Opportunity Lost? Can Condemnation Blight be a Taking or a Substantive Due Process Violation?

Take note, property rights mavens: a takings claim is a separate and distinct claim from a substantive due process claim, and it's a mistake to treat them as coextensive. Fresh out of the Third District Court of Appeals is Teitelbaum v. South Florida Water Management District, No. 3D14-963 (Sep. 30, 2015), which focuses on condemnation blight and its relationship to inverse condemnation claims, but which may be more useful for its teachings on framing a property rights case.

A large group of plaintiffs sued the District for depressing the value of their properties that were long zoned as agriculture in order to pursue environmental goals related to the nearby Everglades. The District had bought up as much land as it could in the area, and when it could not acquire their properties, it passed a condemnation resolution. It did not make any attempts to actually acquire the properties, though. Slip Op. at 4. The plaintiffs further alleged that the District had prevented Miami-Dade County from rezoning the properties and that the District's acquisition of property in the area in a "checkerboard" fashion prevented the plaintiffs from developing their properties. Slip Op. at 5.

Because there was no physical taking and the plaintiffs had not applied for a development permit to test what could be permitted, the plaintiffs were stuck asserting a novel claim:

Likely recognizing that the Water District’s conduct would not constitute a taking under the traditional takings formulations, the Plaintiffs have not argued their claims under any ... well-established standards. Rather, the Plaintiffs urge this Court to recognize a new cause of action and adopt a new category of governmental activity that will result in a per se taking: condemnation blight. Under the Plaintiffs’ proposed formulation for a condemnation blight claim, a constitutional taking would occur when: (1) the government makes an official, publicly-announced declaration of its intent to condemn the property that goes beyond mere planning; (2) the government engages in some postannouncement unreasonable conduct, such as protracted delay in actual condemnation proceedings or interference with the property owner’s rights; and (3) the property suffers impairment of value or the property owner’s use and enjoyment of the property is disrupted. We decline to adopt this proposed standard as a per se taking.

Slip Op. at 10.

The Court's opinion isn't terribly surprising. In Florida, condemnation blight is about value: it precludes the government from depressing the value of a property before it subjects it to a de jure or de facto taking by calculating the property's value before it was depressed.Earlier this year, the court had held that condemnation blight does not itself give rise to a taking, although condemnation blight may be considered when the property is valued for the government's liability. On rehearing, the court withdrew that opinion and reissued one that held the same thing, with some further embellishment, explaining.

The interesting part about the opinion is in the court addressing the plaintiffs' focus on the District's "unreasonable" conduct rather than on the effect on their property." The court held that this "perspective confuses the aim of the Takings Clause, as the cases uniformly analyze the effect of the governmental actions and regulations on the property to determine whether they are so onerous as to constitute an ouster." Slip Op. 11.

Attentive readers of this blog might think this sounds more like a Substantive Due Process argument, since it focuses on the government's means rather than on its ends. And you would be right. However, the court declined to take that issue up on rehearing, deeming it to have been abandoned:

One of the appellants’ primary arguments in their motion for rehearing is that this Court should have analyzed their Due Process Clause claims as a distinct cause of action separate and apart from their Takings Clause claims under the authority of Tampa-Hillsborough County Expressway Authority v. A.G.W.S. Corp., 640 So. 2d 54, 57-58 (Fla. 1994). While there is an interplay between these two constitutional clauses and many takings claims are analyzed coextensively with due process claims, the appellants are correct that these claims can be pled as distinct causes of action when the allegations involve governmental actions or regulations on private property. Id. The alleged unreasonableness of the Water District’s actions, while irrelevant for a takings analysis, would certainly have been germane to the Plaintiffs’ substantive due process claim, and their argument would likely require further consideration had it been raised prior to the Plaintiffs’ motion for rehearing. In this case, however, the trial court treated both causes of action as coextensive and made no separate findings or rulings regarding the Plaintiffs’ due process claim. The appellants did not challenge that aspect of the trial court’s decision below, did not brief or argue that issue before this court—indeed, they did not even independently cite the A.G.W.S. decision in their initial or reply brief—and now raise this point of error for the first time in their motion for rehearing. As such, the appellants have waived that issue ... and we do not comment on the merits of that claim.

Slip Op. at 11-12. Too bad. We could have used some more guidance here in Florida on Substantive Due Process challenges to the government's unreasonable actions to prevent development. 

Lesson learned: figure out whether you're challenging the government's means or its ends early on in a property rights challenge.

Florida's New Environmental Resource Permit Rules

As you may have heard, Florida environmental resource permit (ERP) process has been overhauled and streamlined with the Statewide Environmental Resource Permit (SWERP). The Florida Bar Journal recently ran a good piece on the subject, "New Environmental Resource Permit Rules," written by Susan Roeder Martin. Susan is a senior specialist attorney with the South Florida Water Management District. It's always nice to see pieces like this by agency attorneys to give those of us in private practice an insight into working with them. Ms. Martin begins with a quick backgrounder on the program:

Florida’s water resources are regulated pursuant to the Environmental Resource Permit (ERP) program under Part IV of F.S. Ch. 373. This broad regulatory program went into effect on October 3, 1995, and applies to activities that involve the alteration of surface water flows, including new activities in uplands that generate stormwater runoff from upland construction, as well as dredging and filling in wetlands and other surface waters. The program covers everything from residential and commercial development in wetlands and uplands, to construction of roads, to certain agricultural alterations that impede or divert the flow of surface waters.

ERP applications are processed by either the Department of Environmental Protection (DEP) or one of the state’s five water management districts in accordance with the division of responsibilities specified in operating agreements between DEP and the individual water management districts. The ERP program is in effect throughout the state. 

Each of the five water management districts has historically had different rules for processing ERPs. The rules of each of the water management districts were also adopted by DEP and are utilized by DEP in processing permits. While the environmental criterion was substantially the same in all the water management districts, the processing and administration varied.

The problem with ERP, though, was that this variety led to a lot of confusion and disagreements across the districts; hence the need for the SWERP. After discussing the Legislature's directive for development of the SWERP, Ms. Martin details the permit categories, statutory and rule-based exemptions, fees, and procedures. She then includes a detailed discussion of how under the new SWERP, there are still differences across the districts. The Applicant's Handbook now provides the mechanism by which the districts can differentiate their procedures:

In the pre-statewide ERP rules, each of the five water management districts’ technical criteria was set forth in a separate volume known as the applicant’s handbook (AH) or the basis of review (BOR), incorporated by reference into each water management district’s rules. Each AH or BOR was also adopted by reference by DEP. The pre-statewide ERP AHs and BORs include environmental, water quality, water quantity, and procedural criteria.

***

What was formerly referred to as the AH or BOR in each water management district is now called the Environmental Resource Permit Applicant’s Handbook Volume II for Use within the Geographic Limits of the Applicable Water Management District (AH II). AH II includes water quality and quantity design and performance standards, hydrologic basins, and regional watersheds applicable to each water management district. The retention of these provisions in the individual AH II and the retention of special basin criteria satisfies F.S. §373.4131(1)(c)2, which requires that the rules account for different physical or natural characteristics, including special basin considerations, of each water management district. AH II is not generally applicable to 1) projects that cause no more than an incidental amount of stormwater runoff, such as a single-family home up to a quadruplex, which is not part of a larger plan of development; 2) stand-alone in-water projects and shoreline stabilization type projects; 3) docks and piers; 4) activities that do not add more than a de minimis amount of impervious surface; 5) exempt activities; and 6) activities that qualify for a general permit.31

Importantly, water quality and quantity criteria from each water management districts’ AH or BOR are retained. With respect to design and performance standards for stormwater quality and quantity, each water management district, with DEP oversight, may continue to adopt rules on these subjects.32 The criteria set forth in AH II further the goal of meeting the water resource objectives in Part IV of F.S. Ch. 373. Performance criteria were used when possible.

Many thanks to Ms. Martin for this informative article. If you'd like more information, check out DEP's SWERP website, or the webinar produced by the Florida Bar's Environmental and Land Use Section.

New Florida Rule to Eliminate Water Management District Fees for Some Forestry-Related Activities

In good news for Florida's timberlands owners, the Florida Forestry Association reports:

The $250 fee for receiving a permit from the state's Water Management Districts (WMDs) for certain forestry-related activities is being eliminated with the adoption by Florida DEP of a revised environmental permitting system. Forestry activities, such as fill-road construction and stream crossings, that formerly required a "Noticed General Permit" (NGP) now qualify for the new "No-Fee Noticed Exemption for Minor Silvicultural Surface Water Management Systems" (Rule Number 62-330.0511 F.A.C). This new rule goes into effect on October 1, 2013, in each of the five WMDs. It's important to note that this very positive regulatory change is the direct result of FFA's Environmental Committee meeting with DEP officials last year to discuss the way silviculture was being regulated by the WMDs.

Review the full rule and all the activities for which there will no longer be a fee here.

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.

Will the U.S. Supreme Court Grant Review of Florida's Koontz Case to Clarify Exactions Law?

I've written before about a Florida property owner's request that the U.S. Supreme Court review an exactions decision by the Florida Supreme Court. Readers will recall that in St. Johns River Water Management District v. Koontz, 77 So. 3d 1220 (Fla. 2011), the Florida Supreme Court severely limited exactions law in this state. For the uninitiated, exactions are government requirements to donate something (usually real property) in exchange for a development right or permit. The U.S. Supreme Court requires exactions to meet a pair of conditions, sometimes called the Nollan-Dolan test: First, 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). Second, 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).

The U.S. Supreme Court has not yet given much more guidance on exactions, and confusion has been the result. The Florida Supreme Court forged its own path, holding that the Nollan-Dolan test only applies to (1) exactions of real property (2) where a permit was actually issued and imposed an exaction. Consequently, in Florida, there are now relatively few restrictions on what a local government can ask for in exchange for a development permit. Other states, like Texas, have seen little distinction between a government asking for real property and asking for personal property (like money). This latter view seems to make the most sense to me: real and personal property are fungible, and both can be used to mitigate development impacts, so why should the government be able to avoid the Takings Clause by asking for personal property?

The District has responded to the Pacific Legal Foundation's petition for certiorari. The brief doesn't seem to be available elsewhere online, so I've posted the District's opposition brief here and below. The District makes a couple of arguments. First, the Supreme Court does not have jurisdiction because of Koontz's reservation of his rights to take claims to federal court later. Second, the District did not exact anything because it never issued a permit or collected an exaction.

These problems do not seem to be insurmountable to the Court in taking the case on. First, Florida's Takings Clause is interpreted coextensively with the federal Takings Clause, so the Court could accept jurisdiction just as it did when a very similar argument was made in the briefing of Stop the Beach Renourishment v. Florida Department of Environmental Protection,130 S. Ct. 2592 (2010). Second, if the District's exaction were unconstitutional and so onerous that the landowner could not continue with its plan (or do anything else), why should it be shielded from liability? In effect, as the trial court seemed to recognize, that may just mean a temporary taking occurred. 

I'll have an article in the American Planning Association's Planning & Law Newsletter soon taking a deeper look at these issues.

First Quarter 2012: Recent Florida Environmental and Land Use Case Law

The Florida Bar's Environmental and Land Use Law Section has posted my column on the environmental and land use cases in Florida that you need to know about in the first quarter of 2012.

• Graves v. Pompano Beach, 74 So. 3d 595 (Fla. 4th DCA 2011), establishing that plat approval does constitute a development order under section 163.3215, Florida Statutes, reversing the court's previous opinion upon rehearing.
• Martin County Conservation Alliance v. Martin County, 73 So. 3d 856 (Fla. 1st DCA 2011), confirming on rehearing sanctions imposed on environmental organizations under section 57.105, Florida Statues, as they were held to have pursued appellate review without any foundation in law or fact.
• St. Johns River Water Mgmt District v. Koontz, 2011 WL 5218306 (Fla. Nov. 2, 2011), declining to recognize an exaction under U.S. Supreme Court precedents Nollan and Dolan because the theory is applicable only to exactions involving real property.
• Venice v. Gwynn, 2011 WL 6934531 (Fla. 2d DCA Dec. 30, 2011), stating that ordinances that do not deprive all or substantially all of a property’s value fail the Penn Central test and thus do not violate the Constitution as uncompensated taking of property.

Take a look at past posts for previous cases I've summarized. As usual, please email me with recent cases that others need to know about.

Fourth Quarter 2011: Recent Florida Environmental and Land Use Case Law

Continuing my Florida environmental and land use case law updates, I summarized the cases below with my co-author in the latest newsletter of the Florida Bar's Environmental and Land Use Law Section.

• Miami-Dade Cnty. v. Torbert, 
• 36 Fla. L. Weekly D1674a 
• (Fla. 3d 
• DCA Aug. 3, 2011), holding that plat restrictions must be incorporated and reference into a deed to be valid.
• St. Johns River Water Mgmt. Dist. v. Molica, 2011 WL 3627412 (Fla. 5th DCA Aug. 19, 2011), declaring that Water Management Districts have the power to create an administrative rule requiring environmental resource permits (ERP) for dredging and filling of surface water and wetlands.
• Bush v. Mexico Beach, 2011 WL 4345169 (Fla. 1st DCA Aug. 31, 2011), confirming previous case law requiring comprehensive plan consistency challenges after a local government hearing to be brought in de novo proceedings in circuit court, but allowing challenges to the hearing based on other reasons to be brought as certiorari proceedings.
• Mickel v. Norton, 2011 WL 4415353 (Fla. 2d DCA Sept. 23, 2011), holding that property owners do not have a riparian right to an unobstructed view of the water body unless the property directly borders it.
• 1000 Friends of Fla., Inc. v. Palm Beach Cnty., 2011 WL 4577746 (Fla. 4th DCA Oct. 5, 2011), stating that comprehensive plans are to be interpreted using the same rules of construction as statutes.
• West Palm Beach v. Roberts, 2011 WL 4949795 (Fla. 4th DCA Oct. 19, 2011), affirming a decision holding a city liable for inverse condemnation where it demolished a structure without giving the owner adequate notice.
• Pembroke Ctr., LLC v. Fla. Dep’t of Transp., 64 So. 3d 737 (Fla. 4th DCA 2011), denying an inverse condemnation claim where there were mere "planning activities" but no loss of activities.

You can detailed description in this quarter's newsletter. Please email me new cases we should review.