All You Ever Wanted to Know about Exactions: Dozens of Amici Support Property Owner in Koontz

Yesterday, dozens of organizations and business weighed in to support the property owner in Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). Even if you're an expert in land use exactions, chances are you'll learn something from these briefs.

There are some great folks writing these briefs. My colleague David Smolker and I authored the Hillcrest brief. My former colleagues at Hopping Green & Sams wrote the Florida industry association brief. That team includes Gary Hunter and Kent Safriet, who led the team that I privilege of working on representing the property owners in Stop the Beach Renourishment, Inc v. Florida Dept. of Environmental Protection, 130 S. Ct. 2592 (2010). Finally, my fellow property rights advocate Robert Thomas, who has an excellent blog, authored the Owner's Counsel of America Brief.

• The Hillcrest Property, LLP brief focuses on the grounding of exactions law in the unconstitutional conditions doctrine and relates that concept to due process. It also gives the Court a vivid example of the abuse that property owners are facing: "This Court developed the unconstitutional conditions doctrine as a calculated and limited check on government discretion. It applied the doctrine to exactions because the realities of modern land use regulation had resulted in constant expansion of the police power. The Florida Supreme Court summarily disposed of this check on government power–going so far as to base its decision on the grounds that government needs more power, not less. Now beyond merely making adjudicative permitting decisions that occasionally cross constitutional lines, governments will brazenly legislate around the Constitution. The Pasco County ordinance that Hillcrest has endured will be a mere precursor. This Court should take this opportunity to put an end to such chicanery."

• The Institute for Justice and Cato Institute brief attempts to draw the "Court’s attention to the widespread abuse of non-real property exactions in the absence of judicial scrutiny," explaining many situations where property owners were treated unfairly. It concludes that, "[l]imiting the application of Nollan/Dolan to exactions of real property would effectively eliminate the exactions doctrine as a check on government extortion."

• The Land Use Institute brief explains why there is no significant danger of permitting authorities arbitrarily denying permits without negotiation, questioning the Florida Supreme Court's suspect policy argument: "One observation in the wake of Nollan and Dolan is that planners have demonstrated new creativity in imposing conditions, often favoring impact fees in many instances, which can be more readily tailored to specific circumstances. Id. at 137. This demonstrates that agencies can and do easily comply with the requirements of Nollan and Dolan and that they need not and will not fear takings liability because compliance with constitutional requirements can be readily and predictably accomplished."

• The Owner's Counsel of America brief shows why compliance with the Constitution  makes for better planning, and why there is really no difference when a government exacts real property or exacts something else, like money: "It is no great stretch to apply the nexus and proportionality standards to all exactions, and not just those demanding land. Like land, money is property, and should be subject to the same rules. Requiring compliance with Nollan and Dolan when government seeks money or other property in exchange for discretionary permits will not impose a significant burden on land planners, other than the requirement that they, like other officials, follow the Constitution. If the constable must understand the limitations the Constitution places on her powers, so must the planner."

• The National Industry Association brief discusses how the Fifth Amendment is designed to restrict government action, and why the burden is on placed on the government to show its compliance with the Constitution: "Put still another way, the exercise of the power to govern — whether by eminent domain or by far-reaching regulations that de facto deprive the owners of their right to make productive use of their land or by exactions that seek to compel individual citizens to pay for public services or projects that are properly the burden of society at large — is not a tort. Nor is it per se wrongful — unless the government refuses to pay the just compensation required by the Constitution. That the District may prefer to foist the cost of wetlands protection onto the convenient citizen seeking a land use permit is not relevant. The general public, which benefits from such public action, must constitutionally bear the cost.

• The Florida Industry Association brief sketches the practicalities of the land development negotiation process. "If a project cannot “pencil out” because of a disputed exaction, then forcing the applicant to accept a permit as a condition precedent to challenging the disputed exaction would force the applicant to accept an  approval for a project it would not build in order to challenge the condition which rendered it infeasible. Stated differently, if upheld, the Florida Supreme Court’s decision would require an applicant to accept a condition – binding itself in the process – before challenging the condition’s constitutional validity. This would surely discourage applicants from relying on the Nollan/Dolan doctrine when it matters most, when a  condition stands between a feasible or infeasible project."

This case will be argued on January 15. Until then, catch up on the case in my archives.

The Other Clean Water Act Case: One of Five Cases Relevant to Property Owners Before the U.S. Supreme Court

With all of the environmental and land use cases on the Court's docket this term, it's shaping up to be an important year for property owners (and maybe another tough year for environmental interests). It's may also be a year of correction for the Ninth Circuit, since several of these cases are out of that Circuit. It's unusual for the Court to hear so many of this type of case in the same term; it's unclear whether this is just a coincidence, or if there is something else driving their interests. These cases, with links to my commentary about them, are below:

• Arkansas Game & Fish Commission v. United States, No. 11-597 (cert. granted Apr. 2, 2012, argued Oct. 3d, 2012), concerning the federal government's taking of timber by flooding.
• Decker v. NEDC, No. 11-338 (cert. granted June 25, 2012, to be argued Dec. 3, 2012) (consolidated with Georgia-Pacific West, Inc. v. NEDC, No. 11-347), about the viability of the EPA's Silvicultural Rule under the Clean Water Act.
• Los Angeles County Flood Control District v. NRDC, No.11-460 (cert. granted June 25, 2012, to be argued Dec. 4, 2012), which will consider whether the District should be held liable under the Clean Water Act for polluted stormwater that is discharged into two rivers.
• Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012, to be argued Jan. 15, 2012), regarding a government's failed attempt to exact personal property in connection with a land use permit.
• Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012), considering whether a New Deal agricultural statute takes property of raisin growers without compensation.

Next week, the U.S. Supreme Court will hear oral arguments in two of these cases, both of which concern the Clean Water Act. My readers know that I've followed the first very closely because, here in Florida, so much of my practice representing agricultural landowners relates to forest landowners. And, sure, it doesn't hurt that I'm in the fifth generation of my family in a profession dealing with forestry. Those cases are the forest roads litigation (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347).

The second case is the only case among this bunch that I haven't discussed in any detail: Los Angeles County Flood Control District v. NRDC, No.11-460 (cert. granted June 25, 2012). I have not spent much time discussing this case because it does not directly affect my main audience of private landowners. The case could, however, have implications for some private landowners, as indicated by the National Association of Home Builders' amicus brief. As it points out, "[f]or all its complexity, the Clean Water Act is simple in one respect-it creates liability for a person who adds pollutants to 'a water of the United States' through a 'point source.'" The main issue I see that could ensnare a private landowner is that, if the Supreme Court rules against the District, then those who merely convey pollutants into a water of the United States could be exposed to liability, even if others actually create the pollutants. However, as the Solicitor General of the United States argued, no matter what the ruling in this case, the Supreme Court should be able to confine it to the unique facts of this case.

You can follow the case's progress at SCOTUSblog, or read here for much more depth about the legal issues in this case.

Exactions Update: Property Owner Files Brief Arguing Florida Decision Allows Extortionate Leveraging of Police Power

The property owner has filed its opening merits brief in the exactions case before the U.S. Supreme Court.  Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). Recall that the property owner has argued that the Florida Supreme Court disregarded significant constitutional protections, while asking the Court to establish that (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 where a permit is denied because an applicant rejects an exaction.

The summary in the property owner's brief is worth a quick read. It does a good job of pointing out the significant exposure property owners in Florida now have to extortionate leveraging of the police power by governments:

The District’s demand that Mr. Koontz finance improvements to its property as a condition of permit approval—in addition to giving up almost 75% of his land—was an exaction implicating the Takings Clause and, therefore, triggering review under Nollan and Dolan. The District forced Mr. Koontz to choose between two fundamental constitutional rights: (1) the right to make lawful use of his property and (2) the right under the Takings Clause to compensation for the substantial cost incurred making unrelated public improvements. When Mr. Koontz would not agree to waive his right to compensation for the cost incurred making the off-site improvements, the District denied his permit applications. The District’s attempt to bargain its way around the Takings Clause’s requirement that property taken for a public use be compensated is precisely the kind of government “dealmaking” the unconstitutional conditions doctrine, as applied in Nollan and Dolan, is meant to check. 

The doctrine has long been a staple of this Court’s jurisprudence. In its most basic formulation, the doctrine provides that government may not grant an individual a benefit or permit to exercise a constitutional right on the condition that he surrender another constitutional right. The doctrine has shielded countless Americans who seek a government benefit or permit from government “deals” that would strip them of their constitutionally protected rights, including the right to free speech, the right to free exercise of religion, and the right to be free from unreasonable searches. In 1987, this Court expressly recognized the doctrine’s applicability in the land-use context in Nollan and, subsequently, in Dolan. 

While the Takings Clause generally prohibits uncompensated takings, the Court in Nollan recognized a narrow exception to that general rule: In the land-use context, the government has the discretion to exact property—without having to pay for it—as a condition of permit approval. But the Court went on to place a vital limitation on that exception. Only those exactions that bear an “essential nexus” to the alleged adverse impact of the proposed land use are authorized; as the unconstitutional conditions doctrine teaches, any other exaction is merely an unlawful attempt to skirt the Takings Clause’s prohibition on uncompensated takings and therefore is an unconstitutional condition. Later, in Dolan, the Court refined the “essential nexus” test, requiring that any permit exaction must also be “roughly proportional” to the alleged adverse impact of the proposed land use. The discretion and the limitations go hand-in-hand: The Takings Clause does not allow the government unbridled power to confiscate property of any kind, whenever and however it wants, simply because it holds the power to issue land-use permits. 

While rooted in the Takings Clause, Nollan and Dolan rely on the unconstitutional conditions doctrine to smoke out attempts by government agencies to circumvent that Clause’s requirement that compensation be paid for property takings. Nothing in that doctrine, the Takings Clause, Nollan, or Dolan recognizes a relevant distinction among the types of permit exaction subject to the “essential nexus” and “rough proportionality” limitations. Government demands for real or personal property—both categories protected by the Takings Clause—are subject to the same limitations. Nor does application of the limitations depend upon when in the permit process the exaction is imposed. A decision to deny a permit application based on refusal to accede to an unlawful exaction and a decision to approve a permit application subject to acceptance of an unlawful exaction are substantively identical: In both cases, no permit issues unless and until the permit applicant agrees to waive his right to compensation for the confiscated property. 

The Florida Supreme Court’s decision to the contrary fails to take into account the logic of Nollan and Dolan. Uncompensated takings in the land-use context are permissible only because such takings are limited by the “essential nexus” and “rough proportionality” tests in Nollan and Dolan. If those limitations do not apply, neither does the exception to the Takings Clause’s prohibition against uncompensated takings recognized in those precedents. In other words, the Takings Clause does not countenance a totally unlimited power to confiscate property in the permit process. Thus, if Nollan and Dolan do not apply to the District’s exaction of Mr. Koontz’s money, then the District must accept the Takings Clause’s default rule prohibiting government from confiscating permit applicants’ property. The Florida Supreme Court’s decision confining the “essential nexus” and “rough proportionality” limitations to the narrow facts of those cases ignores the interdependence between the limitations and the extraordinary power that the government has to exact property from permit applicants. The decision also leaves Floridians with little to no protection against government attempts to “cloak[] within the permit process ‘an out-and-out plan of extortion.” Lambert v. City & Cnty. of San Francisco, 529 U.S. 1045, 1048 (2000) (Scalia, Kennedy, and Thomas, JJ., dissenting from denial of certiorari) (internal citations omitted). Naked, uncompensated confiscations of land are uncommon, because of the obvious application of Nollan and Dolan. Instead, land-use authorities increasingly have resorted to confiscating property other than interests in real property—most often, money, in the form of either financing of public projects (as in Mr. Koontz’s case) or payment of fees in-lieu of a land dedication. Yet the constitutional injury is the same: The property owner is required, as a permit condition, to waive his right to compensation for the confiscation. If the Florida Supreme Court’s decision stands, that constitutional right will rarely have a remedy. 

The Florida Supreme Court based its decision in large part on its desire to preserve the freedom and flexibility of land-use agencies like the District to make “deals” with permit applicants. It did so, but at too high a cost to the constitutional rights of those applicants. The decision of the Florida Supreme Court should be reversed.

Amicus briefs in support of the property owner are due on Wednesday. The District's brief in response is due next month, and the property owner's reply brief is be due on January 8. The case is set to be heard on January 15, 2013. For more information in the meantime, check out my posts on the case's background.

Yes, Silviculture is Agriculture: Forest Roads Case to be Argued Next Week Before U.S. Supreme Court

If it were up to your environmental organizations, your local tree farmer couldn't call himself a farmer. And he doesn't have a tree farm. No, he is an industrial titan - just as much an industrial operation as mining, oil exploration, and heavy equipment manufacturing.

What? Even though silviculture is simply the agriculture of trees? Even though silviculture is always regulated as agriculture? And EPA says forestry is agriculture? Incredibly, that is just the argument being made by NEDC in the forest roads litigation to be heard before the U.S. Supreme Court next week (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347). Absurd arguments like this show the disconnect these days between environmental advocacy and reality.

The closing reply briefs of the forest and silviculture interests were filed recently, just ahead of the oral arguments. Georgia-Pacific's brief makes some strong technical arguments about the Clean Water Act, but its strength is in explaining the practicalities of forestry. For example, as lampooned above, the NEDC argued that the timber harvesting is industrial activity, twisting those words almost to their breaking point. Georgia-Pacific, however, points out that silviculture is no more industry than agriculture is: "The use of a chain saw, feller buncher, or cable-yarder to harvest trees no more makes logging 'industrial' than using a 20-ton combine to pick and segregate corn makes crop harvesting 'industrial.'" Consequently, "EPA has determined that forestry roads and silvicultural harvesting ... more closely resemble agricultural land uses than industrial uses."

Georgia Pacific's brief makes four main legal arguments:

• Channeled forest road runoff is not a discharge "associated with industrial activity."
• Channeled forest road runoff is not a "point source" discharge.
• The respondent environmental organization's interpretations would undermine the purpose of the CWA.
• The U.S. Supreme Court lacks jurisdiction to invalidate EPA regulations in this kind of enforcement action.

The brief by the State of Oregon  focuses on the Ninth Circuit's refusal to defer to the expertise of the EPA. Normally, courts are supposed to give the opinions and rules of expert agencies great weight, but in the case below, the Ninth Circuit did not do that: 

Here, EPA has consistently interpreted its stormwater discharge rule to exclude stormwater runoff from forest roads from the permitting requirements and its interpretation is consistent with the text of the rule and EPA's expressed intention when it adopted the rule. In light of its unfaltering interpretation of its rule, EPA's interpretation binds this Court. 

But respondent now suggests that this Court should simply pretend as if the very regulation that respondent is seeking to enforce does not exist at all because the relevant statutory language is "plainly dispositive." (Resp. Br. 17). Yet in so arguing, respondent fails to grapple with the two roadblocks in its path: (1) this Court's longstanding recognition that when Congress entrusts an agency with the responsibility to carry out Congress' directives and that agency carries out its responsibility by adopting a rule, the agency's regulations executing those directions cannot simply be ignored; and (2) the limitations on the scope of review in a citizen suit, which preclude a reviewing court from rejecting an agency's regulations because, in the court's view, the agency's interpretation is inconsistent with the relevant statute.

Stay tuned. The Supreme Court will hear this case next week. I'll post commentary once the transcripts are released. In the meantime, catch up on the history of this dispute in my archives.

U.S. Supreme Court to Hear Third Property Rights Case This Term, Consider New Deal Agriculture Statute

The U.S. Supreme Court announced earlier this week that it would hear its third property rights case this term. The case is Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012). In the case below, the Ninth Circuit held that it lacked jurisdiction to hear a takings claim:

Under a federal marketing program for California raisins, the government seeks to stabilize prices by taking some of the annual crop off the market. A federal committee each year recommends to the Agriculture Department the part of the crop that it believes should be held off the market. A packer or processor may buy raisins from the growers for the part of an annual yield that can be marketed, but the part ordered to be withheld must be kept in reserve. These so-called “reserve tonnage” amounts, though, can be sold in markets where competition does not exist, such as school-lunch programs. The proceeds from selling those raisins are used to pay the costs of running that part of the program. 

A group of grape vineyard operators in California were accused by the Department of setting up a program to evade the reserve pool requirement by processing their own grapes into raisins, then selling them. They countered that they were only producers, not processors, and so were not covered by the marketing order and its reserve set-aside. The Department sought to compel them to obey the marketing order, and the vineyards ultimately were ordered to pay $483,844 in civil penalties. 

The vineyards went to court, contending that the reserve set-aside requirement amounted to a “taking” of their private property without just compensation, as required by the Fifth Amendment. A federal district court judge ruled for the Department, finding that the vineyard operators were, in fact, functioning as processors or packers. Transfer of title to the reserve raisins was not a “taking,” the judge concluded. 

The Ninth Circuit Court ultimately ruled that it lacked jurisdiction to hear the “takings” claim, and that the vineyards should take that plea to the Court of Federal Claims under the so-called ”Tucker Act,” which allows lawsuits against the government seeking monetary compensation for taking private property for public use. The vineyards then took the issue of where they may sue to the Supreme Court, resulting in Tuesday’s grant of review.

My fellow bloggers are already noting that this situation sounds a lot like an exaction. This case has an interesting parallel with Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). In both cases, the courts below held that the property owner needed to give in to the government's demand for their property before challenging the demand. With any luck, the Court will make clear two cases arising out of very different contexts that unlawful government demands for property may be challenged in court without giving in first. In that sense, the Court's ruling in either of these cases could end up seeming a bit like Sackett v. EPA, where the Court gave landowners the right to take EPA to court to challenge environmental compliance orders.

You can follow the case's progress over at SCOTUSblog. More background is available from the LA Times. The briefs from the petition for certiorari stage are below.

Boundary and Fencing Disputes, Adverse Possession, and Property Law in Florida

This weekend I ran across a good resource for Florida property owners. The University of Florida IFAS Extension produced the Handbook of Florida Fence and Property Law a couple of years ago. I thought I would point it out to my readers because it covers a range of interesting topics that I get asked about a lot. It covers a bit about adverse possession, which my most popular blog post covers. It also covers another topic that I am asked about a great deal: neighbor boundary disputes. What happens when neighbors have disputes over their boundary lines or their fences? The handbook summarizes, after giving a great deal of detail:

If your title clearly describes your land and, according to your deed and your neighbor’s deed, your neighbor’s fence is clearly encroaching upon your land, you should immediately notify your neighbor in writing of the encroachment. Your neighbor is required to remove this encroachment. 

If the location of the true boundary line is unclear from both your deed and your neighbor’s deed, avoid future dispute by notifying your neighbor of the ambiguity, calling a surveyor, and clarifying your boundary lines. In the case where you think boundary by agreement or boundary by acquiescence may apply to the dispute, think of the aspects of each and whether they actually apply to your case. 

Remember the three aspects of boundary by agreement: 

1. Uncertainty or doubt as to the true boundary line
2. Agreement that a certain line will be treated by the parties as the true boundary line
3. Subsequent occupation by the parties in accordance with the agreement for a period of time sufficient to show settled recognition of the line as a permanent boundary 

Consider also the two aspects of boundary by acquiescence: 

1. A dispute or uncertainty from which it can be implied that both parties are in doubt as to the true boundary line
2. Continued occupation and acquiescence in a line other than the true boundary for a period of more than seven years (as required by the statute of limitations)

Of course, IFAS has many other guides and handbooks that landowners may find useful.

A Prime Example of Why the U.S. Supreme Court Needs to Throw Out Florida's Misguided Exactions Ruling

You might ask why the U.S. Supreme Court should overturn Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). Look no further than amicus briefs in Florida courts citing to that case's misguided public policy reasoning. Koontz is the exactions case recently accepted by the U.S. Supreme Court that will decide (1) whether  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) whether the Nollan-Dolan exactions test applies where a permit is denied because an applicant rejects an exaction.

In Pacetta, LLC v. Ponce Inlet, Case. No. 2010-31696-CICI (Fla. 7th Cir. Apr. 20, 2012), the question was not about an exaction, but about inverse condemnation and a Bert Harris Act claim. The trial court described a shocking Florida takings tale of government abuse and political corruption. The Florida Chapter of the American Planning Association (FAPA) and the Florida League of Cities have filed an amicus brief in the case on appeal. The amici make a number of arguments that should concern property owners. For example, the amici argue that the public's statutory right to participate in the planning process is disenfranchised by the trial court's protection of the landowners' constitutional property rights. Then, the amici ask the court to assume that landowers will be better off if they have to continuously negotiate their projects, using Koontz:

Finally, the lower court's decision that the discussions between Pacetta and the Town's officials created an equitable estoppel has a pernicious and counterproductive result for the relations between local governments and developers. A prudent developer will consult with the local government when preparing a land development proposal, especially if the existing comprehensive plan and land development regulations do not allow the development as a matter of right. A local government, especially its planning and management staff, ordinarily will expect to advise an potential applicant of the regulatory constraints and will advise the potential applicant about perceived improvements to the potential development. The negotiations continue even after an application is filed, especially if the required Town action on the application is a legislative decision, as here, and not a quasi-judicial decision. Jennings v. Dade County, 589 So. 2d 1337, 1340 (Fla. 3d DCA 1991) (lobbyist's ex-parte communications in a quasi-judicial variance proceeding can violate due process). The discussions and negotiations can result in a better result for both the developer and the local government. As recognized in St. Johns River Water Management District v. Koontz, 77 So.3d 1220, 1231 (Fla. 2011), penalizing the local government for such discussions with the threat of financial consequences if the negotiations fail by the time of the final decision injures both sides:

"... 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."

The course of the proceedings between the Pacetta entities, the Town staff and individual officials were not actions that Pacetta can reasonably claim to rely upon for purposes of equitable estoppel. Rather, they were the preliminary, non-binding discussions between the parties that were not legislative, final action. 

The amici might be right about the equitable estoppel issue. I've not reviewed the case record. But it seems especially misguided to say that somehow the landowners should have continued working with a local government that was doing everything in its power to thwart the landowners' efforts. In Koontz, the Florida Supreme Court gave no logical or case law justifications for how property owners would be worse off if governments were allowed to extort property, money, and labor from landowners. The Florida Supreme Court even said that the landowners were better off allowing the practice--though ignoring the fact that the case before it was not about the negotiation process, it was about the permit's denial following negotiations. If there were ever a reason for the U.S. Supreme Court to overturn Koontz, the amici's use of that case to support the government in Ponce Inlet is a great one.

In full disclosure, I'm a member of FAPA and actively involved in it. I spoke at its annual conference this summer on agricultural law and policy in Florida. When I was in my graduate planning program, it honored me as "Student Planner of the Year." Nevertheless, briefs advocating in support of such egregious governmental action, and showing such disregard for individual property rights, make me wonder whether I should continue to support the organization.