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.

Why Exactions Law Should Bring Property Rights Advocates Cheer in the New Year

When even progressive scholars throw their hands up in the air over the strength of an area of property rights law, you know it's time for those of us who believe in strong property rights to take note. Professor Timothy Mulvaney at Texas A&M has done just that in his latest paper, forthcoming in the Harvard Environmental Law Review, "Legislative Exactions and Progressive Property." 

In it, Prof. Mulvaney covers the debate of whether the stringent judicial review of exactions provided to administrative exactions also applies to legislative exactions. The debate here is over what the government can demand from a landowner before approving a discretionary permit. In three important cases - Nollan, Dolan, and Koontz - the U.S. Supreme Court has held that the government must show that the demand is related to the harms that will be caused by the landowner's activities and that the demand is roughly proportionate to the ills the government seeks to remedy. 

The Supreme Court has explained that these rules apply no matter whether the government ultimately approves or denies a permit application and no matter whether the government demands money, road building, or anything else. Compared to other areas of property rights law, the Supreme Court has been remarkably clear that the landowners must be protected from such "unconstitutional conditions" by government. Governments, though, dislike such strict rules, and some have argued that these rules only apply to "administrative" demands, such as those by an executive or bureaucrat, and not to "legislative" demands, such as an ordinance that makes demands from everyone. As others have argued better than I can, the Takings Clause  and the Due Process Clauses of the Constitution do not distinguish between the branches of government in protecting landowners. 

In his article, Prof. Mulvaney essentially asks: should proponents of "progressive property" (read: fans of weak personal property rights) support making such a distinction for its practical consequences? He concludes:

Scholarly debate continues on the question of whether the heightened scrutiny of the Supreme Court’s decisions in Nollan and Dolan should be applicable in takings cases involving exactions that result from generally applicable legislation. Proponents of progressive conceptions of property have strong first-order reasons to support immunizing legislative exactions from such heightened scrutiny, reasons that are grounded in the checks and balances of democratic government, the likelihood of reciprocal advantages stemming from legislation, and an aversion to judicial usurpation of the legislative process. However, this Article raises the possibility that distinguishing between legislative and administrative exactions could produce two secondary effects that ultimately prove detrimental to progressive property’s aims. 

First, pressing the idea that administrative exactions are significantly more likely to abuse property owners than legislative exactions necessarily risks marginalizing case-by-case administration across the board, which could lead courts to incorporate the heightened scrutiny of Nollan and Dolan in takings cases involving administrative acts unrelated to exactions. Second, formally recognizing the legislative-administrative distinction could prompt governmental entities to shy away from administrative actions in favor of broad, unbending legislative measures to avoid heightened scrutiny, and deserting case-by-case administration can come with weighty social costs, given that it is administration that at least in certain instances can better respond to varied and unpredictable development impacts and invariably focuses attention on the affected parties’ human stories. 

It follows that both remaining options in the wake of Nollan, Dolan, and Koontz—subjecting legislative exactions to either a deferential level of takings scrutiny or the heightened standard to which administrative exactions currently are subject—pose significant complications for proponents of progressive conceptions of property. In the end, then, perhaps progressive property scholars might concentrate more readily on evaluating and advocating for other potential boundary principles in exaction takings law, or, even more dramatically, reinvigorate the long dormant and admittedly uphill battle to reverse Nollan and Dolan in their entirety.

That is, Constitutional questions aside, even proponents of weak personal property rights should be wary of making a distinction between administrative and legislative exactions. Why? Exactly because the Supreme Court has extended such clear, strong protections to administrative exactions. Those proponents would do better to focus their attention elsewhere, says Prof. Mulvaney.

Take heart, fans of private property rights: progress is being made. And that should bring you cheer in this New Year.

The Florida Legislature Creates a Cause of Action for Illegitimate Exactions

Although the Florida House may have gone home early, they at least got down to business and strengthened the property rights of Florida landowners before leaving Tallahassee. Both houses of the Legislature passed an illegitimate exaction bill nearly unanimously. Judging by Governor Scott's strong property rights record, you can bet he'll let this one become law.

HB 383 was aimed at addressing guidance provided by the U.S. Supreme Court in Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586, 2596 (2013). The legislative bill analysis explains:

Of particular significance to the bill, the Koontz court found that while the government's conditions unconstitutionally burdened the landowner's Fifth Amendment rights, no constitutional taking has occurred that qualifies for the constitutionally mandated remedy of just compensation to the landowner. Instead, the Court left it up to the states to determine what remedies would be available to a landowner who has been subject to an unconstitutional demand where no actual taking has occurred. 

The Court explained: "Where the permit is denied and the condition is never imposed, nothing has been taken. While the unconstitutional conditions doctrine recognizes that this burdens a constitutional right, the Fifth Amendment mandates a particular remedy—just compensation—only for takings. In cases where there is an excessive demand but no
taking, whether money damages are available is not a question of federal constitutional law but of the cause of action—whether state or federal—on which the landowner relies." 

Consequently, the Court left unanswered the question of whether the landowner in Koontz could recover damages for unconstitutional conditions claims predicated on the Takings Clause because the landowner's claim was based on Florida law, s. 373.617, F.S. Specifically, because s. 373.617, F.S., allows for damages when a state agency's action is "an unreasonable exercise of the state's police power constituting a taking without just compensation," it is a question of state law as to whether that provision covers an unconstitutional conditions claim.

The bill gives landowners just that statutory cause of action, providing for injunctive relief and damages for a "prohibited exaction," defined as "any condition imposed by a governmental entity on a property owner's proposed use of real property that lacks an essential nexus to a legitimate public purpose and is not roughly proportionate to the impacts of the proposed use that the governmental entity seeks to avoid, minimize, or mitigate." Here's the key provision:

In addition to other remedies available in law or equity, a property owner may bring an action in a court of competent jurisdiction under this section to recover damages caused by a prohibited exaction. Such action may not be brought until a prohibited exaction is actually imposed or required in writing as a final condition of approval for the requested use of real property. The right to bring an action under this section may not be waived. This section does not apply to impact fees adopted under s. 163.31801 or non-ad valorem assessments as defined in s. 197.3632.

That is, if the exaction doesn't measure up to the U.S. Supreme Court's exactions trio (Nollan, Dolan, and Koontz), a landowner can make a claim for damages (which is defined to include injunctive relief, which might include invalidation of the offensive condition). Just as those cases command (but which many courts have misunderstood), the government has the "burden of proving the exaction has an essential nexus to a legitimate public purpose and is roughly proportionate to the impacts of the proposed use that the governmental entity is seeking to avoid, minimize, or mitigate." Sensibly, the landowner must give the government written notice of the claim to give the government a chance to rescind or reduce the exaction. If the landowner wins a lawsuit, the court must award attorney's fees.

What does all this mean, in layman's terms? Simply put, if, in exchange for a development permit, the government demands more than it fairly should, or demands something that doesn't relate to the permit, than landowners have another tool at their disposal to challenge the government demand and get damages for their injuries. All in all, this was a great way to celebrate the Bert Harris Act's twentieth birthday.

And speaking of the Bert Harris Act, there were a few "glitch" fixes to it this year (as has been the case over the past few years):

• The bill clarifies that property must be "directly" affected by government action. Presumably, this means to distinguish properties that are merely tangentially or indirectly affected by a government action to another property.
• It clarifies that the landowner and the government can use the flexibility of the Bert Harris Act settlement process both before and after a lawsuit is filed. This was an important amendment because the Bert Harris Act allows settlements to protect the landowner from application of contrary local laws and ordinances, and last year an appellate court refused to allow a settlement agreement because it was entered after a lawsuit was filed. Collier County v. Hussey, 147 So. 3d 35 (Fla. 2d DCA 2014).
• Sensibly, the bill also prohibits actions against local governments that adopt federal flood maps as a requirement of the National Flood Insurance Program.

Hillcrest Property, LLP v. Pasco County - Property Owner's Reply Brief

Those who follow this blog will be familiar with our petition to the U.S. Supreme Court, Hillcrest Property, LLP v. Pasco County, No. 14-864. You'll also be familiar with the County's brief in opposition to the U.S. Supreme Court taking this case up on certiorari, and with the overwhelming amici support we received from the National Association of Home Builders, the National Association of Realtors, the National Federation of Independent Small Businesses, the International Council of Shopping Centers, the National Multifamily Housing Council, and the Florida Home Builders.

And you'll probably recall that this case raises due process, exactions, and unconstitutional conditions issues that are similar to those the U.S. Supreme Court recently dealt with in Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586, 2596 (2013). The Eleventh Circuit, though, ruled that any issues dealing with the facial constitutionality of the County's ordinances had to be raised within four years of their adoption. This case asked the U.S. Supreme Court to weigh in, and the reply brief was recently filed.

As is my tradition when my firm or I am on a case or a brief, I leave commentary to others. For an interesting writeup, see Robert Thomas's post on the issue, where he concludes: "But regardless of the claim made or the remedy sought, if the challenge is in federal court, the plaintiff must show Article III standing, and must demonstrate some injury to itself as a result of the ordinance that is different from that of the general public. And we're not sure how that happened in Hillcrest until Hillcrest actually presented development proposal which triggered application of the Right of Way Preservation Ordinance."

Keep an eye on this one. It was on the conference list for Friday, April 17, so we could have an answer as soon as today on whether the Supreme Court will take it up.

Koontz Wins on Exactions Again - Probably for Good

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

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

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

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

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

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

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

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

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

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

Recent Florida Environmental and Land Use Case Law

The Florida Bar's Environmental and Land Use Law Section has posted its columns on the environmental and land use cases in Florida that you need to know about for the third quarter of 2013, as well as the fourth quarter of 2013. Here is what we've got this quarter:

• Hillcrest Prop., LLP v. Pasco County, 24 Fla. L. Weekly, Fed. D 33 (M.D. Fla. 2013), finding that a local government may not require property owners to give up property in exchange for development permits, where the exaction is unconnected to the development's impact. Read more from on my friend Robert Thomas's blog. Disclaimer: my firm represents the plaintiff property owner in this case, and we submitted an amicus brief to the U.S. Supreme Court in the Koontz case on its behalf.

• Town of Ponce Inlet v. Pacetta, LLC, No. 5D12-1982, 2013 WL 3357520 (Fla. 5th DCA July 5, 2013), reversing the trial court decision that I've written extensively about, and holding that a Bert Harris Act claim for the burdening of vested rights cannot be premised on local government assurances that it will amend its comprehensive plan.

• Collins v. Monroe County, No. 3D11-2944, 2013 WL 3455608 (Fla. 3d DCA July 10, 2013), determining that a special master's administrative recommendation that a local government purchase properties because they may be a taking is not enough to prove the taking, where the landowners could not prove they had explored the properties' development potential.

• Seminole Tribe of Fla. v. Hendry County, 114 So.3d 1073 (Fla. 2nd DCA 2013), holding that a local government's land use procedures were not preempted by the Power Plant Siting Act when a property owner applied for a local government land use permit before activating Power Plant Siting Act review.

• Maronda Homes v. Lakeview Reserve Homeowners Ass’n, No. SC10-2292, No. SC10-2336, WL 3466814 (Fla. July 11, 2013), deciding that the implied warranties of fitness and merchantability apply to certain common areas, and a Florida law limiting these warranties cannot be applied retroactively.

• Angelo’s Aggregate Materials v. Pasco County, 118 So.3d 971 (Fla. 2d DCA 2013), holding that a local government may not require an administrative vested rights process to be exhausted by a landowner before requesting that a court issue a declaratory judgment.

• Manley v. City of Tallahassee, 2013 WL 4007650 (11th Cir. 2013), determining that a local government does not deprive a landowner of his property in violation of due process where it approves a site plan of a neighbor without allowing the landowner to be heard, even if the landowner has an access agreement concerning the neighbor's property.

• Foley v. Orange County, 2013 WL 4110414 (M.D. Fla. 2013), finding that a local government may not enact or enforce land use regulations in conflict with general laws and regulations concerning the care and keeping of exotic animals.

• U.S. Sugar Corp. v. 1,000 Friends of Fla., 2013 WL 4017136 (Fla. 4th DCA 2013), holding that comprehensive plan consistency is determined by analyzing the face of a development order, and not by what the developer intends to do under the development order.

• CBS Outdoor, Inc. v. Fla. Dep’t of Transp., 2013 WL 5744443 (Fla. 1st DCA 2013), determining that where Florida law allows the owners of signs and billboards to engage in an administrative process to receive compensation for blocked view, the billboards must conform to local, state, and federal regulations for their owners to use this process.

If you're so inclined, over two years' worth of these cases and these summaries on new environmental and land use cases in Florida are in my archives.

Exactions Bills in the 2014 Legislative Session Should Cheer Property Owners

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

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

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

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

The text of the bills is below.

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

70.45 Local government development exactions.—

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

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

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

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

The 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.

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?

Horne Oral Argument Preview: The Takings Clause as a Weapon Against Government Enforcement Actions

On Wednesday, the U.S. Supreme Court will hear its third property rights case of the term, Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012). As I've explained, in this case, 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 defense.

Lyle Denniston at SCOTUSblog always has insightful analyses, and he has done it again in this weekend's argument preview. He notes the tricky line in this case between jurisdiction and the merits of this case:

Although the bottom line of the case is about court jurisdiction, and about when a claim of “takings” is “ripe” for judicial review, the growers’ petition put a heavy emphasis on their argument that the government, by ordering them to make a cash payment to the government, had taken their property in violation of the Fifth Amendment. Any time the government imposes a penalty in the form of money damages, the petition contended, a “takings” claim is available because in demanding money, the government “had already determined that no ‘just compensation’ will be forthcoming.” So, at that very point, a claim of a “taking” should be allowed as a defense to the fine’s imposition, the growers asserted.

In his analysis, this case could have important implications:

This is another of those cases before the Court where the outcome may follow quite easily from the Court’s choice of which of two different theoretical boxes is the right one for this dispute. If it sees the case as a controversy over the government’s use of a “bait-and-switch” strategy to thwart a serious challenge to its marketing program enforcement, the growers could be well on their way to winning. The growers’ lawyers have done quite a good job of portraying this as a David-and-Goliath contest; here and there, the filings portray these vineyards as small parts of the raisin industry. 

But if the Court sees the case as one more in a lengthy line of pleas to relax its hard line against “premature” claims for just compensation under the Takings Clause, the Agriculture Department could be home free. The Court has steadfastly refused to budge on requiring those who claim a “taking” to go through the proper channels before they can mount a definitive claim for compensation. 

The case, as it was being readied for the Court, moved a considerable distance away from the legalities of the decades-long programs for shoring up agricultural prices. In fact, the back-and-forth categorization of the growers, as the controversy moved along, between “handlers” and “producers” is not likely to clarify legal responsibilities under these farm crop marketing schemes. In the end, the case began to appear, in some significant ways, as a case that turns on its special facts. 

But the larger potential of the case, to draw the Court deeply into the history and meaning of the Fifth Amendment Takings Clause, gives it the promise of producing a major new precedent. It could, indeed, clarify not only when claims under that Clause are, or are not, premature, but also determine whether there is anything to the growers’ quite novel argument that the Clause is a weapon against government enforcement actions through monetary fines.

This should be an interesting oral argument. Michael McConnell, a Stanford law professor and former federal appellate judge, will be arguing for the raisin producers. He and his team have done an excellent job of positioning this case as a David versus Goliath battle: “All we want to do is pack our raisins and sell them,” Mr. Horne has said. “The only thing I wanted, along with my group, was to be free.” 

Is it a Regulatory Taking if the Government Forces You to Hand Over Your Crops in Exchange for the Privilege of Entering the Marketplace?

Now that all the responsive briefs are have been submitted in Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012), I've had a chance to take a look. Recall that this is the third property rights case that the U.S. Supreme Court will hear this term. Recall that this is the raisins case, Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012), that has been compared to guerrilla warefare, and which is to consider whether a New Deal agricultural statute takes property of raisin growers without compensation. As I've written before, the issues is this: if the government takes you to court because you failed to pay something it required, can you defend against the government by arguing it is attempting to take your property without compensation?

In its response brief, the Department of Agriculture begins by continuing a recent theme in takings cases by naming the Takings Clause the Just Compensation Clause. Robert Thomas believes this move was to imply that the Hornes are seeking compensation, when in fact they are simply defending against government enforcement. The Department makes two main points:

1. The Hornes can attack the raisin confiscation through a claim for compensation through the federal Tucker Act, which authorizes the Court of Federal Claims to award compensation when it finds a taking has occured.
2. The Hornes engaged in a procedural "shell-game" in defending against government enforcement using the takings clause. The Department argues that the Hornes are defending in their statutory capacity as a "producer" of raisins rather than as a "handler."

As for the second point, the amicus brief of the Sun-Maid Growers of California makes the same argument. I ask: should the government really be able to shield itself when it takes property by erecting arbitrary statutory categories of property owners?

In the amicus brief of the International Municipal Lawyers Association, Prof. John Echeverria of Vermont Law School, who always resolves takings claims in favor of the government, argues:

Petitioners have needlessly complicated the vindication of their asserted rights under the Takings Clause of the Fifth Amendment by failing to file a straight forward claim for just compensation in the U.S.Court of Federal Claims. Petitioners have long participated in the raisin industry marketing program which they now believe results in a taking. Thus, they could easily have filed a claim for just compensation in the U.S. Court of Federal Claims based on this asserted taking. Instead, petitioners decided to disregard federal law requiring that they participate in the program and now seek to invoke the Takings Clause to defend against the sanctions imposed as a result of their illegal action.This effort should fail for three independent reasons. First, because the purpose of the Takings Clause is to provide compensation for takings, rather to stop takings from occurring, it would contradict the purpose and function of the Takings Clause to allow a party who has defied federal law and thereby blocked implementation of a federal program to defend his or her action by invoking the Takings Clause. Second, government seizures of private property for law enforcement purposes, such as forfeitures, are outside the scope of the Takings Clause. Third, government-imposed mandates to pay money in general, including but not limited to the kinds of monetary sanctions at issue in this case, are outside the scope of the Takings Clause.While it is unlikely the Court will reach the merits of the takings issue in this case, amici submit that the takings argument is meritless. The raisin marketing program is best viewed as involving a regulatory restriction on property rather than an appropriation of property, and therefore the Penn Central analysis should govern this claim. Given the modest (if any) net economic burden imposed by the raisin marketing program, and the modest (if any) interference with petitioners’ reasonable investment-backed expectations, the Penn Central claim should fail. Even if the alleged taking were analyzed under a per se test,the claim should fail because petitioners could not carry the burden of demonstrating that the program has imposed any net compensable injury on them.

Let's hope the U.S. Supreme Court doesn't have as much disdain for private property rights as Prof. Echeverria does! This case is scheduled for oral argument on March 20, 2013.

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.

Raisins Takings Case at the U.S. Supreme Court: When Can You Defend Against a Government Enforcement Action with the Takings Clause?

Lest my readers think property rights are boring, Overlawyered has compared one of this term's takings cases to ... guerrilla warefare! Yep, this is the raisins case, Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012), which is to consider whether a New Deal agricultural statute takes property of raisin growers without compensation. Think of the case as basically answering this question: if the government takes you to court because you failed to pay something it required, can you defend against the government by arguing it is attempting to take your property without compensation?

The property owners' summary is excerpted below:

I. The panel erred in holding that it lacked jurisdiction to consider petitioners’ defense under the Takings Clause. That claim is immediately ripe for two independent reasons.  

A. First, under Apfel, a party may challenge a governmental demand for a cash transfer without going through the repetitive steps of paying a fine and then going to the Court of Federal Claims to get the same sum back in the form of compensation for the taking.Second, ripeness bars a lawsuit only in cases where the party seeks anticipatory relief against government action that has not yet taken place. It does not apply when a party seeks to interpose a constitutional defense to an enforcement action brought by the government at the time and in the forum of the government’s own choosing. 

B. Recent cases applying a specialized “ripeness”doctrine to takings claims confuse ripeness with equitable principles regarding the propriety of is-suing an injunction. A review of the text, structure,and historical interpretation of the Takings Clause confirms that a party can obtain affirmative injunctive relief under the Clause or raise the Clause as a defense. The historical record shows that, from the earliest cases, a party could raise the Takings Clause as a defense to government enforcement action. During the Nineteenth Century, courts (including this Court) held that affirmative injunctive relief was also available under the Clause where a party lacked a“reasonable, certain, and adequate” monetary remedy. This rule paralleled the standard for obtaining affirmative injunctive relief under Ex parte Young, 209 U.S. 123 (1908). The availability of affirmative injunctive relief did not limit the ability of parties to raise the Takings Clause as a defense. Nor was this rule ever characterized as an aspect of “ripeness” or“subject-matter jurisdiction” doctrine. It was viewed as the standard for obtaining injunctive relief under the Clause — what would now be described as “choice of remedies.” Once the background legal rule is properly viewed (as an equitable principle regarding the availability of affirmative injunctive relief), it be-comes clear that the panel’s decision that it lacked jurisdiction because petitioners’ takings claim is “unripe” was erroneous. 

II. The review procedures of the AMAA withdraw the Tucker Act. The panel’s holding that those procedures were inapplicable because petitioners challenged the USDA order in their “capacity as producers” rather than “handlers” misunderstands the statutory scheme and contradicts the litigating posture of the government in this very case.The decision below should be reversed and the case remanded for consideration of petitioners’ takings defense on the merits.

Four amicus briefs have been filed in support of the property owners by the Cato Institute, the U.S. Chamber of Commerce, the State of Texas, and a group of constitutional law professors. For those interested, a minor California newspaper has an article with some background. Robert Thomas also has some good thoughts on each of the briefs over at his blog.

We'll see the government's brief and supporting amici's briefs soon. Oral arguments in the case have been set for March 20, 2013.

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?