                     NE OF THE THEMES EXPLORED IN THE WIRE, HBO’S                        warrants” by law enforcement, can also
                     long-running series on Baltimore street life, is the cat-           be troublesome for prosecutors. “You’ve
                                                                                         got to jump through a lot of hoops
                     and-mouse surveillance game between drug dealers and
                                                                                         before presenting the case to a judge,”
                     police. In the 2004 episodes, dealers are still using pagers.       says Tim Crudo, a former federal pros-
                     As the wiretaps catch up, the dealers switch to cell phone          ecutor and partner in the white-collar
                                                                                         defense group at Latham & Watkins in
“burners,” swap out SIM cards, and           Khuzami, director of the SEC’s enforce-     San Francisco. Those hoops include a
send coded text messages. Over five          ment division, observed at a press con-     showing of probable cause, requisite
seasons, the game stays about even.          ference: “Certain moral truths should       necessity, the failure of other methods,
    Segue to two Wall Street insider trad-   be self-evident. And there should be a      particularity of subject, and the identi-
ing cases brought last year against 21       moment—hopefully before you’re              ties of the persons to be tapped. In any
defendants, including hedge fund man-        holding a bag of cash, delivered to you     case, a court order is good for no longer
agers, securities traders, corporate exec-   by somebody code-named the ‘Octo-           than 30 days before it must be renewed.
utives, and lawyers (SEC v. Galleon Mgmt.    pussy’—that causes anyone in a posi-        “It’s easier to get a wiretap when an
LP No. 09-8811 (S.D.N.Y. filed Oct. 16,
  ,                                          tion to tip or trade inside information,    individual has flipped and agrees to
                                                                                         wear a consensual body wire, and use
                                                                                         that evidence in court,” Crudo says.
“If you find yourself chewing the memory                                                       Cris Arguedas, a criminal defense
 card in your cell phone, something has                                                  attorney at Arguedas Cassman & Head-
                                                                                         ley in Berkeley, adds, “I don’t see prose-
 gone terribly wrong.”                                                                   cutors using wires on a regular basis—it’s
                                                                                         not that difficult to get authorization,
2009) and SEC v. Cutillo, No. 09-9208        to think twice before taking such a mis-    but it’s labor intensive. For prosecutors,
(S.D.N.Y. filed Nov. 5, 2009)). Most of      guided step. And if you find yourself       the good part is that they might capture
the defendants were associated with the      chewing the memory card in your cell        incriminating evidence. But they also
Galleon Group hedge fund or Zvi Goffer,      phone to destroy your record of your        capture mitigating evidence. Just snips
a registered representative at Echotrade     misconduct, something has gone terri-       don’t tell the whole story.”
who had once worked at Galleon.              bly wrong with your character.”                 Still, judges almost never deny wire-
   There are parallel civil and criminal         A wire on Wall Street? “Contrary to     tap requests. According to the Admin-
proceedings. Prosecutors relied on con-      the views of some, court-authorized         istrative Office of U.S. Courts, state and
sensual recordings by informants, and        Title III wiretaps are not statutorily      federal prosecutors made 1,891 appli-
on some 14,000 wiretap intercepts—the        reserved for unsavory drug traffickers      cations for wiretap orders in 2008, and
first used in an insider trading case        and mobsters,” said Preet Bharara, U.S.     courts granted every one. The report
under Title III of the Omnibus Crime         Attorney for the Southern District of       noted that 95 percent of the locations
Control and Safe Streets Act of 1968 (18     New York. “Why use wiretaps to inves-       specified were portable devices carried
U.S.C. § 2510 et seq)—to identify $53        tigate insider trading, for example?        by individuals, such as digital pagers
million in purported illegal profits.        Because it is an exceedingly difficult      and cell phones.
   According to the indictment, at one       crime to prove—especially when it                In Galleon, defense attorney John
point Goffer allegedly removed the           involves hedge funds, whose sheer vol-      Dowd of Akin Gump Strauss Hauer &
memory card from his cell phone, bit it,     ume of trading can be used to mask a        Feld has filed a motion to suppress the
broke the phone in half, threw away          sale or purchase of a security based on     Title III recordings based on, among
one half and then instructed his tippee      material nonpublic information.”            other things, the prosecutors’ alleged
to throw away the other half. Robert             But Title III wiretaps, called “super   material misrepresentations and omis-

10   APRIL 2010 CALIFORNIA LAWYER
                                                                                                                  FULL DISCLOSURE

sions in wiretap affidavits and applica-      people to prevent them from bringing         incoming numbers, as well as the con-
tions. But criminal defense attorney          down an entire fund? But Galleon was         tent of calls and text messages. “Together,”
Victor Sherman, a principal in Sherman        different, because it’s alleged the entire   according to a review of the software in
& Sherman in Santa Monica who spe-            organization was based on eliciting and      Wired magazine, “the surveillance sys-
cializes in wiretap cases, says, “Courts      using material nonpublic information.”       tems let FBI agents play back record-
rarely suppress intercepts—it almost              In February, Marc Fagel, the SEC’s       ings even as they are being captured,
never happens in drug cases. Incrimi-         regional director in San Francisco, told     create master wiretap files, send digital
nating evidence is captured in a defen-       a Bar Association of San Francisco           recordings to translators, track the
dant’s own words—police love it.”             forum that his office was tired of bring-    rough location of targets in real time
    After Galleon, hedge funds could          ing “whack-a-mole” insider trading           using cell-tower information, and even
become a target of opportunity. “The use      cases against individuals. He said the       stream intercepts outward to mobile
of real-time monitoring signals a new         SEC—which isn’t authorized to wire-          surveillance vans.”
tactic,” says Peter Henning, a professor at   tap—is using software programs and              That’s more than a few steps ahead of
Wayne State University Law School in          industry reports to locate unusual trad-     cell phone burners or swapped-out SIM
Detroit and a former senior attorney in       ing patterns, and then referring cases to    cards. “Greed, sometimes, is not good,”
the SEC’s enforcement division. “But          the U.S. Attorney’s office.                  Bharara said at the announcement of
hedge funds collect a whole bag of                Federal prosecutors are using their      the Galleon prosecution. “Today, tomor-
information before making a decision.         own new surveillance tools. In 2007          row, next week, the week after, privi-
You still have to sort out the noise.”        the FBI released documents describing        leged Wall Street insiders who are
    The Galleon cases have made hedge         its Digital Collection System Network        considering breaking the law will have
funds paranoid on both coasts. “Compli-       (DCSNet), which connects wiretapping         to ask themselves one important ques-
ance officers are asking, ‘What can you       rooms to switches controlled by tradi-       tion: Is law enforcement listening?”
do about rogue employees?’ says Jay           tional land-line operators, Internet-           “It’s naïve to think that Galleon is
Gould, head of the investment funds           telephony providers, and cellular            the only one out there,” Pillsbury’s
practice in the San Francisco office of       companies. The software suite includes       Gould says. The Wall Street wire could
Pillsbury. “How are you going to monitor      components to record outgoing and            be a game-changer. CL




                                                                                                    CALIFORNIA LAWYER APRIL 2010     11
                   by Thomas Brom




Selling the Commons
                                                                                        in public hands,” says John R. Schmidt,




I
             N EARLY OCTOBER THE STATE LEGISLATURE FINALLY PASSED
             a budget that featured no new taxes, deep cutbacks in social               a partner in the Chicago office of Mayer
                                                                                        Brown who represents the City of Chi-
             services—and a dubious form of inventory shrinkage. To help                cago in these deals. “In Canada, Austra-
             meet expenditures, the State of California sold 24 office build-           lia, France, and Spain, the toll roads and
             ings—including the Department of Justice Building in Sacra-                bridges have all been privatized.” Mayer
                                                                                        Brown, Fulbright & Jaworski, White &
mento, the entire Civic Center complex     fund current state spending.” In an          Case, as well as the U.K.’s Magic Circle
in San Francisco, the Elihu M. Harris      interview, he adds, “We have rules: You      firms, have a thriving practice in infra-
Building in Oakland, and the Ronald        can’t use long-term debt for short-term      structure financing.
Reagan State Building in Los Angeles—      obligations.”                                    Schmidt says there’s a well-established
for $2.33 billion. The new owners              But whether the deal pencils out takes   market for sale-leasebacks, primarily
include Hines, a Houston-based devel-      a back seat to the policy decisions hid-     infrastructure funds created by private
oper, and Irvine-based Antarctica Capi-    den within it. The Beacon report was         equity firms. Spain-based Cintra, along
tal Real Estate.                           funded by SEIU 1000, the largest pub-        with the Macquarie Group, an Austra-
    Last year the Legislature and Gov.     lic employee union in the state and a        lian investment bank, own both the Sky-
                                                                                        way Bridge and the Indiana toll road.
                                                                                        Morgan Stanley owns the Chicago park-
“There’s a big cloud of private capital                                                 ing garage and half of the city’s priva-
hovering, waiting for an opportunity to                                                 tized parking meters, sharing them with
                                                                                        the Abu Dhabi sovereign wealth fund
invest [in public infrastructure].”                                                     and Allianz insurance of Germany.
                                                                                            “Infrastructure is a state-by-state pro-
Arnold Schwarzenegger authorized the       longtime foe of privatization schemes.       cess,” Schmidt says. “Even if a project
20-year sale-leaseback, which was the      The report claims that the sale-lease-       has some federal funding, there are 50
subject of conflicting economic reports.   back is “based on the idea that build-       different capital markets for infrastruc-
The Department of General Services         ings managed by the private sector will      ture. But in places where the popula-
forecast that it would bring more than     be cheaper to maintain because of            tion is growing—Texas, Florida, Georgia,
$1.2 billion in net revenue, a claim       lower employment costs. Notably, this        and California—those states are seeing
challenged by both the Legislative Ana-    new policy is a direct repudiation of a      that this is a better way to do things.
lyst’s Office and Beacon Economics, a      tradition enacted over 30 years ago to       Public entities have no other resources.”
consulting group. Beacon’s Christopher     lower the state’s cost for courts, employ-       Twenty years ago California was a
Thornberg, principal author of a report    ees, and agencies by developing state-       pioneer in so-called public-private
titled “A Bad Deal,” concluded that if     owned office buildings.”                     partnership (P3) agreements, a hybrid
the state used standard accrual account-      Privatization is new to California, but   ownership form. In 1989 the Legisla-
ing—rather than cash accounting as         not to many other states or to the Euro-     ture added section 143 to the Streets
permitted in the public sector—“this       pean Union. Indiana recently sold and        and Highways Code, resulting in con-
transaction would actually end up          leased back its toll road, using the pro-    struction of two public-private toll
expanding the budget gap substantially,    ceeds primarily to build other infrastruc-   roads in Southern California. But the
rather than reducing it.”                  ture. Chicago has privatized its Skyway      Professional Engineers in California
    Thornberg argues that the sale of      Toll Bridge and an underground park-         Government (PECG), the union rep-
buildings violates the spirit of Propo-    ing garage, and currently it’s negotiating   resenting CalTrans white-collar
sition 58—the 2004 balanced-budget         the sale of Midway airport. “Toll roads      employees, opposed alternatives to the
initiative—by “using long-run debt to      and bridges in the U.S. are the last ones    design-bid-build formula, and the

12   DECEMBER 2010 CALLAWYER.COM
                                                                    FULL DISCLOSURE

authorizing statute lapsed.                   authority in the state budget, PECG
    “P3 contracts are very different from     warned that strict oversight would be
privatization,” says Fredric Kessler, a       needed “to prevent foreign, multina-
partner in the Los Angeles office of Nos-     tional companies and Wall Street
saman who has represented state enti-         investment houses from taking huge
ties in P3 projects in Texas, Washington,     profits out of our transportation sys-
and Alaska, among others. “They are           tem, preventing the improvement of
used for new construction financed            public roads, and inflicting outrageous
through a combination of tax-advan-           tolls on motorists.”
taged bonds and private equity funds.             There are no guarantees for investors,
The project is owned by the public and        either. Earlier this year, the Macquarie
subject to regulatory control through         Group’s toll road in San Diego County
contract provisions to assure that the        declared bankruptcy. The ten-mile road-
parties comply with their obligations.”       way took almost 17 years to build, but its
    Faced with a pressing need to build       owners took less than three years to
infrastructure but a limited ability to       default on debt payments. The parties
issue bonds, the Legislature passed the       are now in litigation.
Infrastructure Financing Act of 1996              There have been other recent priva-
(Cal. Gov’t Code §§ 5956–5956.10),            tization failures. In 2006 a superior
which authorized P3 agreements for fee-       court judge voided Stockton’s 20-year
producing projects. In 2007 the Legis-        contract for a privatized wastewater
lature authorized such financing for the      system after citizens complained of a
Long Beach Court Building, to be con-         sewage spill. In 2007 Petaluma declined
structed by a consortium led by Paris-        to renew a water treatment contract
based Meridiam Infrastructure, a private      with Paris-based Veolia Environnement
equity fund. Schwarzenegger then              after city officials decided public opera-
pushed lawmakers in 2008 and 2009 to          tion would be cheaper.
amend the Streets and Highways Code               More than a century ago the U.S.
to permit CalTrans and regional transit       Supreme Court held that the Illinois leg-
authorities to use P3 financing for the       islature was not free to sell the entire
Presidio Parkway, which will replace the      Chicago harbor to a railroad, upholding
roadway at the south end of the Golden        a pubic trust in the state’s navigable
Gate Bridge in San Francisco.                 waters and the commerce over them.
    Of course, whether it’s a good idea to    But in the teeth of the recession, advo-
partner with private investors to build,      cates of a broader public commons are
manage, sell, or lease back public prop-      finding it hard to attract a quorum.
erty is a matter of opinion. Leonard C.           “Public agencies in California are
Gilroy, director of government reform         facing difficulties they have never faced
for the libertarian Reason Foundation         before,” says Steven Meyers, a princi-
in Los Angeles, insists “privatization is     pal at Meyers Nave in Oakland who
not partisan and not ideological.” He         recently established a P3 infrastructure
says P3 contracts should be “perfor-          group. “Property tax revenue is not
mance-based,” permitting public entities      coming back—so the public agencies
to mitigate risk in financing, construc-      must change.”
tion, and maintenance.                            Faced with a Macquarie Toll Road,
    Gilroy is principal editor of the foun-   an Antarctica Capital Civic Center, and
dation’s Annual Privatization Report,         a Meridiam Court Building, we’re left
which chronicles privatized roads,            with the words of 17th-century protest-
bridges, buildings, airports, water and       ers to the English enclosure acts:
sewage systems, schools, prisons, and             The law locks up the man or woman
social services. “There’s a big cloud of          Who steals the goose from off
private capital hovering, waiting for an             the common,
opportunity to invest,” Gilroy says.              But leaves the greater villain loose
    But the skeptics aren’t buying it.            Who steals the common from under
Reacting to last year’s expanded P3                  the goose. CL

                                                                                           CALLAWYER.COM DECEMBER 2010   13

				
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