Koontz Update: Government Argues It Denied Permit after Merely Suggesting Mitigation

The governmental agency has filed its brief responding to the property owner in Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). This is the case before the U.S. Supreme Court where the property owner is arguing that the Florida Supreme Court disregarded significant constitutional protections, while asking the Court to establish 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; and the Nollan-Dolan exactions test applies where a permit is denied because an applicant rejects an exaction.

The government's brief asks: what's the big deal? This aligns with interviews of the government's attorney, who has said exactions like the one in this case are more or less "run of the mill." Here's the summary from the government's brief:

Petitioner applied for permits from the St. Johns River Water Management District (“the District”) to dredge and fill part of his property in the Econlockhatchee River Hydrologic Basin. Petitioner acknowledged that his proposal would destroy more than three acres of wetlands in an area designated for special protection, so he proposed to preserve about 11 acres elsewhere on his property as mitigation for the environmental harm. Applying generally applicable criteria—the validity of which petitioner does not contest—the District concluded that the mitigation petitioner proposed would not offset the harm caused by his project enough to meet the permitting standards. The District therefore told petitioner that the permits could not be issued unless he modified the project or pro-posed additional or alternative mitigation. The District suggested several ways petitioner could meet the permitting requirements, including by enhancing other wetlands near his property. Petitioner, however, disagreed with the District’s conclusions about the sufficiency of the mitigation he had proposed. He refused to modify his project or propose any other mitigation, and the District denied the permits. 

Instead of appealing the permit denial, petitioner filed this inverse-condemnation action. He sought monetary compensation on the ground that the District’s decision constituted a taking. But nothing was taken from petitioner when the permits were denied. Petitioner did not have to convey any property interest to the District or suffer any other invasion of his property. He spent no money, time, or labor performing any mitigation. Nor does petitioner argue here that he suffered any taking of the economically viable uses of his property under Lucas or Penn Central. Indeed, he stipulated that his suit did not “proceed[] upon a theory that the [permit denial] deprived [him] of all or substantially all economically beneficial or productive use of the subject property.” JA 76. In short, he suffered no loss for which he is entitled to compensation. 

Before this Court, petitioner now seeks compensation for a regulatory taking of his real property on the ground that the District’s request for additional mitigation was not sufficiently tailored to a legitimate regulatory purpose under the “nexus” and “proportionality”test of Nollan and Dolan. This Court rejected that means-ends approach to regulatory takings in Lingle, and it should not revive it here. 

Even if one could seek compensation under Nollan and Dolan for some proposed conditions that were never accepted or imposed, such a claim must fail in this case. Contrary to petitioner’s characterizations, the District never required him to perform any particular form of mitigation. Nor does the District’s suggestion for mitigation that petitioner singles out—which would have required him to spend money to enhance wetlands within the same hydrologic basin—constitute a taking under this Court’s decisions. In these circumstances, the Supreme Court of Florida correctly held that petitioner has no valid claim to just compensation under Nollan and Dolan.

It looks like the United States, through the Solicitor General, and one organization have filed amici briefs in support of the District. I have not seen these briefs yet, but I'll report on it once I do. The Solicitor General has also requested leave to take part in oral argument.

Recall that my colleague David Smolker and I submitted an amicus brief in support of the property owner, arguing that the Florida Supreme Court ignored the unconstitutional conditions doctrine, which protects all property owners:

Although a government may regulate the ownership of property under its police power, this Court has found it necessary to develop outer limits so that the power does not swallow property rights. This Court developed exactions law to protect property owners from a government’s extortionate leveraging of the police power to obtain benefits for which the government would otherwise have to pay for. The unconstitutional conditions doctrine provides this protection through both the Takings Clause and the Due Process Clause.

The government's brief failed to engage with this argument.

Changes in Environmental Law to Watch for in President Obama's Second Term

In an interesting series of articles, attorneys on the West Coast have been writing about the changes to watch for in environmental law in the under President Obama's second term administration. The articles include:

• A summary of air, energy, water, natural resources, and waste policy change:

The Obama Administration is expected to advance major changes to energy and environmental laws in the next four years. There is already a backlog of pending legislation and proposed regulation to work through, and both environmental and industry groups will press for major reforms.

• A detailed look at changes in air quality rules:

Now that the election is over, EPA is expected to begin moving forward a crowded air docket, including greenhouse gas standards for utilities and refineries, updates to ambient air quality standards for particulate matter and ozone, and several rules that are being rewritten in response to legal challenges. Utilities, refineries, and operators of industrial boilers will all face new requirements specific to their source categories, as well as potential for further constraints due to more stringent, generally applicable ambient air quality standards. Final action on the first of these rules is expected before the end of 2012.

• A overview of the future of energy policy:

The first Obama administration saw many proposals, but few final actions on new federal regulation of oil and gas production. That pattern appears likely to change in the President’s second administration. The boom in oil and gas production is creating a counter-boom in litigation aimed at stopping or limiting development, and both industry and environmentalists are pressing their case as to the role the federal government should play in an era of greater energy abundance.  

• A discussion considering why waste policy may be a bigger issue than considered at first glance:

Compared with some other items on the Obama Administration’s second term agenda, hazardous waste and chemicals regulation is not as likely to be seen as an area of significant change. That’s a mistake. A number of issues are percolating at or just below the surface of the Administration’s regulatory priorities in this area that may bring significant change over the next four years.

Each issue discussed will not necessarily affect every landowner, but the takeaway here is that we could see some significant changes to our federal environmental laws and regulations over the next four years.

Friday Roundup of Environmental & Property Rights Cases before the U.S. Supreme Court

This was a big week at the U.S. Supreme Court for environmental and property rights cases. What's my soundbite? The environmental cases are extremely unlikely to actually resolve anything, which will certainly lead to more litigation. The property rights case was a big win for landowners.

First, as I discussed earlier in the week, the Court issued its opinion in Arkansas Game & Fish Commission v. United States, No. 11-597 (cert. granted Apr. 2, 2012), holding that where the government causes flooding, even if the flooding is merely temporary and non-recurring, it may be liable for a taking. Commentary and recaps:

• SCOTUSblog analysis of the opinion.
• Collection of commentary at SCOTUSblog.
• Robert Thomas at InverseCondemnation collects commentary and gives his own detailed thoughts.

Second, the Court heard the Forest Roads case (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347). As I blogged about previously, EPA issued a new final rule about logging roads on the eve of oral arguments, so the Court spent most of its time discussing what should be done in light of the new development. After this, I question whether this case will actually resolve anything about the Clean Water Act. Commentary and recaps:

• The SCOTUSblog preview and recap.
• Lawrence Hurley reports over at Greenwire.
• From the New York Times.
• The National Alliance of Forest Owner's blog, which as always, boils down the legalese into something that's easy to understand, if unfortunate: "Perhaps the most significant impact of the new rule is that it will perpetuate litigation in the Ninth Circuit with the added twist that, since the rule applies nationwide, whatever the Ninth Circuit ultimately decides will apply nationwide as well. The NEDC attorney told the Court in very clear terms that NEDC intends to continue litigation by whatever means to require permits for forest roads, stating:“…we contend that the new rule simply violates the statute, and we have a right to bring a citizen suit for a violation of the Clean Water Act itself…I think that what we’ll do is proceed whatever way we can.”"

Third, the Court heard the other Clean Water Case, Los Angeles County Flood Control District v. NRDC, No.11-460 (cert. granted June 25, 2012). As with Decker, it appears that this case may not end up resulting in much insight because all parties agreed the Ninth Circuit was wrong; they just disagreed on how to fix the error. It also appears that most of the arguments are permit-specific and an opinion from the Court would likely be confined to the facts. Commentary and recaps:

• SCOTUSblog has a great preview and excellent recap of why this case will probably not end up being all that important.
• The transcript.
• From the L.A. Times.
• One Los Angeles blog thinks this case was all about money behind the scenes.

Why Koontz Matters to All Property Owners: Protections of the Unconstitutional Conditions Doctrine and Due Process

Last week, my colleague David Smolker and I filed an amicus brief before the U.S. Supreme Court in Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). As we point out, the outcome of this case will be important to any landowner in the country, including average homeowners and even agricultural and recreational landowners. That may not be immediately obvious, however, because at first glance, the case might only seem to be relevant to the development community. We argued that the unconstitutional conditions doctrine protects all property owners:

Although a government may regulate the ownership of property under its police power, this Court has found it necessary to develop outer limits so that the power does not swallow property rights. This Court developed exactions law to protect property owners from a government’s extortionate leveraging of the police power to obtain benefits for which the government would otherwise have to pay for. The unconstitutional conditions doctrine provides this protection through both the Takings Clause and the Due Process Clause.

The Florida Supreme Court ignored this doctrine, which underlies this Court’s exactions jurisprudence—even though the lower appellate court extensively discussed it. See St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220 (Fla. 2011) [Koontz V]; St. Johns River Water Mgmt. Dist. v. Koontz, 5 So. 3d 8 (Fla. 5th DCA 2009) [Koontz IV]). Instead, with little critical analysis, the Florida Supreme Court took a simplistic and flawed view of exactions that led the court to conclude that the need for government regulatory “authority and flexibility” trumps the protections of the Fifth Amendment. It held that Mr. Koontz could only challenge an unconstitutional condition related to a land use permit if he first gave in to it, and even then that only an illegitimate demand for real property could be challenged. 

In response, this Court should hold that: (1) a government is liable when it refuses to issue a land use permit because the landowner refuses to accede to a permit condition that would have violated the test set forth in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. Tigard, 512 U.S. 374 (1994); and (2) the protections of Nollan and Dolan apply to all types of governmental demands that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use. Because local government exaction practices have become so widespread, Hillcrest respectfully suggests that this Court should take this opportunity to clearly and comprehensively address the constitutional limitations governing exactions and the remedies available to landowners faced with extortionate leveraging of the police power. Experience since Nollan and Dolan strongly suggests that such guidance is necessary to ensure that government compliance with the Fifth Amendment is “more than an exercise in cleverness and imagination.” Nollan, 483 U.S. at 841.

Two other amicus briefs that have just arrived support this interpretation. The brief of the Atlantic Legal Center, the Center for Constitutional Jurisprudence, and the Reason Foundation also discusses the unconstitutional condition doctrine in detail:

The district does not escape liability for imposing the unconstitutional condition in an attempt to cash in on its permitting power. Nollan, 483 U.S. at 837. It is the imposition of the condition, not the success or failure of compelling the applicant to sign a check or deed, that is the violation. Sherbert v. Verner, 374 U.S. 398, 403-04 (1963). Thus, in unconstitutional condition cases, the Court has recognized the availability of damage awards, voided the condition, or established a procedure to protect against the condition. When the condition has denied a constitutional right, such as an uncompensated taking, government must either lift the condition or pay compensation. Nollan, 483 U.S. at 837. The Court has not required the denial of constitutional rights before actions may be taken, however. From the earliest cases on unconstitutional conditions, the Court has allowed the voiding of the condition as a means of protecting the constitutional rights at stake. Home Ins. Co., 87 U.S. at 451. Modern cases have imposed prophylactic procedures to protect against the unconstitutional condition coming to fruition.... The district's failure to obtain the deed and cash payment from property owner here does nothing to obviate the constitutional violation.

As the American Civil Rights Union points out, such bald denials of due process lead to violations of the Takings Clause. You can read my quick review of the other amicus briefs here.

U.S. Supreme Court Refuses to Elevate Vague Public Interest above Private Property Rights

In a unanimous opinion today by Justice Ginsburg, the U.S. Supreme Court refused to elevate vague public interests above private property rights. The Court's opinion in Arkansas Game & Fish Commission v. United States, No. 11-597 (cert. granted Apr. 2, 2012), explains that where the government causes flooding, even if the flooding is merely temporary and non-recurring, it may be liable for a taking.

The Court roundly criticizes the government for attempting to carve out exceptions to the Takings Clause. It rejects the familiar argument that is made in nearly every takings case that the government won't be able to do its job if it is burdened with the mandate to pay just compensation:

There is thus no solid grounding in precedent for setting flooding apart from all other government intrusions on property. And the Government has presented no other persuasive reason to do so. Its primary argument is of the in for a penny, in for a pound genre: reversing the decision below, the Government worries, risks disruption of public works dedicated to flood  control.  “[E]very passing flood attributable to the  government’s operation of a floodcontrol project, no matter  how brief,” the Government hypothesizes, might qualify as a compensable taking. Brief for United States 29.  To reject a categorical bar to temporary-flooding takings claims, however, is scarcely to credit all, or even many, such claims. It is of course incumbent on courts to weigh carefully the relevant factors and circumstances in each case, as instructed by our decisions. See infra, at 14. 

The slippery slope argument, we note, is hardly novel or unique to flooding cases. Time and again in Takings Clause cases, the Court has heard the prophecy that recognizing a just compensation claim would unduly impede the government’s ability to act in the public interest. Causby, 328 U. S., at 275 (Black, J., dissenting); Loretto, 458 U. S., at 455 (Blackmun, J., dissenting).  We have rejected this argument when  deployed to urge blanket exemptions from the Fifth Amendment’s instruction. While we recognize the importance of the public interests the Government advances in this case, we do not see them as categorically different from the interests at stake in myriad other Takings Clause cases.  The sky did not fall after Causby, and today’s modest decision augurs no deluge of takings liability.

This is a solid opinion for property owners that brings some much-needed clarity to the law. It's good to see a unanimous opinion protecting property rights. The Court also seems comfortable that its current takings precedents cover most situations, making it disinclined to adopt any new rules. We may see more of this philosophy in January when the Court hears Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). This still leaves the petitioning property owner there in a good position because the biggest stretch the Court would need to make is to modestly expand its current caselaw. Dolan v. Tigard, 512 U.S. 374, 391 (2005); Nollan v. Cal. Coastal Com., 483 U.S. 825, 837 (1987).

I'll post more analysis later, but until then my archives on the case are here. My fellow blogger Robert Thomas has already posted some of his initial thoughts.

U.S. Supreme Court Hears Forest Roads Case: Legal Uncertainty Very Likely to Continue

The U.S. Supreme Court heard the forest roads case today (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347). Boy, how things change in just a few days. What was postured to have been a heavyweight brawl with industry, Oregon, and EPA favored by a wide margin appears likely to become a mere footnote in environmental law.

Right out of the gates, Chief Justice Roberts wanted to talk about how the EPA's new rule would affect the case, congratulating the industry on "getting almost all the relief they're looking for under the new rule issued on Friday." LegalPlanet's analysis of the arguments continues:

The Chief Justice was not nearly as polite when the Deputy Solicitor General began his argument on behalf of USEPA (as amicus supporting the industry and Oregon petitioners). Were you as surprised as we were, asked Roberts, that the rule would be issued on Friday? After the government’s lawyer revealed that he, too, had only learned of the new regulation on Friday, the Chief Justice mused that 375 pages of merits briefing had been rendered largely irrelevant, and that the Court could have postponed the Decker arguments until April if it had known in advance that the new rule was coming–presumably to allow supplemental briefing on the effect on the case of the late-breaking EPA regulation. 

*** 

Following this morning’s arguments, it seems obvious that the Northwest Environmental Defense Center will not preserve its win in the Ninth Circuit. But it’s almost equally unlikely that the timber industry and Oregon will obtain the reversal on the merits that they had been fervently seeking from the Supreme Court. More likely, the Court will wind up disposing of the Decker case on procedural grounds, without issuing a substantive decision. And that, ironically, will vindicate the Solicitor General’s original recommendation to the Court–ignored by the justices–that the Decker case was not cert-worthy in the first place.

All this without Justice Breyer, who had recused himself from the case, and whose expertise in administrative law may have been originally helpful, and which certainly would have been valuable after the case's change in posture. With that, the environmental cases don't seem to be making as big of a splash before the Court as many thought they would. As SCOTUSblog reports, the other Clean Water Act case before the Supreme Court, to be argued tomorrow, also appears to have become irrelevant. See Los Angeles County Flood Control District v. NRDC, No.11-460 (cert. granted June 25, 2012).

The upshot here for forest landowners is, just as NAFO predicted, EPA's new rule has created legal uncertainty that landowners will be forced to deal with, possibly for years into the future. Based on the arguments today, it's hard to imagine a scenario that doesn't keep this issue in litigation for years to come.

Forest Roads Update: EPA Finalizes New Logging Road Rule on the Eve of U.S. Supreme Court Arguments

Tomorrow, the U.S. Supreme Court will hear oral arguments in the forest roads case (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347). I've been following this legal battle for quite some time, so my readers know its importance for forest landowners. The statutory and regulatory mechanisms in play are complex, which has made the case tough to follow. The National Alliance of Forest Owners, however, has boiled down the legal arguments in the briefs of the parties and the many amici to three main questions:

• Is the Silvicultural Rule defining these roads as nonpoint sources a valid interpretation of the Clean Water Act (CWA)?
• Did the U.S. Environmental Protection Agency (EPA) exclude logging from the industrial activity category which requires stormwater discharge (NPDES) permits?
• Does the CWA allow NEDC to file this case in a federal district court 30 years after the Silvicultural Rule became final?

SCOTUSblog, as usual, has a great preview of the case:

Next week, in Decker v. Northwest Environmental Defense Center and Georgia-Pacific West, Inc. v. Northwest Environmental Defense Center, the Court will review a controversial Ninth Circuit environmental decision that has swept up all three branches of government. A panel of the court that included Justice Breyer’s younger brother Charles, sitting by designation, rejected the Environmental Protection Agency’s view that the federal Clean Water Act does not require permits for stormwater runoff from ditches and culverts on roads used for harvesting lumber (i.e., logging). Congress was sufficiently unhappy with the decision that bipartisan majorities enacted legislation to stay permitting until the beginning of this Term, and members of Congress have introduced legislation seeking to restore EPA’s former approach. To top it all off, EPA recently released proposed regulations for comment that, if finalized, would “clarify” that such stormwater runoff is not subject to permitting. 

The case is of central importance to the logging industry and businesses that rely on it. If the Ninth Circuit’s decision is upheld (and, of course, the regulations exempting logging roads are not finalized soon), in the near term, it would mean a significant additional regulatory burden on logging operations because of the expense in obtaining permits, the ability of environmental groups to delay the permitting process, and the “mind boggling” number of logging roads nationally – there are an estimated 15,000 miles of logging roads in the State of Maine alone and hundreds of thousands more in the Northwestern United States. Depending on the Court’s rationale, a variety of work-arounds (from revised EPA regulations to blanket permits) could render the impact manageable in the longer term, but there is no question that affirmance would be disruptive to the logging industry. 

When the case was first granted, many believed that the case reflected overreaching by the Ninth Circuit and concluded it was headed towards certain and overwhelming reversal. The Northwest Environmental Defense Center (“NEDC”) – the plaintiff below, but the respondent at the Court – must “run the table” and win every issue presented to prevail. Still, the case’s fate is far from clear. 

*** 

On balance, the NEDC has the more difficult challenge: It must win all threearguments to prevail. But while the early consensus appeared to be that the Supreme Court would clearly reverse the Ninth Circuit’s decision, focusing on the Silvicultural Rule, as argument approaches, it appears the case presents some closer questions. The jurisdictional issue is of particularly broad importance, because affirmance could broaden the ability to challenge EPA interpretations of regulations.

Meanwhile, EPA's new logging road rule was signed on Friday. It will go into effect 30 days after it is published, which should be soon. The rule is nearly identical to the proposed rule, which I discussed here. The industry has criticized the rule as poorly timed and creating legal uncertainty, even though it clarifies that logging roads are not be subject to the mandatory NPDES permit requirement under Phase 1 of the stormwater program for discharges associated with industrial activity.