In Cementing Koontz's Legacy, the Florida Supreme Court Shows Why Taxpayers Will Foot an Enormous Bill for Government's Mistakes

Recently, the Florida Supreme Court refused to hear the Koontz case yet again. Too bad for taxpayers that it took the Court eighteen months to make a decision.

Recall that, in the long Koontz saga, in 1994, the government agreed to issue a permit to fill wetlands if the landowner paid to improve government culverts miles away. The landowner refused and sued when the government denied the permit. A decade ago, in 2006, the trial court found a taking and awarded $477,000 in just compensation.

The Florida Supreme Court said the landowner could only challenge the unreasonable permit demand after giving in to it. The U.S. Supreme Court, though, ruled for landowners (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work. Koontz v. St. Johns River Water Mgmt. Dist., 133 S.Ct. 2586 (2013). 

Not long afterwards, in late 2013, the Florida Supreme Court punted the case back to the appellate court for further proceedings. The 5th DCA made short work of the remand:

Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below. We deny Appellant's request to reopen the briefing. The constitutional issues decided by the United States Supreme Court were fully briefed here, and that Court's holding does not set forth a new legal construct with which we must re-analyze these issues. To the extent that Appellant seeks to brief the state law issues left open by the Supreme Court, we conclude that those issues were either disposed of in Koontz I or Koontz IV, or they were not preserved and presented in those proceedings. 

Yet again, in June 2014, the government asked the Florida Supreme Court to review the case. Over a year and a half later, the Florida Supreme Court has finally concluded this long saga, and the Koontz family will now return to the trial court to collect their just compensation. 

Which leads us to the difficult part for taxpayers: once the government made a bad decision, it doubled down for over twenty years. Now, taxpayers will be stuck not only with the bill for those bad decisions, but also the bill for the Koontz family's attorneys to prove that and the interest for the past two decades.

Exciting Announcement

You'll now find me at the Tampa office of Stearns Weaver. Next time you're in the Tampa area, stop by our offices and say hello.

Those of you who know me well know that change excites me. That's why I jumped at the chance to join the state's premier environmental and land use team that includes, locally, Ron Weaver and Vin Marchetti, and, in Tallahassee, Reggie Bouthillier. Expect to see some great entitlements, permitting, and regulatory work coming from this team. I couldn't be more pleased to be a part of it.

And, of course, I'll continue my constitutional and property rights practice, as well. We all know that landowners in Florida need somebody to do it.

Koontz Wins on Exactions Again - Probably for Good

I'm a bit later to the game than usual on this one. On April 30, Florida's 5th DCA handed the Koontz family another big win in St. Johns River Water Management District v. Koontz, Case No. 5D06-1116 (Fla. 5th DCA Apr. 30, 2014). After the U.S. Supreme Court's landmark ruling last year, many speculated that there were a great many questions left open about exactions law, at least under state law. The 5th DCA disagreed:

Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below. We deny Appellant’s request to reopen the briefing. The constitutional issues decided by the United States Supreme Court were fully briefed here, and that Court’s holding does not set forth a new legal construct with which we must re-analyze these issues. To the extent that Appellant seeks to brief the state law issues left open by the Supreme Court, we conclude that those issues were either disposed of in Koontz I or Koontz IV, or they were not preserved and presented in those proceedings.

This is good news for property owners in Florida. As the Pacific Legal Foundation writes:

The Court of Appeal’s decision is an important win, not just for the Koontz family, but for all Floridians who face extortionate demands in the permitting process. Under the Court of Appeal’s interpretation of the relevant Florida statute, property owners can be compensated for the lost use of their land during the entire period the land-use agency engages in its extortionate practice.

Both my fellow bloggers, Gideon Kanner and Robert Thomas, think the St. Johns Water Management District will seek review in the Florida Supreme Court. 

Maybe - but don't bet on it. Why? The Florida Supreme Court probably doesn't have jurisdiction to hear the case. The Florida Supreme Court has extremely limited jurisdiction compared to many other state high courts. Article V, section 3(b) of the Florida Constitution lays out its jurisdiction. None of the mandatory review provisions apply, and only two of the discretionary review provisions might apply:

(b) JURISDICTION.—The supreme court:
(3) May review any decision of a district court of appeal that expressly declares valid a state statute, or that expressly construes a provision of the state or federal constitution, or that expressly affects a class of constitutional or state officers, or that expressly and directly conflicts with a decision of another district court of appeal or of the supreme court on the same question of law.
(4) May review any decision of a district court of appeal that passes upon a question certified by it to be of great public importance, or that is certified by it to be in direct conflict with a decision of another district court of appeal.

As for article V, section 3(b)(3), there is no declaration a state statute is valid, there is no class of officers expressly affected, and no other district court of appeal has ruled on this issue in a way that directly conflicts with the 5th DCA's opinion. The only potential "in" for the St. Johns Water Management District would be to argue that the 5th DCA "expressly construes a provision of the state or federal constitution." But that's not really what the 5th DCA did, its re-adoption of St. Johns River Water Mgmt. Dist. v. Koontz, 5 So. 3d 8 (Fla. 5th DCA 2009) [Koontz IV] notwithstanding. Here, the 5th DCA is just saying that all issues have been disposed of previously, and to the extent they weren't, they haven't been preserved. You don't get Florida Supreme Court review for that.

As for article V, section 3(b)(4), it's almost impossible to imagine the 5th DCA granting a motion by the St. Johns Water Management District like it did five years ago in Koontz IV. There, the court had wrestled with what it believed was an undecided questions of state and federal law. Here, on the other hand, the court writes "Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below." And again, no other district court of appeal has ruled on this issue in a way that directly conflicts with the 5th DCA's opinion.

Is there a chance of a rehearing? Sure, there's always a chance, but I certainly wouldn't want to be the attorney who files a motion for rehearing in a case that the 5th DCA thinks is this open-and-shut. If I were the Koontz family, I'd feel pretty good right now. And as a property owner in Florida, I feel a little bit better.

Exactions Bills in the 2014 Legislative Session Should Cheer Property Owners

The 2014 Florida Legislative Session convenes next Tuesday, and property owners should find some early cheer in a pair of bills: HB 1077 (Perry) and SB 1310 (Evers).

These bills bear a strong resemblance to two bills that did not pass last year: HB 673 and SB 772, both of which would also have limited the ability of local governments to impose exactions somewhat beyond the Nollan-Dolan test. As you might expect, this year's bills appear to have been tweaked to take into account the Koontz decision.

Even though the problem in Koontz was with the St. Johns River Water Management District, a state agency, local governments have really been the bigger culprits in leveraging exactions from property owners. That is probably why these bills are aimed at limiting the ability of local governments to exact payments for indirect impacts of development. Part of the bills restate the law after Koontz: governments can't require exactions that are unrelated to the impacts of development. The part that appears to be new to Florida is that regulatory overlap would be reduced because local governments would be prohibited from exacting more than a state or federal agency for the same impact. 

So where a state or federal agency must analyze an impact, it looks like local governments would largely have to accept that analysis. This might not sound like much, but it does at least put a ceiling on what a local government can demand in return for a permit if a state or federal agency is involved.

The text of the bills is below.

Section 1. Section 70.45, Florida Statutes, is created to read:

70.45 Local government development exactions.—

(1) The Legislature finds that in the land use planning and permitting process, a landowner or applicant may be especially vulnerable to excessive demands for relinquishment of property or money in exchange for planning and permitting approvals. The Legislature further finds that exaction demands beyond the direct impact of a proposed development are against public policy and are therefore prohibited.

(2) A county, municipality, or other local governmental entity may not impose on or against any private property a tax, fee, charge, or condition or require any other development exaction, either directly or indirectly, that:
(a) Requires building, maintaining, or improving a public, private, or public-private infrastructure or facility that is unrelated to the direct impact of a proposed development, improvement project, or the subject of an application for a development order or administrative approval.
(b) Is more stringent than an exaction imposed by a state or federal agency on or against the same property that concerns the same impact.  

(3) This section does not prohibit a county, municipality, or other local governmental entity, upon demonstration, from:
(a) Imposing a tax, fee, charge, or condition or requiring any other development exaction that serves to mitigate the direct impact of the proposed development and that has an essential nexus to, and is roughly proportionate to, the impacts of the proposed development upon the public, private, or public-private infrastructure or facility that is maintained, owned, or controlled by the county, municipality, or other local governmental entity.
(b) Accepting the voluntary dedication of land or an easement that has an essential nexus to, and is roughly proportionate to, the impacts of the proposed development upon the public, private, or public-private infrastructure or facility that is maintained, owned, or controlled by the county, municipality, or other local governmental entity and the development or proposed development is situated on the specific property to which the dedication of land or easement applies.  

Section 2. This act shall take effect July 1, 2014.

The Permanence of Conservation Easements - Is Forever A Good Thing?

Bruce Ritchie has an interesting piece on his blog about the permanence of conservation easements. He notes that these easements are supposed to be "perpetual," and he explores whether this means "forever." He also explores whether this is a good thing or not:

Changes in climate or scientific understanding may reduce the public benefit of some purchases. Surrounded by development, an “island” of conservation may no longer be as valuable when weighed against the need for, say, a hospital. 

University of Virginia law professor Julia D. Mahoney wrote in a research paper that permanent conservation easements may create a legal mess for future generations. She argues that preservationists should rely on future generations to make wise land use decisions. 

“Such an approach would compel today’s preservationists to abandon the illusion that they can save nature through calculated efforts to restrict the options of future generations,” she wrote. “Their descendants, however, might thank them.”

It's a good question, since 425,000 of the state's 2.4 million acres (18%) of conservation land purchased since 1990 are through conservation easements.

I explained my own views on this in a 2010 article in the Environmental Law Report, Fighting the Lure of the Infinite: Lease Conservation Easements at the Urban Fringe. In it, I argued that contrary to popular opinion, perpetual conservation easements are less useful than at the urban fringe:

Today, local, state, and federal governments provide incentives intended to conserve agricultural uses. One of those incentives, the conservation easement, is flourishing in both quantity and acres conserved. Perpetual conservation easements are generally assumed to be superior to shorter term lease conservation easements because of a preference for stronger, more permanent restrictions. Some commentators question the sensibility of this preference, pointing out that citizens are most often interested in conserving agricultural land on the urban fringe. This type of land use is best conserved by lease conservation easements, and least likely to be conserved by perpetual conservation easements. Alternatives, such as state and federal amendments allowing lease conservation easements to receive the same tax benefits as perpetual conservation easements, may allow for more effective conservation of agricultural uses of land.

What do you think?

The Aftermath of Koontz - An Update and Review of New Scholarship

What's going on with Koontz, you might be wondering? Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (2013). For readers just joining us, this was the exactions case where the U.S. Supreme Court ruled for landowners (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work.

For one, scholars are starting to crank out some interesting work on the case and its future effects:

• In Two Steps Forward for the 'Poor Relation' of Constitutional Law: Koontz, Arkansas Game & Fish, and the Future of the Takings Clause, Prof. Ilya Somin at George Mason describes how Koontz helped property rights enjoy a "modest revival" in the last term of the U.S. Supreme Court.
• In Koontz: The Very Worst Takings Decision Ever?, Professor Echeverria at Vermont, who has never seen a takings decision that he found supportable, discusses why he finds nothing redeeming in Koontz. Exaggerate much?
• In Fees, Expenditures, and the Takings Clause, Professor Pidot at Denver undertakes a rather strained analysis to find that Koontz's application of the Nollan-Dolan exactions test should only extend those monetary exactions "that require a permit applicant to pay money to the government"(which he calls a fee), but not to "those that require a permit applicant to engage in activities that cost money, but do not transfer money to the government" (which he calls an expenditure). He worries "that much of federal environmental law could become subject to" the Nollan-Dolan exactions test. Even if he is right, which I doubt, is there anything really that wrong with requiring that a permit regulation requiring the expenditure of money to be reasonably related to the purpose of the permit and be roughly proportionate the social harm of the permit?
• In Exactions Creep, Professors Fennell and Penalver at Chicago present a thoughtful analysis presenting the U.S. Supreme Court's exactions jurisprudence as the Court's attempt to deal with the problem of protecting property from the state with the power of the state. They argue - as I did in my amicus brief supporting the property owners in Koontz - that the Due Process Clause is the best way to balance the concerns of the government with property owners' rights.
• In Nollan and Dolan and Koontz – Oh My! The Exactions Trilogy Requires Developers to Cover the Full Social Costs of Their Projects, But No More, Christina Martin at the Pacific Legal Foundation, argues just what I have been saying since I first read Koontz: "Koontz, like Nollan and Dolan, recognizes that government may legitimately require landowners to carry their own weight, mitigating their development plans so that they do not impose costs on their community. But government cannot use the permitting process to coerce landowners into giving up more. That simple rule will not end land-use planning or permit negotiations."

Which brings us to the next update. Recall that the U.S. Supreme Court punted Koontz back to the Florida Supreme Court. Well, the Florida Supreme Court just punted the case back to the lower appellate court for further proceedings. The docket shows:

In light of the decision of the United States Supreme Court in Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013), this case is hereby remanded to the Fifth District Court of Appeal for further proceedings consistent with that decision.

Looks like the Koontz's long battle continues.

Early Roundup of Koontz Commentary

Earlier today, I wrote about the win for landowners in Koontz v. St. Johns River Water Mgmt. Dist., No. 11-447 (June 25, 2013). On reading the opinion, my favorite line so far:

Extortionate demands for property in the land use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation. As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury.

Here's a roundup of commentary thus far:

• Paul Beard with the Pacific Legal Foundation (who argued the landowner's case) offers a great plain-language summary of the decision.
• Brian Hodges at the Pacific Legal Foundation offers more musings on the case.
• Robert Thomas, as always, has a good initial analysis of the high points of the case. His take? The Court was "right on the money," and it's "growing weary of silly procedural arguments." 
• Legal Planet writes that while the effects of the decision on governments may not be clear, "[w]hat is clear is that property owners have achieved a clean sweep in the three Takings Clause cases decided by the Supreme Court this Term."
• Eric Giunta, for Sunshine State News, grudgingly reports that Koontz continues to soldier on after 20 long years.
• Daniel Fisher at Forbes points out that the unconstitutional conditions doctrine cuts both ways, since the Court pointed to precedent that most conservatives don't care for.
• Tejinder Singh at SCOTUSblog probably has a good point: "The decision has the potential to significantly expand property-owners’ ability to challenge local land use regulations and fees, though it is not clear that this expansion will result in a significant number of successful challenges.
• Prof. Rick Hills (NYU) doesn't care much for the opinion:

So how will the federal courts eventually exit this quagmire? The answer might be remedial equivocation. Nollan-Dolan has so far mostly been a dead letter in zoning litigation, because the remedy in lower courts has usually (although not universally) been restoration of the pre-exaction status quo in which the developer is unconditionally denied the desired permission to build. (See Goss v. City of Little Rock, (8th Cir. 1996), for an example of how this remedy guts the right, or read Mark Fenster's Failed Exactions). Such a remedy means that developers will rarely sue, and the ones that do sue get nothing for their troubles. Koontz did nothing to disturb this remedial equivocation, declaring that "[b]ecause petitioner brought his claim pursuant to a state law cause of action,the Court has no occasion to discuss what remedies might be available for a Nollan/Dolan unconstitutional conditions violation either here or in other cases" (Slip op. at 11). 

This may be the most important sentence in the opinion -- a hint at the SCOTUS's "exit strategy" when developers start challenging plazas, parks, playgrounds, and the like. San Remo Hotel v. San Francisco severely limits developers' power to bring a federal takings claim in federal court: If state courts can continue to define the Nollan-Dolan remedy as invalidation of the illegal condition and denial of the zoning permission, then Koontz will be a practical dead letter. And a good thing, too, if one cares about federalism and believes, as I do, that Nollan-Dolan was always a quixotic expedition to control land-use decisions far too numerous and fact-specific to be amenable to federal judicial policing.

• But Prof. Ilya Somin (George Mason) begs to disagree: "Overall, Koontz is the most important victory for property rights in the Supreme Court for a long time." That's because "Koontz addresses two major issues that previous Supreme Court cases had not covered: Whether the requirements of Nollan and Dolanapply when the government denies a permit, as opposed to issuing it with attached conditions, and whether those requirements apply to cases where the burden imposed by the government is an obligation to finance off-site “mitigation” as opposed to requiring the property owner to allow a physical invasion of his land. The Supreme Court majority answered “yes” to both questions. I think they got both of them right."

U.S. Supreme Court Says Government Demands for Property Must Satisfy Exactions Law, Even Where Permit is Denied and Where Demands are for Money

In an important win for landowners everywhere, the U.S. Supreme Court has ruled for landowners in the exactions case I've been writing about for quite some time. Koontz v. St. Johns River Water Mgmt. Dist., No. 11-447 (June 25, 2013). Recall that this is the case where Koontz asked the Court to establish (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work. My colleague Dave Smolker and I submitted an amicus brief in support of the property owners in this case.

The Court agreed with Koontz on both points, overturning the decision of the Florida Supreme Court. I'll post some analysis once I've had time to digest the opinion. In the meantime, here are some excerpts. On the first question:

The principles that undergird our decisions in Nollan and Dolan do not change depending on whether the government approves a permit on the condition that the applicant turn over property or denies a permit because the applicant refuses to do so. We have often concluded that denials of governmental benefits were impermissible under the unconstitutional conditions doctrine. See, e.g., Perry, 408 U. S., at 597 (explaining that the government “may not deny a benefit to a person on a basis that infringes his constitutionally protected interests” (emphasis added)); Memorial Hospital, 415 U. S. 250 (finding unconstitutional condition where government denied healthcare benefits). In so holding, we have recognized that regardless of whether the government ultimately succeeds in pressuring someone into forfeiting a constitutional right,the unconstitutional conditions doctrine forbids burdening the Constitution’s enumerated rights by coercively withholding benefits from those who exercise them. 

A contrary rule would be especially untenable in this case because it would enable the government to evade the limitations of Nollan and Dolan simply by phrasing its demands for property as conditions precedent to permit approval. Under the Florida Supreme Court’s approach, a government order stating that a permit is “approved if ”the owner turns over property would be subject to Nollan and Dolan, but an identical order that uses the words “denied until” would not. Our unconstitutional conditions cases have long refused to attach significance to the distinction between conditions precedent and conditions subsequent. See Frost & Frost Trucking Co. v. Railroad Comm’n of Cal., 271 U. S. 583, 592–593 (1926) (invalidating regulation that required the petitioner to give up a constitutional right “as a condition precedent to the enjoyment of a privilege”); Southern Pacific Co. v. Denton, 146 U. S. 202, 207 (1892) (invalidating statute “requiring the corporation, as a condition precedent to obtaining a per- mit to do business within the State, to surrender a right and privilege secured to it by the Constitution”). See also Flower Mound, 135 S. W. 3d, at 639 (“The government cannot sidestep constitutional protections merely by rephrasing its decision from ‘only if’ to ‘not unless’”). To do so here would effectively render Nollan and Dolan a dead letter.

On the second question:

Respondent’s argument rests on a mistaken premise. Unlike the financial obligation in Eastern Enterprises, the demand for money at issue here did “operate upon . . . an identified property interest” by directing the owner of a particular piece of property to make a monetary payment. Id., at 540 (opinion of KENNEDY, J.). In this case, unlike Eastern Enterprises, the monetary obligation burdened petitioner’s ownership of a specific parcel of land. In that sense, this case bears resemblance to our cases holding that the government must pay just compensation when it takes a lien—a right to receive money that is secured by a particular piece of property. See Armstrong v. United States, 364 U. S. 40, 44–49 (1960); Louisville Joint Stock Land Bank v. Radford, 295 U. S. 555, 601–602 (1935); United States v. Security Industrial Bank, 459 U. S. 70, 77–78 (1982); see also Palm Beach Cty. v. Cove Club Investors Ltd., 734 So. 2d 379, 383–384 (1999) (the right to receive income from land is an interest in real property under Florida law). The fulcrum this case turns on is the specific parcel of real property.2 Because of that direct link, this case implicates the central concern of Nollan and Dolan: the risk that the government may use its substantial power and discretion in land-use permitting to pursue governmental ends that lack an essential nexus and rough proportionality to the effects of the proposed new use of the specific property at issue, thereby diminishing without justification the value of the property. 

In this case, moreover, petitioner does not ask us to hold that the government can commit a regulatory taking by directing someone to spend money. As a result, we need not apply Penn Central’s “essentially ad hoc, factual inquiry],” 438 U. S., at 124, at all, much less extend that“already difficult and uncertain rule” to the “vast category of cases” in which someone believes that a regulation is too costly. Eastern Enterprises, 524 U. S., at 542 (opinion of KENNEDY, J.). Instead, petitioner’s claim rests on the more limited proposition that when the government commands the relinquishment of funds linked to a specific,identifiable property interest such as a bank account or parcel of real property, a “per se [takings] approach” is the proper mode of analysis under the Court’s precedent. Brown v. Legal Foundation of Wash., 538 U. S. 216, 235 (2003).

Second Quarter 2013: Recent Florida Environmental and Land Use Case Law

The Florida Bar's Environmental and Land Use Law Section has posted its column on the environmental and land use cases in Florida that you need to know about for the second quarter of 2013. This is the column that I formerly coauthored. Here is what we've got this quarter:

• Clipper Bay Invs., LLC v. Dep’t of Transp., No. 1D11-5496, 2013 WL 425882 (Fla. 1st DCA Feb. 5, 2013). "The Marketable Record Title Act’s exception for easements and right-of-ways is applicable to land held as a fee estate for the purpose of a right-of-way, so long as competent, substantial evidence establishes the land is held for such a purpose."
• Wendler v. St. Augustine, 108 So. 3d 1141 (Fla. 5th DCA 2013). As I pointed out previously, the statute of limitations for filing a Bert Harris Act claim in court is within 4 years of the government’s act. Section 70.001(11), it held, is a pre-suit condition merely requiring that a claim be presented to a local government within 1 year of its act.
• Alachua Land Investors, LLC v. Gainesville, 107 So. 3d 1154 (Fla. 1st DCA 2013). As I discussed, for an inverse condemnation claim to be ripe, the plaintiff should prove (1) the regulation denies substantially all economically beneficial or productive use of the land; (2) alternative uses were applied for and conclusively denied by the regulatory body; and (3) at least one meaningful application has been filed under the existing regulations.
• Nieto v. Mobile Gardens Ass’n of Englewood, Inc., No. 2D11-4958, 2013 WL 1489377 (Fla. 2d DCA Apr. 12, 2013). "A homeowners association lacks standing to enforce restrictive covenants unless it is the direct assignee of the developer’s right to enforce deed restrictions or it is a successor in interest of the developer."
• Martin Cnty. Conservation Alliance v. Martin Cnty., No. SC11-2455, 2013 WL 1908644 (Fla. May 9, 2013). As I've discussed previously, the Florida Supreme Court dismissed review of a case from the 1st DCA sanctioning environmental organizations for advancing legal positions unsupported by material law or fact.

For those interested, there are about two years' worth of analysis and these summaries on new environmental and land use cases in Florida in my archives.

Defending against Enforcement Actions with the Takings Clause: Good News for Agriculture and Property Owners in U.S. Supreme Court

What's that, you say? The U.S. Supreme Court has just decided a second Takings Clause case this term, unanimously--and in the property owner's favor?

Indeed. In today's opinion by Justice Thomas, the Supreme Court again ruled favorably for property owners. Horne v. U.S. Department of Agriculture, No. 12-236 (June 10, 2013). Recall that this is the case where raisin producers raised the Takings Clause as a defense to the  imposition of fines for a New Deal agricultural marketing law. In response, the government argued that the raisin producers can try their hand at bringing a separate lawsuit but cannot use it as a weapon against government enforcement. The Ninth Circuit bought the government's argument, but the U.S. Supreme Court did not.

While carefully noting that it was not ruling on the merits of the raisin producers' takings claim, the Supreme Court held that a "takings-based defense may be raised by a handler in the context of an enforcement proceeding initiated by the USDA under §608c(14)." Slip Op. at 14. The practical result of this holding is that the raisin producers will get to assert their takings defense below. So, their saga continues, but as in a case decided last year, Sackett v. EPA, the good news is that landowners continue to open the door to judicial review of abusive government processes. That is, the takings clause has been strengthened as a weapon for the property owner to use when the government brings enforcement actions against the property owner.

There's no media coverage of the case yet, but I'll update you when it becomes available. In the meantime, to catch up on the background of this case, see my archives. Stay tuned. We're still waiting on a decision in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012), which has some theoretical similarities to Horne. Here's hoping property owners go three-for-three at the U.S. Supreme Court this term.

Legislative Session Wrap-Up Part 2: Land Development

In addition to some of the bills I mentioned in Part 1 of my legislative session wrap-up, these bills will be of interest to the land development community.

Land Development Bills

HB 319: This bill clarified and amended transportation concurrency, which was overhauled by the 2011 Community Planning Act. The legislative staff report on the bill summarizes its effects:

[The bill places] new requirements on local governments that implement alternative mobility funding systems. The bill requires these alternative systems to allow developers to “pay and go” for new development. Under the bill, once a developer pays for its identified transportation impacts, the local government must allow the development process to move forward. The bill encourages local governments without a transportation concurrency funding system to implement an alternative mobility funding system.  

The bill prohibits alternative mobility funding systems that are not mobility fee based from requiring developers to pay for existing transportation deficiencies. Local governments must apply revenue they collect from alternative funding systems to implement the needs upon which the revenue collection was based and mobility fees must comply with the dual rationale nexus test. Under the dual rationale nexus test, a court will find an impact fee reasonable if: 1) it offsets needs that are sufficiently attributable to the new development and 2) the fees collected are adequately earmarked for the benefit of the residents of the new development. 

The bill makes the following changes to transportation concurrency mechanisms: (1) Allows developers to satisfy the transportation concurrency requirements of a local comprehensive plan by making a good faith offer to enter a binding agreement to pay for or construct its proportionate share of impacts; (2) Allows local government to pool contributions from multiple applicants to apply toward one regionally significant transportation facility; (3) Requires local governments to provide the basis upon which landowners will be assessed a proportionate share of cost addressing the transportation impacts from a proposed development; (4) Clarifies that s. 163.3180(5)(h), F.S., applies to local governments that continue to implement transportation concurrency; (5) Clarifies when local governments are not required to approve new development.

HB 357: This bill is aimed at increasing Florida's competitiveness in the manufacturing sector. Again, the legislative staff report provides an excellent analysis. Local governments are encouraged to establish local manufacturing development programs aimed increasing capital investment and job creation within the manufacturing industry. The Department of Economic Opportunity (DEO) is charged with developing a model ordinance for local governments to do so. Most importantly for business owners, the bill creates a coordinated approval process for development approvals and permits for manufacturers managed by DEO in order to streamline the process for manufacturers participating in local manufacturing development programs. Finally, DEO and Enterprise Florida are to develop and distribute materials indicating which areas have developed local manufacturing development programs.

HB 375: This bill reduces permitting and inspection requirements for septic tanks and related systems (technically called onsite sewage treatment and disposal systems). For landowners, the biggest changes is that some single-family homeowners may now operate and maintain their own systems with approval by the Department of Environmental Protection.

Finally, there was HB 999--this session's bill that every environmental organization loved to hate. There was a great deal of press about this bill, much of it negative. But what this bill did do was decrease a number of environmental permitting burdens. For that reason, I've included in it my land use and development roundup, even though it might have been better left to Part 3 of my legislative session wrap-up, where I will review environmental and natural resource bills. Below is a summary of changes taken from the legislative staff report.

• Limiting to three the number of times a local government may request additional information when reviewing an application for a development permit, unless the applicant waives the limit; 
• Expanding the activities that qualify as "phosphate-related expenses" for the purpose of receiving severance tax proceeds;
• Providing lease fee calculation for certain marinas, boatyards, and marine retailers and providing conditions for the discount and waiver of these fees;
• Providing general permits for local governments to construct certain mooring fields;
• Increasing the size of certain multi-family docks on sovereign submerged lands that are exempt from paying lease fees;
• Prohibiting water management districts (WMDs) from reducing allocations due to additional water supplies resulting from developing of desalination plants;
• Providing that the issuance of well permits is the sole responsibility of WMDs, delegated local governments, or local county health departments, and prohibiting government entities from imposing certain requirements and fees;
• Providing that licensure of water well contractors by a WMD must be the only water well contractor license required in the state or any political subdivision;
• Exempting certain farm ponds and wetlands from regulatory requirements;
• Increasing the amount the Department of Environmental Protection (DEP) is authorized to enter into a contract for preapproved advanced cleanup work for designated contaminated sites in each fiscal year;
• Allowing a person to bring a cause of action for damages resulting from a discharge or certain pollution if not authorized pursuant to chapter 403, F.S.;
• Extending the payment deadline of permit fees for major sources of air pollution;
• Specifying that field procedures and lab methods for certain water quality testing must be adopted by rule or approved by order;
• Prohibiting a local government from using a recovered materials dealer's registration information to compete unfairly with the dealer for a period of 90 days after it is submitted; 
• Authorizing DEP to establish permits for special events relating to boat shows;
• Authorizing expedited permitting for natural gas pipelines and for summary hearings; and
• Ratifying certain leases on state-owned uplands in the Everglades Agricultural Area.

Because of the implications of this bill to agriculture (explicitly relating to farm ponds and implicitly in other ways), I've now cross-referenced this post with Part 1 of my legislative session wrap-up.

Your Raisins or Your Life: Recapping the Horne Oral Argument before the U.S. Supreme Court

Last week, the U.S. Supreme Court heard oral arguments in this term's third property rights case, which could have important implications for a variety of agriculture interests. Horne v. U.S. Department of Agriculture, No. 12-236 (argued Mar. 20, 2013). This is the case where raisin producers raised the Takings Clause as a defense to the government's imposition of fines for a New-Deal-era agricultural marketing law. The government, on the other hand, has argued that the raisin producers can try their hand at bringing a separate lawsuit but cannot use it as a weapon against government enforcement.

Lyle Denniston at SCOTUSblog recaps the strange and lively arguments:

A portentous constitutional issue hung in the air Wednesday as the Supreme Court examined government seizures of private property, and everybody seemed to want to have it decided. But it was almost totally lost in a fog raised by a perplexing array of minutiae about how the government tries to push up the price of raisins. The cloud was so thick that even a highly respected professor and former judge misspoke twice in describing his clients’ role.

***

In one of the points Wednesday when a bit of clarity seemed within reach, Justice Stephen G. Breyer (who often asks questions with multiple layers of complexity) suggested simply that the raisin program is either constitutional or it’s not, and “it rather seems to me that it is not a right fit for the Court of Claims. Am I wrong about that?”

The Wall Street Journal gets the implications right for the average Joe:

Taxpayers are wary of government programs that confiscate private property—witness outrage over the 2005 Supreme Court Kelo decision that let government take homes via eminent domain for private use. Now the High Court is considering another program that orders citizens to surrender their assets—or else.

U.S. raisin farmers have been required for nearly 80 years to turn over a share of their crops to the federal government every year, often at below-market prices. Last week the Supreme Court heard oral argument on whether, in the words of Justice Elena Kagan, this annual raisin heist is "a taking, or just the world's most outdated law." 

*** 

For small businesses, these routine confiscations are a special burden because so few can afford to defend their property rights. Similar federal marketing orders cover produce including apricots, avocados, kiwis and olives. The effect is to impose a tax on farmers. 

As Justice Antonin Scalia put it, so it's "your raisins or your life, right? . . . you don't have to pay the penalty if you give us the raisins." No, Mr. Palmore explained. "They have to give the raisins . . . It's not a choice." Which is why the Justices should find these takings to be unconstitutional.

Seems like The Onion picked a good case to parody, doesn't it?

Those who like to read the tea leaves would do best by checking out Robert Thomas's blow-by-blow analysis of the arguments. His prediction?

We're predicting a narrow ruling from the Court vacating the Ninth Circuit's amended opinion, holding that the issue is not "jurisdictional," and sending the case back to the Ninth Circuit for further consideration of the Hornes' request for en banc review. The multiple concessions from USDA's counsel are probably going to be too much to overcome, and a narrow remand would allow the Court to resolve the case without getting too far into the weeds about "handlers" and "producers," issues that no Justice seemed ready to tackle, and without getting into the merits of the takings issue.

In his preview of the Horne case, Robert Thomas did a good job of connecting Horne to a case that's near and dear to this author's heart, Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). I've written about the Koontz case many times, and as my readers know, I co-authored an amicus brief in support of the landowner-petitioner in that case. As I've discussed before, Horne, like Koontz, raises a fundamental question about the Takings Clause: does it have any power to prevent unconstitutional threats? Or must a property owner roll over to the government's extortion and only then go to court?

Administrative Law Judge Finds Landowner's Agricultural Activities are Exempt from Environmental Permitting

In a recent case that will interest agricultural landowners in Florida, a landowner represented himself before an administrative law judge (ALJ) an administrative hearing. In Zagame v. Department of Agriculture and Consumer Services, DOAH Case No. 12-1356 (Feb. 1, 2013), the ALJ found that the landowner's dredging of a cattle pond and removal of trash from it were exempt from environmental permitting requirements, despite a contrary binding determination by the Department of Agriculture and Consumer Services (DACS). 

In Florida, the Department of Environmental Protection (DEP) oversees the Environmental Resource Management program. This program "regulates activities involving the alteration of surface water flows. This includes new activities in uplands that generate stormwater runoff from upland construction, as well as dredging and filling in wetlands and other surface waters. Environmental Resource Permit applications are processed by either [DEP] or one of the state's water management districts, in accordance with the division of responsibilities specified in operating agreements between [DEP] and the water management districts. The Environmental Resource Permit Program is in effect throughout the State."

Certain agricultural activities, however, are exempt from the the program's requirements. Section 373.406(2), Florida Statutes, provides that:

Notwithstanding s. 403.927, nothing herein, or in any rule, regulation, or order adopted pursuant hereto, shall be construed to affect the right of any person engaged in the occupation of agriculture, silviculture, floriculture, or horticulture to alter the topography of any tract of land, including, but not limited to, activities that may impede or divert the flow of surface waters or adversely impact wetlands, for purposes consistent with the normal and customary practice of such occupation in the area. However, such alteration or activity may not be for the sole or predominant purpose of impeding or diverting the flow of surface waters or adversely impacting wetlands. This exemption applies to lands classified as agricultural pursuant to s. 193.461 and to activities requiring an environmental resource permit pursuant to this part. This exemption does not apply to any activities previously authorized by an environmental resource permit or a management and storage of surface water permit issued pursuant to this part or a dredge and fill permit issued pursuant to chapter 403. This exemption has retroactive application to July 1, 1984.

The ALJ explained how DACS was given the authority to determine what activities qualified for an agricultural exemption:

For many years prior to 2011, [DACS] had the authority to review and give non-binding opinions at the request of a water management district concerning whether claimed alterations qualified for an agricultural exemption under section 373.406(2). However, along with other revisions in 2011, chapter 2011-165, Laws of Florida, authorized [DACS] to make binding determinations, at the request of a water management district or a landowner, regarding whether alterations or activities qualify for an exemption. See § 373.407, Fla. Stat. 

Two threshold issues for an exemption under section 373.406(2) are: (1) is the land classified as agricultural pursuant to section 193.461, Florida Statutes, and (2) is the person whose activities are in question engaged in agriculture. The parties stipulated that both of these threshold requirements were met in this case. 

The other two criteria, which are the ones at issue in this case, are whether the activity (1) is for purposes consistent with normal and customary agricultural practices for the area and (2) is not for the sole or predominant purpose of adversely impacting wetlands.

Inquiring into these two criteria, the ALJ  found that "[a]lthough the pond is larger than needed because the footprint of the dumping area was large, and Petitioner may have some non-agricultural plans for the Site in the future, under the facts and evidence as outlined herein, it is found that the pond constructed by Petitioner was for purposes consistent with common practices for cattle operations in the area." Further, it found "that the predominant purpose and effect of Petitioner’s activities was to construct a cattle pond and clean up a dumping ground, not to adversely impact a wetland." Id. at 15-6. Consequently, the ALJ recommended that DACS enter a final order finding that the landowner's agricultural activities were exempt from environmental permitting.

Under Florida's administrative law process, the Department must now issue a final order adopting, rejecting, or modifying the ALJ's recommended order. You can follow the progress here.

Early Issues for Landowners in the 2013 Legislative Session

People are starting to talk about the 2013 legislative session in Florida, which runs from March 5 to May 3. Here are some of the issues and bills that are being talked about. First, the Florida Current reports that there does not seem to be much appetite for changes to Florida's growth management system after the big changes in 2011:

After sweeping growth management law changes in 2011, most legislators and interest groups were content in 2012 to leave the issue alone while cities, counties and developers adjust to the changes. They still feel that way in 2013. However, a court case and a legal opinion involving growth management are creating a stir on a pair of issues. 

One involves referendums on development and changes made by a "glitch bill" that passed in 2012. A circuit court judge in Palm Beach County ruled in October that HB 7081 in 2012 now allows Boca Raton residents to seek a referendum challenging the proposed Archstone apartment complex there. That ruling has developers seeking clarifying legislation. 

Another issue stemming from the 2011 law involves transportation "concurrency" and a system for charging developments for needed road improvements. In 2012, the Florida Association of County Attorneys said a requirement for allowing developers to pay only their "proportionate share" doesn't apply to counties with other systems for collecting mobility fees.

The Florida Forestry Association has an update on some interesting bills: 

Alternative Water Supply Development – HB 109 by Rep. Dana Young, SB 364 by Sen. Alan Hays. Florida’s population growth has taxed our water resources. Florida’s forested lands can be part of the solution through surface water storage and aquifer recharge. Extended consumptive use permits for water utilities would enable them to raise bonded revenue to fund the infrastructure needs for alternative water supplies. Both bills have been approved by their respective Agriculture Committees and now go to the House State Affairs Committee (HB 109) and the Senate Community Affairs Committee (SB 364). 

Ag Lands & Practices Act – HB 203 by Rep. Halsey Beshears. The Ag Lands & Practices Act adopted in 2003 preempted counties from adopting any new ordinance regulating a farm or forestry operation beyond adopted BMPs. While this has been very effective, an effort is now underway to expand this preemption from counties to governmental entities. HB 203 was approved by the House Agriculture Committee and now goes to the Local & Federal Affairs Committee. Sen. Jeff Brandes has filed a companion bill in the Senate, but a bill number has not been assigned yet. 

Green Building Certification – HB 269 by Rep. Halsey Beshears. The Department of Management Services (DMS) has adopted the LEED green building rating system for state construction projects. LEED does not accept wood products certified under the SFI or Tree Farm system, which means it excludes virtually all Florida wood products from being used in new state construction projects. Rep. Halsey Beshears has filed legislation requiring DMS to adopt a green building rating system that does not discriminate against Florida wood products. His bill would require Florida wood products to be considered first when the use of wood is required for state construction projects. HB 269 has been placed on the agenda of the House Energy & Utilities Committee next week. Sen. Greg Evers has filed a companion bill in the Senate, but a bill number has not been assigned yet.

The Florida chapter of the American Planning Association also writes on two bills, one with interesting property rights implications:

SB 584 (Senator Hays) would prohibit the state, a county or a municipality from buying land for conservation purposes unless: 1) An accurate inventory, not more than 1 year old, of government-owned property is made public; (2) Sufficient funds are approved in the annual budget for the maintenance of existing properties; (3) An analysis describing the annual cost of maintenance of the proposed land purchase is completed; and (4) An equal amount of public property not being held in conservation is returned or sold at fair market value to the private sector. There is no companion bill filed yet in the House. 

HB 673 (Rep. Perry) and SB 772 (Senator Brandes) are identical bills that would amend the Bert Harris Act (Chapter 70, F.S.) to prohibit a local government entity from directly or indirectly imposing a tax, fee, charge or exaction against private property that: 1) does not result from a development or proposed development with a essential nexus to development impacts upon infrastructure or other public facilities; or 2) is more stringent than an exaction imposed by a state or federal agency unless the local government entity demonstrates that the exaction is reasonably necessary. This bill appears to create a more stringent test than Nollan/Dolan requirements or “the rationale nexus" test stemming from Florida case law that has governed impact fees and other exactions for decades. SB 772 has been referred to the Senate Community Affairs Committee and Judiciary; HB 673 has been filed but not yet referred to committees.

The Constitutional Issues at Stake in Koontz, Simplified

Many thanks to the newsletter for the Constitutional Law Committee of the American Bar Association's Section of Environment, Energy, and Resources, which recently published my article about Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). I sought to provide another plain-language summary of the case, although more to a legal audience than my last summary. Here it is:

U.S. Supreme Court Hears Important Florida Exactions Case

These days, Florida is a hotbed of property rights litigation. Three years ago, Florida was defending its beach renourishment program before the U.S. Supreme Court. Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). That case broke new ground when a plurality of justices acknowledged that a court can take property, just as the legislative and executive branches can.

Now that the U.S. Supreme Court has heard Koontz v. St. Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012, argued Jan. 15, 2013), environmental attorneys, constitutional scholars, and land use planners are wondering if Florida will again be on the forefront of takings law. This could be the most important decision in the world of environmental and land use permitting in years. It could draw into question common bargaining practices by governments when requesting conditions in exchange for development permits.

In the development approval process, governments commonly require a dedication of real property to mitigate adverse impacts. But what if the request is for cash or for services? What if the request is unreasonable, and the landowner cannot use the property?

Background

The Takings Clause of the Fifth Amendment to the U.S. Constitution ensures that private property cannot “be taken for public use, without just compensation.” The Takings Clause was intended to bar government from forcing individuals from bearing public burdens alone. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548 (2005). Early cases focused on physical invasions of property. As the regulatory state grew in the twentieth century, the U.S. Supreme Court began to recognize that government regulation of private property can sometimes be so onerous that it is tantamount to the government appropriating the property. Id. An exaction is a government requirement to donate something in exchange for the right to develop property. Oftentimes, this is a requirement to dedicate real property. Generally, the government cannot force landowners to give up the right to exclude others from property in return for the ability to develop it. It can, however, require mitigation of adverse development impacts. The U.S. Supreme Court has given some limited guidance on how to determine whether an exaction passes constitutional muster:

1. There must be an “essential nexus” between the exaction and the interest that the exaction is advancing. Nollan v. Cal. Coastal Com., 483 U.S. 825, 837 (1987).
2. There must be a “rough proportionality” in both nature and extent between the exaction and the impact of the proposed development. Dolan v. Tigard, 512 U.S. 374, 391 (2005).

Nollan and Dolan both addressed exactions of easements for public access. The U.S. Supreme Court left open whether the Nollan-Dolan test applied to exactions not involving real property, such as exactions for money or other personal property. Courts have differed on this question, leading to confusion among landowners, planners, regulators, and government officials.

The Koontz Cases

In St. Johns River Water Management District v. Koontz, 77 So. 3d 1220 (Fla. 2011), the Florida Supreme Court declined to recognize an exaction under U.S. Supreme Court precedent. Koontz  had owned his property since 1972. He been trying to develop his property since 1994, when he had applied to the District for a permit to develop his property. All but 1.4 acres of the 14.2-acre property were in a Riparian Habitat Protection Zone. Koontz only wanted to develop 3.7 acres of the property, but he would have to fill 3.4 acres of wetlands to do so.

The District agreed to grant the permit on two conditions. First, the District required that Koontz deed the remainder of his property into a conservation area, which he agreed to do. Second, the District required that Koontz perform offsite mitigation several miles by replacing culverts and plugging drainage canals on District-owned properties seven miles from his property, which Koontz refused.

When the District then denied the permit, Koontz sued in state court, arguing that the District’s offsite mitigation condition was an unconstitutional exaction because it violated the Nollan-Dolan test. The case bounced around between the trial court and the intermediate appellate court for years, producing some important takings jurisprudence in Florida. Ultimately, the trial court found that the District had taken Koontz’s property through an unconstitutional exaction because the condition was not related to the impacts of his project. The intermediate appellate court affirmed.

The Florida Supreme Court reversed, holding there was no taking. The court explained that the Nollan-Dolan test only applied to exactions of real property, where a permit was actually issued imposing the onerous exaction. The court acknowledged a line of cases applying the Nollan-Dolan test beyond real property exactions, but it held that these cases went beyond the U.S. Supreme Court’s decisions. The court also pointed to Monterev v. Del Monte Dunes at Monterev, Ltd., 526 U.S. 687 (1999), and Lingle v.Chevron U.S.A., Inc., 544 U.S. 528 (2005), to support its conclusion that the Nollan-Dollan only applies when the government actually issues the permit that is sought because only then is the owner’s property interest subject to dedication.

Finally, even though the court denied the property owner’s claim, it expressed a public policy concern for other developers and landowners. It worried that “agencies will opt to simply deny permits outright without discussion or negotiation rather than risk the crushing costs of litigation. Property owners will have no opportunity to amend their applications or discuss mitigation options because the regulatory entity will be unwilling to subject itself to potential liability. Land development in certain areas of Florida would come to a standstill. We decline to approve a rule of law that would place Florida land-use regulation in such an unduly restrictive position.” Koontz, 77 So. 3d at 1231.

Consequently, the Florida Supreme Court held there was no taking because (1) no permit was ever issued, (2) the exaction did not demand real property, and (3) public policy precluded expansion

The U.S. Supreme Court Hears Koontz

On October 5, 2012, the U.S. Supreme Court granted certiorari, and it heard oral arguments on January 15, 2013. Koontz asks the Court to establish:

1. The Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work; and
2. The Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction.

Koontz argues that the Court does not have to stretch far to make such a ruling, as it has held in other contexts that government may not withhold discretionary benefits on the condition that the beneficiary surrender a constitutional right. Koontz also argues that both of these issues need to be settled by the Court because the law on these issues has developed such a split across the country that courts facing the issue are having to choose a side, necessitating clear guidance from the Court.

The District, on the other hand, argues that the Court does not have jurisdiction because of Koontz only brought state law claims in state courts (not federal claims). Echoing the Florida Supreme Court, the District also argues it did not exact or take anything because it never issued a permit or collected an exaction.

Early on, there were reasons to think that this case would be an important case for planners and land use lawyers to watch. First, the Pacific Legal Foundation, which is representing Koontz, has shown a knack for litigating environmental and property rights cases before the U.S. Supreme Court, having participated in more than half a dozen landmark decisions. Indeed, it argued and won Nollan, and in March of this year, it won Sackett v. EPA, 566 U.S. __ (2012), which gave property owners the right to take EPA to court over a compliance order dealing with wetlands. Second, this case is positioned well as a vehicle for the Court’s property-rights advocates, as it seems to present the review of a clean issue of law, rather than a messy fact-specific or jurisdictional fight. Justices Scalia, Kennedy, and Thomas have shown an interest in the past in the timing of permit conditions. See Lambert v. San Francisco, 529 U.S. 1045, 1048 (2000) (dissenting from denial of certiorari).

Reading the tea leaves of oral arguments at the Supreme Court is always a dangerous business. That said, I and others have made several observations. First, Justice Scalia, who the landowner almost certainly needs to win a majority, seemed critical of whether anything had actually been taken. Second, while a majority of the Justices appeared at least somewhat sympathetic to the landowner’s plight, there was little agreement amongst them in terms of whether there was a constitutional harm and, if so, what the remedy to it should be. Finally, the reach of the unconstitutional conditions doctrine, which Nollan, Dolan, and Lingle indicate is the origin of exactions law, took center stage. This notoriously murky doctrine stands for the proposition that [a]cts generally lawful may become unlawful when done to accomplish an unlawful end, and a constitutional power cannot be used by way of condition to attain an unconstitutional result.” Frost v. R.R. Comm'n of Cal., 271 U.S. 583, 598-99 (1926). The Supreme Court has traditionally struggled with appropriate breadth of this doctrine, and they appear to be struggling with it in this case, as well.

Jacob T. Cremer is an attorney at Bricklemyer Smolker, P.A., in Tampa, Florida. His practice focuses on property rights, environmental, and land use law. He assisted counsel of record before the U.S. Supreme Court for the landowner-petitioners in Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). He co-authored an amicus brief in support of the landowner-petitioner in Koontz and attended oral arguments. Follow the developments on this case and others at his blog, The Florida Land Environment, www.jacobtcremer.com.

Florida Courts Must Defer to Administrative Agencies' Interpretation of Their Own Rules

In Florida, as in other states and in federal law, courts must give deference to an administrative agency's interpretation of its own rules. I've found that the average citizen usually finds this odd. Why should we allow an agency making a determination on a permit, entitlement, or other benefit to interpret its own rules? The short answer is administrative law is about efficiency, and not always about fairness.

In any case, the 2d DCA recently reinforced this principle in Duke's Steakhouse Ft. Myers, Inc. v. G5 Properties, LLC, - So. 3d -, 2013 WL 191922 (Fla. 2d DCA Jan. 18, 2013). Duke's challenged an order of the South Florida Water Management District approving an environmental resource permit (ERP). The administrative law judge (ALJ) recommended that the agency deny the permit. The District, however, issued a final order approving the ERP, rejecting the ALJ's interpretation of the District's rules:

[The District's] board did not reweigh the evidence or modify the ALJ's findings of fact. Rather, it rejected the ALJ's interpretation of the applicable Florida Administrative Code—specifically, the ALJ's conclusion of law that G5 did not meet BOR section 5.2.1(a) water quality requirements. Section 120.57(1)(l ) provides that an agency may reject or modify the ALJ's conclusions of law and interpretation of administrative rules, so long as its determination is as or more reasonable than those of the ALJ. Beyond peradventure, an agency bears the primary responsibility to interpret statutes and rules within its regulatory expertise and jurisdiction. See, e.g., Pub. Emps. Relations Comm'n v. Dade Cnty. Police Benevolent Ass'n, 467 So.2d 987, 989 (Fla.1985). An agency's interpretation of such statutes and rules does not have to be the only reasonable interpretation—only a permissible one, see, e.g., Suddath Van Lines, Inc. v. Dep't of Envtl. Prot., 668 So.2d 209, 212 (Fla. 1st DCA 1996), and should not be overturned unless clearly erroneous. See, e.g., Collier County Bd. of County Comm'rs v. Fish & Wildlife Conservation Comm'n, 993 So.2d 69, 72 (Fla. 2d DCA 2008).

The 2d DCA concluded that the District's interpretation of its rules were as or more reasonable than the ALJ's  interpretation. Thus, it affirmed the District final order granting the permit.

Need a Plain-Language Summary of Koontz?

My last post dealt in detail with the my observations following oral arguments in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). With good timing, the Hillsborough County Bar Association recently published my plain-language introduction to the case in its magazine, Lawyer (p. 41). It's excerpted below for easy reading.

Florida Once Again on the Forefront of Takings Law

In the development approval process, governments commonly require a dedication of real property to mitigate adverse impacts. But what if the request is for cash or for services? What if the request is unreasonable, and the landowner cannot use the property?

Land use lawyers and urban planners wonder if these questions will be answered now that the U.S. Supreme Court has granted review of Koontz v. St. Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). In what could be the most important land use decision in years, Koontz questions common bargaining practices that governments use when negotiating development permits.

An exaction is a government requirement to donate something in exchange for the right to develop property. Generally, the government cannot force landowners to give up the right to exclude others from property in return for the ability to develop it. It can, however, require mitigation of adverse development impacts.

If the mitigation involves access to real property, there must be an “essential nexus” and a “rough proportionality” between the exaction and the interest that the exaction is advancing. Dolan v. Tigard, 512 U.S. 374, 391 (2005); Nollan v. Cal. Coastal Com., 483 U.S. 825, 837 (1987). Otherwise, the government must pay just compensation because the landowner has lost the ability to exclude others from the property.

In Koontz, the government agreed to issue a permit if the landowner would work on government-owned culverts and canals seven miles away. The landowner refused, and the government denied the permit. When the landowner brought an inverse condemnation suit, the trial court and the Fifth DCA found the exaction illegal. The Florida Supreme Court reversed, holding that the Nollan-Dolan test only applied to exactions of real property, where a permit was actually issued imposing the onerous exaction. St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220 (Fla. 2011).

Now, the landowner asks the U.S. Supreme Court if exactions law applies beyond real property. That is, can the government make unreasonable requests for money and for work, when it cannot for property? Second, the landowner asks if a taking can occur where a permit is denied because an applicant rejects an illegal exaction. In other words, does the landowner have to accede to an unreasonable exaction in order to challenge it? This latter question is the more problematic for governments, since it could increase their exposure to takings litigation and limit a lucrative funding source.

These days, Florida is a hotbed of property rights litigation. Three years ago, Florida was defending its beach renourishment program before the U.S. Supreme Court. Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). That case broke new ground when a plurality of justices acknowledged that a court can take property, just as the legislative and executive branches can. Will Florida again be on the forefront of takings law?

Wrong Plaintiff, Right Theory: Why Property Rights May Still Win in Koontz

I'm back in Tampa after a whirlwind trip to watch oral arguments before the U.S. Supreme Court in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). It was cold and rainy at 5:55 when I arrived to take the second spot in the public line, but I was glad to see a friendly face as the first person in line.

Tough Questions for the Landowner

The Justices had tough questions for everyone on Tuesday morning. Judging by the post-argument commentary, the smart money seems to be on the government for the win:

• Lawrence Hurley at Greenwire gave a slight edge to the government.
• Damon Root though that the government got a surprise win, with Scalia's questioning taking him out of the landowner's corner.
• Lyle Dennison agreed that, surprisingly, the conservative Justices couldn't get on the same page to rule for the landowners.
• Jonathan Adler thought that Justice Scalia is key to a decision for the landowner.
• Robert Thomas agreed that when Justice Scalia gives you a hard time on a takings claim, you have an uphill battle.
• Prof. Gideon Kanner thought the Justices were off-base and muddled, as is usual in takings cases. 
• Even Paul Beard, who argued the case for the landowner, talked about how Justice Scalia didn't seem to be on board.

Maybe I have a contrarian streak. Maybe something about being present at the Supreme Court made a different impression on me. Maybe it's my past experience with the Supreme Court. Either way, I don't think the landowner has such bad chances as some of my colleagues.

The Unconstitutional Conditions Doctrine Unties the Gordian Knot

Certainly, we can't be too cheerful. Justice Scalia indicated several times that he was having trouble finding the taking in this case. But if you look closely, he may have been thinking through the distinction between a taking proper and a violation of the unconstitutional conditions doctrine. In full disclosure, my colleague David Smolker and I submitted an amicus brief in support of the property owner, arguing that the unconstitutional conditions doctrine is the key to understanding exactions law because it blends the protections of Due Process with those of the Takings Clause. So I admit up front that I have a dog in this fight. As we explained,

In the exactions context, this doctrine prohibits the government from requiring that a person give up the constitutional right to receive compensation when property is taken for a public use in exchange for a discretionary benefit conferred by the government where the benefit sought has little or no relationship to the property taken.... It indicates that the means by which valid ends are achieved matter: “[a]cts generally lawful may become unlawful when done to accomplish an unlawful end, and a constitutional power cannot be used by way of condition to attain an unconstitutional result.” Frost v. R.R. Comm'n of Cal., 271 U.S. 583, 598-99 (1926); see M. Merrill, Unconstitutional Conditions, 77 U. Penn. L. Rev. 880, 889 (1929) (Doctrine serves as “a barrier against subversive attacked by the government, state or federal, upon the privileges vouchsafed by the Constitution.”).

But judge for yourself:

JUSTICE SOTOMAYOR: Which -- how does that not address going too far? You just said it. If -- if this is unrelated to the denial of your permit of all uses of your land and you're saying that's the problem, which is I still have a use, I just want more, why does that entitle you to your lost profits? When were you ever entitled to start with the claim that somehow you're entitled to a permit as a matter of law?
MR. BEARD: We're entitled under the Unconstitutional Conditions Doctrine to not have to bear a public burden that has no bearing on the impact that we're trying to use on our property.
JUSTICE SCALIA: Yes, that's fine. That -that would enable you to challenge the denial of the permit, saying it's based upon an unconstitutional condition. But how does it -- how does it enable you to say there's been a taking? What has been taken?
MR. BEARD: What has been -- what has been taken in effect is his funds that have to be put now to a public use, the enhancement of 50 acres of public wetlands. And there is nothing in the takings clause, nothing
JUSTICE SCALIA: It hasn't -- it hasn't been taken. I mean, he turned it down.
MR. BEARD: Nothing was taken in Nollan and Dolan, either. What was proposed there, though, was a threat of a taking.
JUSTICE SCALIA: The -- the -- the permit was granted in Nollan and Dolan. And -- and the condition attached to the permit, therefore, took effect; namely, that you had to dedicate this easement over your -- over your beach whereas -- as my colleague pointed out, anybody could walk back and forth barefooted.

And later:

JUSTICE SCALIA: Justification is the protection of wetlands. That's a justification. The protection of wetlands. There's no necessary comparison, as Nollan and Dolan requires, between the harm that would be occasioned if the permit were granted and what the State is exacting in order to mitigate. That doesn't exist anywhere in -- in the analysis that you are talking about.
MR. WOLFSON: Well, Justice Scalia, there are -- there is another problem with the Nollan and Dolan claim in this case, which is, it's hard to see how you can have an exactions takings claim when nothing has ever actually been exacted.
JUSTICE SCALIA: Now, that is a problem.

So Justice Scalia seems to agree that the denial of the permit can be challenged under the unconstitutional conditions doctrine. But he is searching for a takings theory. Later, responding to questions from other Justices, counsel for the landowner again referenced the unconstitutional conditions doctrine:

MR. BEARD: Justice Breyer, there is another part, a very distinct part, and that part goes to the question of the condition that produced the denial. So there are -- there are actually two parts here. There's the conditioning of your permit. In other words, We will not issue you permits unless you agree to perform offsite mitigation. Now, the question under Nollan and Dolan is, was that condition constitutional? Was he asked to give up something that the State or the district in this case should not have asked him to give up in exchange for his right to use his property? Now, it's true as -- as, Justice Breyer, you mentioned, that the permit denial and whether that affects a regulatory taking of his land, of the thing he wants to use, that's an entirely different question, and it may raise another kind of claim, another kind of taking claim. But the crux of the claim that was litigated in this case from the trial court all the way up to the Florida Supreme Court is: Was the condition to perform offsite mitigation, and that was accepted as true by the courts below, that this was a condition that had been -

And Justice Kagan seemed to agree that it was appropriate to consider it:

JUSTICE KAGAN: Mr. -- Mr. Beard, I don't think anybody is contesting that there was a condition imposed or maybe there are. But -- you know, there's another question whether that position is a taking. And we've been trying to figure out what's the taking here. In Nollan and Dolan, they took an easement, they took a piece of land. So that's the taking. Now, you said the funds are the taking; is that correct?
Any time that somebody comes up with a proposal for -- for a developer to pay money in order to compensate the State for the costs that are associated with his development, that that is itself a taking?
MR. BEARD: I want to be clear that we're not saying that all monetary fees or exactions would be subject to Nollan and Dolan, only within the permit context, the special context of land use permitting.
JUSTICE KAGAN: No, I understand. But in the permit context, a State can't say to somebody, You have to pay to perform some service or to compensate without it being a taking and without it being subject to Nollan and Dolan analysis.

Chief Justice Roberts certainly picked up the point, and the government really could not run from it, other than to say that the government should get some leeway in applying unconstitutional conditions that relate to real property:

CHIEF JUSTICE ROBERTS: Just to nail it down, your position is that there is no limit in the Federal Constitution on what the agency can demand as a condition for the issuance of a permit?
MR. WOLFSON: No, no, no, I don't think that is our position. First of all, the Due Process Clause may certainly impose conditions. The Equal Protection Clause may certainly impose conditions.
CHIEF JUSTICE ROBERTS: But the Takings Clause does not.
MR. WOLFSON: If the conditions are so onerous that it would make it essentially impossible to derive any value from the land, that may very well call into question Penn Central or Lucas. I mean, in many ways this case could have been litigated as a very straightforward Penn Central case.

If I'm right that Justice Scalia sees a difference between a traditional taking and an exaction, through the unconstitutional condition, then the story might not be so bad for the landowners. I can understand why he questions that a taking could occur if a permit is denied based on an unconstitutional condition. But surely there has been a compensable injury because the landowner has then been deprived of property without due process of the law? The compensation should then be measured in the same manner as a temporary taking. So, ultimately, counsel for the landowner may have not had it quite right when he agreed with Justice Kennedy that there was "no due process claim" before the Supreme Court.

Justice Scalia's position should come as no surprise. He explained it in detail thirteen years ago in the denial of certiorari in Lambert v. San Francisco, 529 U.S. 1045 (2000). That case presented a very similar scenario, where a land use permit was denied because a developer refused to pay a monetary exaction. The Supreme Court refused to grant certiorari, and Justice Scalia wrote a detailed dissent. In it, he questioned whether there was a taking, and even whether Nollan and Dolan properly applied. But he did not question that the landowners rights had been violated. The test he proposed in that case was, "when there is uncontested evidence of a demand for money or other property–and still assuming that denial of a permit because of failure to meet such a demand constitutes a taking–it should be up to the permitting authority to establish either (1) that the demand met the requirements of Nollan and Dolan, or (2) that denial would have ensued even if the demand had been met."

Wrong Plaintiff, Right Theory?

My takeaway from all this is that, if exactions law really is premised on the unconstitutional conditions doctrine, as three Supreme Court cases have indicated, then the Court must almost certainly rule in favor of the landowners. If the Court does not rule for the landowners, then the doctrine really isn't what's driving exactions law. While that would be a loss for sound takings jurisprudence, that doesn't necessarily mean it will be a loss for private property rights.

Something about the Justice Scalia's questioning reminded me of the last case I saw arguments in at the Supreme Court. In Stop the Beach Renourishment, Inc v. Florida Dept. of Environmental Protection, 130 S. Ct. 2592 (2010).  That was the case where I worked for counsel of record in representing the landowners in a judicial takings claim after the Florida Supreme Court rewrote its waterfront property law. At oral argument in that case, Justice Scalia was also skeptical of the landowner's theories that it had been harmed when he questioned my former colleague D. Kent Safriet:

MR. SAFRIET:  That is right, Your Honor, but the -- there is no case law in Florida or no principle that says avulsion can occur by artificial means.  So there is -- the beach restoration, where they placed sand on the beach, is not avulsion.
JUSTICE SCALIA:  If there’s no case law, it seems to me you've lost your case. 

When Justice Scalia wrote the opinion in the case, a majority of the Supreme Court agreed the landowner did not have a valid claim. Even so, Justice Scalia reached beyond that to establish a doctrine of judicial takings, which a plurality of the Supreme Court adopted. Perhaps that is what we will see here: an opinion that sends Mr. Koontz home without relief but that nevertheless advances private property rights. Wrong plaintiff; right theory.

EDIT 10:45 AM: Cristina Martin, a legal fellow at the Pacific Legal Foundation, independently came to a conclusion remarkably similar to my own.