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.

Did the Supreme Court Mean It When It Said Landowners Must Have a Practical Way of Challenging an Agency's Jurisdiction?

In my last post, I wrote about how the nationwide stay would likely remain in effect for WOTUS, the new rule written to redefine the meaning of the Waters of the United States under the Clean Water Act by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers. As I implied last month, if WOTUS survives the rule challenges, one effect may be that there are fewer Jurisdictional Determination (JDs).

If that happens, then it would make two cases that are being litigated by the Pacific Legal Foundation before the U.S. Supreme Court even more important. In U.S. Army Corps of Engineers v. Hawkes Co., Case No. 15-290 (2015), The Supreme Court will decide whether a JD can be challenged in court, or whether a landowner has to face the unenviable choice of having to spend tens of thousands of dollars to get a permit denied versus moving forward with a project without asking permission and risking fines and criminal penalties.

In Hawkes, a peat mining company wanted to mine in wetlands. The Corps issued a JD claiming jurisdiction, and issued the JD even after an administrative challenge. The peat company sued, but the district court dismissed, finding that the JD was not a challengeable final agency action. The Eighth Circuit reversed, splitting with the Ninth and Fifth Circuits.

The Eighth Circuit said that all final agency actions for which there is no other adequate judicial remedy must be able to be challenged. To be final, an agency’s action must be the end of the decisionmaking process, and it must have legal consequences for someone. Like every other court that has addressed the issue, the Eighth Circuit found that a JD was the end of a decisionmaking process. It disagreed with other courts, though, and found that the JD jad legal consequences, since the “prohibitive costs, risk, and delay of these alternatives to immediate judicial review” were inadequate substitutes. It held that the Supreme Court had mandated judicial review as a remedy in such cases in Sackett v. EPA, 132 S.Ct. 1367 (2012).

Another very similar case has been pending before the Supreme Court since late 2014. The Supreme Court initially denied certiorari of Kent Recycling Services, Inc. v. U.S. Army Corps of Engineers, Case No. 13-30262 (2014) (also known by the name of another plaintiff below, Belle Co., LLC). After the Hawkes decision by the Eighth Circuit, PLF moved for rehearing, which has yet to be decided.

Oral argument in Hawkes will be on March 30, 2016, so both cases should be decided soon. Ultimately, the Supreme Court will be decided a simple question: did it mean what it said in Sackett, that landowners must have a practical way to challenge an agency’s assertion of jurisdiction over their land?

WOTUS Breaking News: 6th Circuit to Hear Rule Challenge, Stay Likely to Remain in Effect

Big news today in the environmental world: the 6th Circuit has said it will hear challenges to a new rule developed by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers, known as WOTUS ("Waters of the United States"). This mean that the nationwide stay that the 6th Circuit issued last year is likely to remain in place until it comes to a final decision on the merits of the 20-odd lawsuits filed against the rule.

Readers of this blog have seen several posts on this topic in recent months because of its importance to landowners in Florida. As I wrote last month,

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory reach under the Clean Water Act (CWA). The CWA prohibits the discharge of pollutants into waters of the United States without a permit. Violators are subject to penalties of thousands of dollars per day (even if unintentional) or costly lawsuits by neighbors or environmentalists.

Many of the waters subject to federal jurisdiction are easy to identify: navigable water bodies, rivers, streams, creeks, impoundments of those waters, and wetlands directly adjoining any of those waters. Beyond those, though, what qualifies has been unclear for decades. A series of U.S. Supreme Court cases created confusion because the justices could not agree on just how far federal agencies could reach. This meant that, for many small waters and wetlands, the Corps had to perform a site-specific jurisdictional determination. While burdensome to the agencies, this analysis at least forced them to use science to determine whether more-isolated waters and wetlands had a “significant nexus” with a water that was subject to federal jurisdiction.

Now, the federal agencies have adopted WOTUS, a rule that will mean fewer case-by-case analyses. While this may make the process more “efficient” for the agencies, that comes at the expense of more areas automatically being deemed as falling under federal jurisdiction simply because the agency says so, rather than because of any scientific connection to another water.

Many groups filed suit last year, and after one federal district (trial) court in North Dakota issued a stay limited to the states involved in that case, the 6th Circuit issued a nationwide stay on the application of WOTUS. Then, the fight became about whether federal district courts or circuit courts should hear the substance of the parties' challenges to WOTUS. In the meantime, the 11th Circuit, which has jurisdiction over Florida's challenge, cancelled oral arguments on its case, saying it would reschedule once the 6th Circuit had made a decision.

Today, the 6th Circuit did just that, ruling that it had jurisdiction over the challenges, and not district courts. Although it is not yet entirely clear, the decision most likely means that the nationwide stay on any application of WOTUS will remain in place. Landowners should be pleased with the direction of this litigation so far.

New Brief Article: What Does WOTUS Mean for the Timber Industry and Forest Landowners?

My friends at the Southeastern Wood Producers Association recently published an article I wrote for them in their quarterly magazine, Out of the Woods: What Does WOTUS Mean for the Timber Industry. I've written several times about this issue and the Waters of the United States Rule. The problem comes down to the extent of the federal government's reach over water bodies and wetlands, especially those that have nothing to do with navigation or interstate commerce. The article is excerpted below.

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory reach under the Clean Water Act (CWA). The CWA prohibits the discharge of pollutants into waters of the United States without a permit. Violators are subject to penalties of thousands of dollars per day (even if unintentional) or costly lawsuits by neighbors or environmentalists.

Many of the waters subject to federal jurisdiction are easy to identify: navigable water bodies, rivers, streams, creeks, impoundments of those waters, and wetlands directly adjoining any of those waters. Beyond those, though, what qualifies has been unclear for decades. A series of U.S. Supreme Court cases created confusion because the justices could not agree on just how far federal agencies could reach. This meant that, for many small waters and wetlands, the Corps had to perform a site-specific jurisdictional determination. While burdensome to the agencies, this analysis at least forced them to use science to determine whether more-isolated waters and wetlands had a “significant nexus” with a water that was subject to federal jurisdiction.

Now, the federal agencies have adopted WOTUS, a rule that will mean fewer case-by-case analyses. While this may make the process more “efficient” for the agencies, that comes at the expense of more areas automatically being deemed as falling under federal jurisdiction simply because the agency says so, rather than because of any scientific connection to another water.

Thus, WOTUS now designates all tributaries and waters and wetlands “adjacent” to or “neighboring” other jurisdictional waters as under federal jurisdiction. In some cases, waters and wetlands 1,500 feet away from another water are considered “neighboring,” even if there is no hydrologic connection. Even ephemeral drains and ditches that water only flows in after a rain are now almost always under federal jurisdiction.

These changes may not seem important at first, since the timber industry has traditionally been excluded from many permitting requirements. For example, CWA permits are not required to manage the runoff from common forestry practices, such as site preparation, thinning, control burns, and road construction, as long as they are undertaken in accordance with standard industry practice. Even so, WOTUS is important to watch because it will expand the need for obtaining CWA permits for some commonplace practices, such as for application of herbicide and fertilizers in and near wetlands and for construction of some roadside ditches near wetlands. Prudent professionals will need to think twice about past common knowledge.

WOTUS has provoked fierce opposition. Legislation to block it is progressing, but it would likely face a presidential veto. At least half the states are challenging WOTUS in court. A federal judge has temporarily stopped the rule’s implementation, but it is not clear whether this will last. Therefore, the ultimate fate of WOTUS remains unclear. For now, the timber industry should be actively engaging elected officials to encourage them to take action.

As I mentioned last week in a post about another article I wrote on this topic, this issue is moving fast and there are a few updates since I wrote the article:

• The Government Accountability Office found that EPA broke federal lobbying and propaganda laws in its zeal for pushing the rule forward. 
• The Senate voted to kill the rule; the House did the same recently; and President Obama has vowed to veto any such measures.
• A federal judge enjoined the rule's implementation across the entire country, including Florida. However, it's not clear how long this injunction will last, and the legal wrangling is expected to continue for some time.

I'll have a more comprehensive update on the status of the litigation in the coming week.

New Brief Article: How Does WOTUS Affect Your Clients' Wetlands?

Many thanks to the Hillsborough County Bar Association, which published an article I wrote for their Lawyer magazine entitled How Does WOTUS Affect Your Clients' Wetlands? Readers of my blog will be familiar with my earlier posts on the Waters of the United States Rule. The question this new rule raises is how far does the federal government's power reach over water bodies and wetlands, especially those that have nothing to do with navigation or interstate commerce? The article is excerpted below.

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. 80 Fed. Reg. 37054 (June 29, 2015). The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory jurisdiction under the Clean Water Act (CWA).

The CWA prohibits the discharge of pollutants into waters of the United States without a permit. The outer boundaries of what qualifies as a jurisdiction water have been unclear for decades. A series of U.S. Supreme Court cases have indicated that, while the agencies’ jurisdiction is broad, it does not extend to the outer reaches of the Commerce Clause. See Rapanos v. United States, 547 U.S. 715 (2006); Solid Waste Agency of Northern Cook Cnty. v. U.S. Army Corps of Eng’rs, 531 U.S. 159 (2001); Riverside Bayview Homes, Inc. v. United States, 474 U.S. 121 (1985).

One of these cases, Rapanos, created a great deal of confusion because the plurality, a concurrence by Justice Kennedy, and the dissent all developed different jurisdictional tests. The agencies have focused on Justice Kennedy’s “significant nexus” test. Under it, if a water has some appreciable impact on a traditionally-regulated water under the CWA (like a navigable water), then that water is also jurisdictional. This has meant that many small waters and most wetlands have been subject to the “significant nexus” analysis on a case-by-case basis. This led to a great deal of informal agency guidance, including wetland delineation manuals that attempted to use scientific methods to aid decision making.

According to EPA and the Corps, WOTUS increases regulatory certainty by reconciling past practices, science, and case law. It does so by expanding the scope of waters and wetlands that are categorically classified as jurisdictional, rather than subject to a case-by-case review. Tributaries and waters and wetlands “adjacent” to or “neighboring” jurisdictional waters are now categorically jurisdictional. In some cases, waters and wetlands 1,500 feet from a jurisdictional water are considered “neighboring,” even if there is no hydrologic connection. See 33 CFR § 328.3(c)(2). WOTUS also codifies some exclusions that are are based on agency practice, including for minor ditches and small artificial ponds. See 33 CFR § 328.3(b).

WOTUS has provoked fierce opposition. Legislation to block it is progressing, but it would likely face a presidential veto. At least ten federal law suits are challenging the rule (with at least half the states as plaintiffs), alleging that WOTUS expands federal jurisdiction beyond the CWA’s limits. A federal judge recently enjoined the rule’s implementation in thirteen states, but this did not include Florida. Therefore, while the ultimate fate of WOTUS remains unclear, what is certain is that Florida landowners will be required to comply with it in the short term. What is also certain that this new rule will result in more Florida wetlands being categorically defined as jurisdictional rather than being subject to case-by-case analysis.

I'll give a full update post on this topic soon, but since just since my article was published in late 2015:

• The Government Accountability Office found that EPA broke federal lobbying and propaganda laws in its zeal for pushing the rule forward. 
• The Senate voted to kill the rule; the House is expected to do the same soon; and President Obama has vowed to veto any such measures.
• A federal judge enjoined the rule's implementation across the entire country, including Florida. However, it's not clear how long this injunction will last, and the legal wrangling is expected to continue for some time.

 Stay tuned.This issue isn't going away anytime soon.

Development Permit Extension Deadline Approaching

I previously wrote about how the extensions to some development permits that were made available by Governor Scott's executive orders declaring states of emergency due to severe flooding and a tropical storm. Section 252.363, Florida Statutes, provides for deadlines for landowners and holders of these development permits who are seeking to take advantage of these extensions. While one deadline applicable to only a few counties has already passed, the deadline for the Governor's statewide emergency declaration is January 25, 2016. Landowners with eligible development permits should act quickly.

Have a Development Permit in Florida? You May Be Able to Extend It.

As I wrote about in a recent update with my Stearns Weaver colleagues Reggie Bouthillier and Ken Metcalf, two of Governor Scott's latest executive orders present opportunities for the holders of certain types of development permits in Florida. On August 6, 2015, Governor Scott declared an emergency due to severe flooding in Hillsborough, Pasco, Pinellas, Dixie, and Taylor Counties. On August 28, 2015, Governor Scott declared an emergency across the state due to the impending arrival of Tropical Storm Erika.

Section 252.363, Florida Statutes, provides for extensions in certain circumstances for some development-related permits:

252.363 Tolling and extension of permits and other authorizations.— 

(1)(a) The declaration of a state of emergency by the Governor tolls the period remaining to exercise the rights under a permit or other authorization for the duration of the emergency declaration. Further, the emergency declaration extends the period remaining to exercise the rights under a permit or other authorization for 6 months in addition to the tolled period. This paragraph applies to the following:
1. The expiration of a development order issued by a local government.
2. The expiration of a building permit.
3. The expiration of a permit issued by the Department of Environmental Protection or a water management district pursuant to part IV of chapter 373.
4. The buildout date of a development of regional impact, including any extension of a buildout date that was previously granted pursuant to s. 380.06(19)(c).
(b) Within 90 days after the termination of the emergency declaration, the holder of the permit or other authorization shall notify the issuing authority of the intent to exercise the tolling and extension granted under paragraph (a). The notice must be in writing and identify the specific permit or other authorization qualifying for extension.
(c) If the permit or other authorization for a phased construction project is extended, the commencement and completion dates for any required mitigation are extended such that the mitigation activities occur in the same timeframe relative to the phase as originally permitted.
(d) This subsection does not apply to:
1. A permit or other authorization for a building, improvement, or development located outside the geographic area for which the declaration of a state of emergency applies.
2. A permit or other authorization under any programmatic or regional general permit issued by the Army Corps of Engineers.
3. The holder of a permit or other authorization who is determined by the authorizing agency to be in significant noncompliance with the conditions of the permit or other authorization through the issuance of a warning letter or notice of violation, the initiation of formal enforcement, or an equivalent action.
4. A permit or other authorization that is subject to a court order specifying an expiration date or buildout date that would be in conflict with the extensions granted in this section.
(2) A permit or other authorization that is extended shall be governed by the laws, administrative rules, and ordinances in effect when the permit was issued, unless any party or the issuing authority demonstrates that operating under those laws, administrative rules, or ordinances will create an immediate threat to the public health or safety.
(3) This section does not restrict a county or municipality from requiring property to be maintained and secured in a safe and sanitary condition in compliance with applicable laws, administrative rules, or ordinances.

Some local governments, like Palm Beach County, have already created forms to help permit holders in exercising their right to an extension. Even where they have, though, permit holders need to pay particular attention to whether one or both extensions apply and whether other statutory procedures provide further benefits. 

In any case, as the Florida Attorney General has explained, the burden is always on the landowner or permit holder to obtain the extension in the proper manner. They should act quickly to exercise their rights to these extensions.

Federal Jurisdiction over Wetlands Significantly Expanded in Florida

I've had a lot of questions and calls lately about the Army Corps of Engineers' and the EPA's "Clean Water Rule." It is otherwise known as the Waters of the United States Rule (WOTUS), and it significantly expands the federal government's regulatory jurisdiction, especially in Florida. The question is this: how far does the federal government's power reach over water bodies and wetlands, especially those that have nothing to do with navigation or interstate commerce?

As most of you know by now, I've joined the Tampa office of Stearns Weaver. My Tallahassee colleague Reggie Bouthillier, our summer clerk William Anderson, and I wrote an in-depth briefing to update Florida landowners and consultants on how this new rule might affect them. At a conference this summer, a well-known environmental scientists quipped that the new rule of thumb in Florida is that when it rains, there are enough puddles to make the entire state subject to federal jurisdiction. He was only half joking.

Here's the summary of our briefing:

On May, 27, 2015, the United States Environmental Protection Agency ("EPA") and the United States Army Corps of Engineers ("Corps") issued the final "Clean Water Act Rule," aimed at clarifying the jurisdictional definition of "waters of the United States" ("jurisdictional waters") under the Clean Water Act ("CWA"). The new rule attempts to increase regulatory certainty by reconciling past agency practices, science, and U.S. Supreme Court decisions. As a result, Florida landowners and developers will likely need CWA permits where they were not previously necessary. 

The CWA prohibits the discharge of pollutants into jurisdictional waters. Even though this concept is key to the agencies' regulatory jurisdiction, its outer boundaries have been unclear and have been subject to numerous court challenges. While navigable waters have traditionally been viewed as jurisdictional, most other waters (including wetlands) have been subject to case-by-case analysis to determine whether those waters had a "significant nexus" with navigable waters. Under the Clean Water Act Rule, however, many more waters and wetlands will be categorically defined as jurisdictional waters, in some cases even if the water is relatively isolated and wholly intrastate. Consequently, the rule does give more regulatory certainty, but that certainty gives landowners and developers less flexibility and makes challenges to jurisdictional determinations more difficult. 

On August 28, 2015, the Clean Water Act Rule will go into effect and land owners and developers will face increased regulation, translating into additional costs, timing, and permitting requirements for projects. It is unclear whether efforts to delay the rule's implementation will be successful. Legislation blocking implementation of the rule has passed the House and is pending in the Senate, but it would likely face a presidential veto. At least ten federal law suits are challenging the rule, and several seek preliminary injunctions against the rule's enforcement. 

In light of this new rule and the uncertainty surrounding it, landowners and developers need to be vigilant in protecting their rights in the federal permitting process.

Read the full article here. Since this was published, you should know that a federal judge in North Dakota has issued an injunction against the rule's implementation. At this time, the federal agencies are taking the position that the order only applies to implementation in those states involved in that particular lawsuit. Florida is not one of them - so the Corps and EPA have been implementing the new rule since last Friday, August. 28, 2015.

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).

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.

A Cautionary Tale for Environmental and Land Use Practitioners: Florida Supreme Court Declines to Review Environmental Organization Sanctions

Today, the Florida Supreme Court decided not to a review a 1st DCA decision sanctioning environmental organizations. Martin Cnty. Conservation Alliance v. Martin County, - So. 3d. -, 2013 WL 1908644, No. SC11-2455 (May 9, 2013), dismissing as improv. granted Martin Cnty. Conservation Alliance v. Martin Cnty., 73 So. 3d 856 (Fla. 1st DCA 2011) (original opinion revised on motion for rehearing). The Court originally accepted jurisdiction of the case on the grounds that the 1st DCA opinion expressly and directly contradicted with a decision by another district court of appeal. After further review, the Court determined that jurisdiction was improvidently granted and declined review of the case.

Keep in mind that, under Article V, Section 3 of Florida's Constitution, the Florida Supreme Court's jurisdiction is fairly limited. It has much stricter limitations on the cases it can hear than does the United States Supreme Court. In Florida, our court system has been set up so that the five district courts of appeal are the courts of last resort except in certain circumstances. This was not one of those circumstances.

That means the 1st DCA's opinion from 2011 is now final. As a reminder, I said previously that this case would be important to watch for anyone interested in environmental, land use, or administrative law in Florida. In a previous post, I explained:

[The Alliance] challenged two ordinances amending the Martin County comprehensive plan .... The Administrative Law Judge (“ALJ”) concluded the amendments would not cause environmental harm, and the Department of Community Affairs affirmed via issuance of an “in compliance” final order. The appellants appealed, but the First DCA dismissed the appeal for lack of standing, and it ordered appellants to show cause why sanctions should not be imposed for filing an appeal where appellate standing was lacking. The court, on its own initiative, has since withdrawn that order and replaced it with one holding the appeal to be in violation of section 57.105(1), Florida Statutes, and imposing sanctions .... Consequently, the First DCA imposed sanctions, stating that by advancing legal positions unsupported by material facts or law, appellants were statutorily subject to section 57.105 sanctions.

For a much more in-depth analysis, see my review of the 1st DCA opinion in the April 2012 edition of the Florida Bar's Environmental & Land Use Law Section Reporter.

This case serves as a cautionary tale to environmental and land use practitioners--and their clients--that advocacy in support of a position can sometimes go too far. That's not to denigrate the advocates in this case. There were good lawyers on both sides of this issue. But it should certainly go into the calculus of thinking about cases now. Per the 1st DCA's order, the sanctions will now be borne in equal part by the environmental organizations and their attorneys.

EDIT 5/10/2013: Bruce Ritchie has an article up at the Florida Current about the decision.

EDIT 5/29/2013: I've made some slight adjustments in the article to indicate that the Florida Supreme Court actually dismissed the case as improvidently granted, meaning that it accepted the case for review, and after considering it further, declined to review it.

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.

A Jargon-Free Property Rights Update for Forest Landowners

Thanks to the Southeastern Wood Producers Association for inviting me to give its membership a "Forestry and Property Rights Legal Update" in the latest edition of its newsletter, Out of the Woods. It's excerpted below:

Forestry and Property Rights Legal Update

In recent months, there have been several legal developments that property owners and those involved in forestry should know about. Having some familiarity with these legal issues can be an important service to the landowners that members of this Association work with.

You’ve probably heard about the forest roads lawsuit, Decker v. NEDC, argued before the U.S. Supreme Court in early December. At stake is whether logging roads and ditches need federal stormwater permits. Since the 1970s, EPA has agreed they do not with its “Silvicultural Rule.” When environmentalists sued in Oregon, a federal court ruled that EPA was incorrect. Last year, Congress blocked EPA from developing the new permit while the case was on appeal.

The case before the Supreme Court looked strong. EPA, however, complicated things by issuing a new rule intended to replace the faulty Silvicultural Rule on the eve of the case being heard. While the new rule helps the forestry community by generally not requiring permits for logging roads and ditches, the Supreme Court seemed concerned about this new development. The Supreme Court should rule by July. For now, it has asked the parties for further information about EPA’s new rule. The only real solution here is congressional action, so talk to your U.S. representative and senators about this issue.

Two important property rights cases have not been in the news quite as much. One case, Koontz v. St. Johns River Water Management District, questions bargaining practices that governments use for land-related permits. There, 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. The Florida Supreme Court said the landowner could only challenge the unreasonable permit demand after giving in to it.

The outcome of Koontz will be important to all landowners—even average homeowners and agricultural landowners. The growth in government at all levels means that every landowner in the country is now subject to a complex permitting regime. Imagine a local government that requires you to buy $25,000 in new library books in order to get a permit to build a new deck. Or a state agency that requires a timberlands owner in the Panhandle to build a nature walk in South Florida to get a permit to build a logging road. The Supreme Court is being asked to decide how far these outrageous requests can go. I was fortunate to be involved in this case. I watched the oral arguments in Washington, D.C. in January and am cautiously optimistic that the Justices will support the landowner.

The other recent property rights case before the Supreme Court has already been decided—and it was a big win for landowners and forestry. In Arkansas Game and Fish Commission v. United States, the Supreme Court held that a landowner could be compensated where the federal government’s temporary flooding of the property destroyed millions of dollars of standing timber.

From the beginning of the Republic, governments have tried to get out of paying compensation for property they take by arguing it was for the public good. The Supreme Court once again rejected this argument. The Constitution, it said, requires the government to pay landowners for damages to property, no matter whether the government had a good reason for its actions or not.

We must be our own advocates for property rights and the sound environmental practices used in forestry. As these cases illustrate, we must remain diligent in working to protect our property rights and livelihoods. The next time you talk to a landowner, tell them about these recent developments. Remind them about the legal struggles that our industry faced and is still facing out West because our laws prioritize the Northern Spotted Owl above people. It could happen here if we are not mindful.

Jacob T. Cremer is an attorney at Bricklemyer Smolker, P.A., in Tampa. His practice focuses on property rights, environmental, and land use law. He grew up in a family that has been involved in forestry in Florida for many generations. Follow the developments on these cases and others at his blog, The Florida Land Environment.

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.

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.