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.

In Forest Roads Case, Path for U.S. Supreme Court Still Unclear as Supplemental Briefs Arrive

As the supplemental briefs arrive in the forest roads case (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347), it remains unclear what the U.S. Supreme Court will do with the case. My readers will recall that what was shaping up to be a win for the forestry community (and the environment) was thrown into disarray when EPA surprised everyone by issuing a new rule on the eve of the U.S. Supreme Court's consideration of the old rule.

The Justices were not happy with this last minute change, and so they requested supplemental briefing after oral argument. The Pacific Legal Foundation blog has fair summaries of the supplemental briefs:

The petitioners (timber companies): The petitioners urge the Court to issue a substantive opinion resolving the “point source” and “industrial activity” questions, and reversing the Ninth Circuit. The case is not moot, they argue, because the new rule did not change the law; rather, it confirmed the position they have advanced from the beginning, which is that EPA’s stormwater regulations exempt logging road runoff from NPDES permitting. They contend that EPA’s authority to exempt logging roads is a live issue that should be resolved. They also explain that resolving the question of EPA’s authority to adopt the exemption will cut off new challenges to the revised rule, and therefore spare the courts from having to litigateDecker all over again. At the very least, say the petitioners, the Court should vacate the Ninth Circuit’s judgment and remand for reconsideration in light of EPA’s new rule. 

The respondent (Northwest Environmental Defense Center): NEDC argues that the new rule does not foreclose its claims against the petitioners, and that the Court should allow lower courts to consider those claims in light of EPA’s new rule in the first instance. NEDC thus asks the Court to dismiss the case as improvidently granted, and remand so the group can continue to press its claims below. NEDC also asks the Court to affirm any aspect of the Ninth Circuit’s opinion that the Court chooses to address. 

United States (by invitation of the Court): The federal government argues that the case was rendered moot by EPA’s new rule because the rule confirms that the timber companies will not have to obtain NPDES permits. This would be so even if the Supreme Court were to uphold the Ninth Circuit’s opinion, which was issued while the old regulatory framework was in place. The government believes the Court should vacate the Ninth Circuit’s judgment, and remand with instructions to dismiss NEDC’s complaint. An alternative avenue would be to vacate the Court of Appeals’ judgment and remand to allow that court to address the effect of the revised rule.

Lyle Dennison at SCOTUSblog summarized:

Lawyers on all sides of the dispute over the federal government’s role — or lack of it — in monitoring the drainage of storm water across logging roads have offered the Supreme Court a range of ideas on what to do with the case, now that it has been argued and new government rules are in place. There was agreement on only one thing: the Court might consider, perhaps as a backup choice, sending the case back to the Ninth Circuit Court for a new review. That is the simplest option among an array of choices laid out in a new round of briefs in two consolidated cases argued seven weeks ago.

I agree with Lyle's hint that if there is an easy way out for the Supreme Court to take, it will find it. As the National Alliance of Forest Landowners has mentioned, the real solution here is congressional action.

Florida's 4th DCA Explains that Attorney's Fees and Costs for Work Leading up to Successful Takings Suit is Recoverable

This is a simple case, but a good one to be aware of. 

In Board of Supervisors of St. John's Water Control District v. Florida Department of Transportation,  - So. 3d -, 2012 WL 5933012 (Fla. 4th DCA Nov. 28, 2012), the parties agreed that the District was entitled to attorney's fees and costs because it was successful in an inverse condemnation lawsuit. The circuit court ruled, however, that the District was not entitled to its fees and costs in a prior lawsuit, in which it was determined that the District actually owned the property in question. The appellate court reversed, explaining: 

Under Florida law, a property owner awarded fees under the lodestar method is entitled to its reasonable attorneys' fees for all work relating to a condemnation suit, including work performed before the date suit is actually filed. See Volusia Cnty. v. Pickens, 435 So. 2d 247, 248 (Fla. 5th DCA 1983) (an inverse condemnation plaintiff was "entitled to recover a reasonable amount for all costs and attorney's fees reasonably and necessarily expended in connection with the investigation, research, preparation and presentation of the case" despite the defendant's argument that the plaintiff's entitlement to attorney's fees was limited to a certain date range); State Dep't of Trans. v. Grice Elecs., Inc., 356 So. 2d 7, 7 (Fla. 1st DCA 1977) (the trial court did not err when it awarded "compensation to appellee's attorneys for work performed before suit was filed but after condemnation was imminent").

That is, it takes work to get to the point of filing a taking claim, and a prevailing landowner should be compensated for that. Makes sense to me.

Two Florida Courts Apply Penn Central Taking Test with Reasonable Results

In Florida, as in many other places, courts have had trouble applying the Penn Central takings test. Some folks argue that this case is so muddled and unworkable that it was not only a bad takings case, but also one of the worst cases the U.S. Supreme Court ever decided. Recently, however, two courts applied the test, coming to (surpisingly) reasonable results in opinions issued on the same day. 

Galleon Bay Corp. v. Bd. of Cnty. Comm'rs of Monroe Cnty.

Galleon Bay Corp. v. Board of County Commissioners of Monroe County, - So. 3d, 2012 WL 6027768 (3d DCA Dec. 5, 2012), is one of a number of long-running takings disputes in the Florida Keys. The appellate court started by explaining the Penn Central test:

In addressing whether a "taking" has occurred, the United States Supreme "Court's decisions have identified several factors that have particular significance. The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations." Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978) (emphasis added). The Supreme Court has also "frequently observed that whether a particular restriction will be rendered invalid by the government's failure to pay for any losses proximately caused by it depends largely `upon the particular circumstances [in that] case.'" Id. (citation omitted). Furthermore, the United States Supreme Court has also found "categorical treatment appropriate . . . where regulation denies all economically beneficial or productive use of land." Lucas v. So. Carolina Coastal Council, 505 U.S. 1003, 1015 (1992). Moreover, the Court has stated "on numerous occasions [that] the Fifth Amendment is violated when land-use regulation `does not substantially advance legitimate state interests or denies an owner economically viable use of his land.'" Id. at 1016 (citation omitted) (emphasis in original).

Robert Thomas has blogged a few thoughts about this case, pointing out that this case is a good example of how subjective these Penn Central determinations can be. Ultimately, the appellate court held that the trial court did not find a taking because it had incorrectly applied both Penn Central and Lucas. Further, it held that the landowner had "been deprived of all or substantially all of the economically viable use of its property." 

Although the appellate court held a taking had occurred and remanded the case to hold a trial on compensation, it is not yet final because the parties are awaiting a ruling on a motion for rehearing en banc.

Scott v. Galaxy Fireworks, Inc.

On the other hand, in Scott v. Galaxy Fireworks, Inc., - So. 3d -, 2012 WL 6028835 (2d DCA Dec. 5, 2012), the trial court found a taking that the appellate court reversed. In 1998, the governor of Florida entered an executive order that banned the sales, use, or discharge of fireworks for approximately two weeks. The order prohibited sales during the Fourth of July, during Florida's worst drought and fire season in recent history. The retailer showed that it realized approximately seventy percent of its profits during that time period and that it takes months of preparation to do so.

The trial court found a compensable taking, but the the appellate court reversed, holding that under Penn Central, there was no taking:

In addressing the owners' argument, the Supreme Court set forth the following three factors to be considered in determining whether there has been a compensable taking: (1) "[t]he economic impact of the regulation on the claimant," (2) "the character of the governmental action," and (3) "the extent to which the regulation has interfered with distinct investment-backed expectations." Penn Central, 438 U.S. at 124. Applying these three factors to the instant case, we conclude that the executive order here did not amount to a compensable taking.
***
Here, the sale of fireworks is highly regulated due to the potential danger resulting from their discharge. Appellees voluntarily invested in their inventories knowing that the regulation of the sale and use of such was subject to change from time to time and from locality to locality. The temporary limitation on the sale of the fireworks under these facts does not rise to such an interference with investment-backed expectations as to constitute a compensable taking.

Translation: stay out of highly regulated industries if you want to protect your investment! The court's language equating the government's police powers with the "character of the governmental action" concerns me some. I lived in Florida during that time, and with a family in the forestry business, I was able to see first-hand the devastation that the fires wrought in the state. There was certainly a state of emergency, which should be the important point - not necessarily that the state acted within its police powers. Later courts could easily use it out of context. But at least here, the result seems reasonable. The case is not yet final because the parties have just finished briefing Galaxy's motion for rehearing en banc.

The Unintended Consequences of Land Use Controls

There's a good op-ed piece in the Wall Street Journal this week that would be funny--if it weren't so maddeningly true. Roger Kimball writes about his struggles with local land use agencies and FEMA in trying to rebuild after Hurricane Sandy:

In "The Road to Serfdom," Friedrich Hayek noted that "the power which a multiple millionaire, who may be my neighbor and perhaps my employer, has over me is very much less than that which the smallest functionnaire possesses who wields the coercive power of the state on whose discretion it depends whether and how I am to be allowed to live or to work." 

And how. But what makes the phenomenon so insidious is that many of the functionaries are as friendly as can be. It's just that they're cogs in a machine whose overriding purpose is not service but self-perpetuation and control. 

It is, as Alexis de Tocqueville saw, a recipe for a form of despotism peculiar to modern democracies. It does this, wrote Tocqueville, by enforcing "a network of small, complicated, painstaking, uniform rules" that reduces citizens "to being nothing more than a herd of timid and industrious animals of which the government is the shepherd." The sobering thought is that we're all complicit in that infantilization. After all, we keep voting for the politicians who put this leviathan in place.

My friends who read Austrian economics are probably thinking Kimball sounds a lot like Frédéric Bastiat:

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

Why should it be so tough to rebuild after a natural disaster? The seen and the unseen, indeed.

Need a Plain-Language Summary of Koontz?

My last post dealt in detail with the my observations following oral arguments in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). With good timing, the Hillsborough County Bar Association recently published my plain-language introduction to the case in its magazine, Lawyer (p. 41). It's excerpted below for easy reading.

Florida Once Again on the Forefront of Takings Law

In the development approval process, governments commonly require a dedication of real property to mitigate adverse impacts. But what if the request is for cash or for services? What if the request is unreasonable, and the landowner cannot use the property?

Land use lawyers and urban planners wonder if these questions will be answered now that the U.S. Supreme Court has granted review of Koontz v. St. Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). In what could be the most important land use decision in years, Koontz questions common bargaining practices that governments use when negotiating development permits.

An exaction is a government requirement to donate something in exchange for the right to develop property. Generally, the government cannot force landowners to give up the right to exclude others from property in return for the ability to develop it. It can, however, require mitigation of adverse development impacts.

If the mitigation involves access to real property, there must be an “essential nexus” and a “rough proportionality” between the exaction and the interest that the exaction is advancing. Dolan v. Tigard, 512 U.S. 374, 391 (2005); Nollan v. Cal. Coastal Com., 483 U.S. 825, 837 (1987). Otherwise, the government must pay just compensation because the landowner has lost the ability to exclude others from the property.

In Koontz, the government agreed to issue a permit if the landowner would work on government-owned culverts and canals seven miles away. The landowner refused, and the government denied the permit. When the landowner brought an inverse condemnation suit, the trial court and the Fifth DCA found the exaction illegal. The Florida Supreme Court reversed, holding that the Nollan-Dolan test only applied to exactions of real property, where a permit was actually issued imposing the onerous exaction. St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220 (Fla. 2011).

Now, the landowner asks the U.S. Supreme Court if exactions law applies beyond real property. That is, can the government make unreasonable requests for money and for work, when it cannot for property? Second, the landowner asks if a taking can occur where a permit is denied because an applicant rejects an illegal exaction. In other words, does the landowner have to accede to an unreasonable exaction in order to challenge it? This latter question is the more problematic for governments, since it could increase their exposure to takings litigation and limit a lucrative funding source.

These days, Florida is a hotbed of property rights litigation. Three years ago, Florida was defending its beach renourishment program before the U.S. Supreme Court. Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). That case broke new ground when a plurality of justices acknowledged that a court can take property, just as the legislative and executive branches can. Will Florida again be on the forefront of takings law?

Wrong Plaintiff, Right Theory: Why Property Rights May Still Win in Koontz

I'm back in Tampa after a whirlwind trip to watch oral arguments before the U.S. Supreme Court in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). It was cold and rainy at 5:55 when I arrived to take the second spot in the public line, but I was glad to see a friendly face as the first person in line.

Tough Questions for the Landowner

The Justices had tough questions for everyone on Tuesday morning. Judging by the post-argument commentary, the smart money seems to be on the government for the win:

• Lawrence Hurley at Greenwire gave a slight edge to the government.
• Damon Root though that the government got a surprise win, with Scalia's questioning taking him out of the landowner's corner.
• Lyle Dennison agreed that, surprisingly, the conservative Justices couldn't get on the same page to rule for the landowners.
• Jonathan Adler thought that Justice Scalia is key to a decision for the landowner.
• Robert Thomas agreed that when Justice Scalia gives you a hard time on a takings claim, you have an uphill battle.
• Prof. Gideon Kanner thought the Justices were off-base and muddled, as is usual in takings cases. 
• Even Paul Beard, who argued the case for the landowner, talked about how Justice Scalia didn't seem to be on board.

Maybe I have a contrarian streak. Maybe something about being present at the Supreme Court made a different impression on me. Maybe it's my past experience with the Supreme Court. Either way, I don't think the landowner has such bad chances as some of my colleagues.

The Unconstitutional Conditions Doctrine Unties the Gordian Knot

Certainly, we can't be too cheerful. Justice Scalia indicated several times that he was having trouble finding the taking in this case. But if you look closely, he may have been thinking through the distinction between a taking proper and a violation of the unconstitutional conditions doctrine. In full disclosure, my colleague David Smolker and I submitted an amicus brief in support of the property owner, arguing that the unconstitutional conditions doctrine is the key to understanding exactions law because it blends the protections of Due Process with those of the Takings Clause. So I admit up front that I have a dog in this fight. As we explained,

In the exactions context, this doctrine prohibits the government from requiring that a person give up the constitutional right to receive compensation when property is taken for a public use in exchange for a discretionary benefit conferred by the government where the benefit sought has little or no relationship to the property taken.... It indicates that the means by which valid ends are achieved matter: “[a]cts generally lawful may become unlawful when done to accomplish an unlawful end, and a constitutional power cannot be used by way of condition to attain an unconstitutional result.” Frost v. R.R. Comm'n of Cal., 271 U.S. 583, 598-99 (1926); see M. Merrill, Unconstitutional Conditions, 77 U. Penn. L. Rev. 880, 889 (1929) (Doctrine serves as “a barrier against subversive attacked by the government, state or federal, upon the privileges vouchsafed by the Constitution.”).

But judge for yourself:

JUSTICE SOTOMAYOR: Which -- how does that not address going too far? You just said it. If -- if this is unrelated to the denial of your permit of all uses of your land and you're saying that's the problem, which is I still have a use, I just want more, why does that entitle you to your lost profits? When were you ever entitled to start with the claim that somehow you're entitled to a permit as a matter of law?
MR. BEARD: We're entitled under the Unconstitutional Conditions Doctrine to not have to bear a public burden that has no bearing on the impact that we're trying to use on our property.
JUSTICE SCALIA: Yes, that's fine. That -that would enable you to challenge the denial of the permit, saying it's based upon an unconstitutional condition. But how does it -- how does it enable you to say there's been a taking? What has been taken?
MR. BEARD: What has been -- what has been taken in effect is his funds that have to be put now to a public use, the enhancement of 50 acres of public wetlands. And there is nothing in the takings clause, nothing
JUSTICE SCALIA: It hasn't -- it hasn't been taken. I mean, he turned it down.
MR. BEARD: Nothing was taken in Nollan and Dolan, either. What was proposed there, though, was a threat of a taking.
JUSTICE SCALIA: The -- the -- the permit was granted in Nollan and Dolan. And -- and the condition attached to the permit, therefore, took effect; namely, that you had to dedicate this easement over your -- over your beach whereas -- as my colleague pointed out, anybody could walk back and forth barefooted.

And later:

JUSTICE SCALIA: Justification is the protection of wetlands. That's a justification. The protection of wetlands. There's no necessary comparison, as Nollan and Dolan requires, between the harm that would be occasioned if the permit were granted and what the State is exacting in order to mitigate. That doesn't exist anywhere in -- in the analysis that you are talking about.
MR. WOLFSON: Well, Justice Scalia, there are -- there is another problem with the Nollan and Dolan claim in this case, which is, it's hard to see how you can have an exactions takings claim when nothing has ever actually been exacted.
JUSTICE SCALIA: Now, that is a problem.

So Justice Scalia seems to agree that the denial of the permit can be challenged under the unconstitutional conditions doctrine. But he is searching for a takings theory. Later, responding to questions from other Justices, counsel for the landowner again referenced the unconstitutional conditions doctrine:

MR. BEARD: Justice Breyer, there is another part, a very distinct part, and that part goes to the question of the condition that produced the denial. So there are -- there are actually two parts here. There's the conditioning of your permit. In other words, We will not issue you permits unless you agree to perform offsite mitigation. Now, the question under Nollan and Dolan is, was that condition constitutional? Was he asked to give up something that the State or the district in this case should not have asked him to give up in exchange for his right to use his property? Now, it's true as -- as, Justice Breyer, you mentioned, that the permit denial and whether that affects a regulatory taking of his land, of the thing he wants to use, that's an entirely different question, and it may raise another kind of claim, another kind of taking claim. But the crux of the claim that was litigated in this case from the trial court all the way up to the Florida Supreme Court is: Was the condition to perform offsite mitigation, and that was accepted as true by the courts below, that this was a condition that had been -

And Justice Kagan seemed to agree that it was appropriate to consider it:

JUSTICE KAGAN: Mr. -- Mr. Beard, I don't think anybody is contesting that there was a condition imposed or maybe there are. But -- you know, there's another question whether that position is a taking. And we've been trying to figure out what's the taking here. In Nollan and Dolan, they took an easement, they took a piece of land. So that's the taking. Now, you said the funds are the taking; is that correct?
Any time that somebody comes up with a proposal for -- for a developer to pay money in order to compensate the State for the costs that are associated with his development, that that is itself a taking?
MR. BEARD: I want to be clear that we're not saying that all monetary fees or exactions would be subject to Nollan and Dolan, only within the permit context, the special context of land use permitting.
JUSTICE KAGAN: No, I understand. But in the permit context, a State can't say to somebody, You have to pay to perform some service or to compensate without it being a taking and without it being subject to Nollan and Dolan analysis.

Chief Justice Roberts certainly picked up the point, and the government really could not run from it, other than to say that the government should get some leeway in applying unconstitutional conditions that relate to real property:

CHIEF JUSTICE ROBERTS: Just to nail it down, your position is that there is no limit in the Federal Constitution on what the agency can demand as a condition for the issuance of a permit?
MR. WOLFSON: No, no, no, I don't think that is our position. First of all, the Due Process Clause may certainly impose conditions. The Equal Protection Clause may certainly impose conditions.
CHIEF JUSTICE ROBERTS: But the Takings Clause does not.
MR. WOLFSON: If the conditions are so onerous that it would make it essentially impossible to derive any value from the land, that may very well call into question Penn Central or Lucas. I mean, in many ways this case could have been litigated as a very straightforward Penn Central case.

If I'm right that Justice Scalia sees a difference between a traditional taking and an exaction, through the unconstitutional condition, then the story might not be so bad for the landowners. I can understand why he questions that a taking could occur if a permit is denied based on an unconstitutional condition. But surely there has been a compensable injury because the landowner has then been deprived of property without due process of the law? The compensation should then be measured in the same manner as a temporary taking. So, ultimately, counsel for the landowner may have not had it quite right when he agreed with Justice Kennedy that there was "no due process claim" before the Supreme Court.

Justice Scalia's position should come as no surprise. He explained it in detail thirteen years ago in the denial of certiorari in Lambert v. San Francisco, 529 U.S. 1045 (2000). That case presented a very similar scenario, where a land use permit was denied because a developer refused to pay a monetary exaction. The Supreme Court refused to grant certiorari, and Justice Scalia wrote a detailed dissent. In it, he questioned whether there was a taking, and even whether Nollan and Dolan properly applied. But he did not question that the landowners rights had been violated. The test he proposed in that case was, "when there is uncontested evidence of a demand for money or other property–and still assuming that denial of a permit because of failure to meet such a demand constitutes a taking–it should be up to the permitting authority to establish either (1) that the demand met the requirements of Nollan and Dolan, or (2) that denial would have ensued even if the demand had been met."

Wrong Plaintiff, Right Theory?

My takeaway from all this is that, if exactions law really is premised on the unconstitutional conditions doctrine, as three Supreme Court cases have indicated, then the Court must almost certainly rule in favor of the landowners. If the Court does not rule for the landowners, then the doctrine really isn't what's driving exactions law. While that would be a loss for sound takings jurisprudence, that doesn't necessarily mean it will be a loss for private property rights.

Something about the Justice Scalia's questioning reminded me of the last case I saw arguments in at the Supreme Court. In Stop the Beach Renourishment, Inc v. Florida Dept. of Environmental Protection, 130 S. Ct. 2592 (2010).  That was the case where I worked for counsel of record in representing the landowners in a judicial takings claim after the Florida Supreme Court rewrote its waterfront property law. At oral argument in that case, Justice Scalia was also skeptical of the landowner's theories that it had been harmed when he questioned my former colleague D. Kent Safriet:

MR. SAFRIET:  That is right, Your Honor, but the -- there is no case law in Florida or no principle that says avulsion can occur by artificial means.  So there is -- the beach restoration, where they placed sand on the beach, is not avulsion.
JUSTICE SCALIA:  If there’s no case law, it seems to me you've lost your case. 

When Justice Scalia wrote the opinion in the case, a majority of the Supreme Court agreed the landowner did not have a valid claim. Even so, Justice Scalia reached beyond that to establish a doctrine of judicial takings, which a plurality of the Supreme Court adopted. Perhaps that is what we will see here: an opinion that sends Mr. Koontz home without relief but that nevertheless advances private property rights. Wrong plaintiff; right theory.

EDIT 10:45 AM: Cristina Martin, a legal fellow at the Pacific Legal Foundation, independently came to a conclusion remarkably similar to my own.

Federal Circuit Examines the Boundaries of the Relevant Parcel Rule in Takings Claims

When I explain how takings law works to lawyers in other specialties, they are usually surprised that we fight so much to define the relevant parcel of property. That matters because the U.S. Supreme Court has said that government action only constitutes a regulatory taking when it goes "too far." The question becomes, then, did the government go too far if it takes 95% of the value of your parcel A, but your parcel B is unaffected so that if both parcels are considered, the government only took 50% of the combined value? Bet you can guess the government's standard argument!

The Federal Circuit just issued a new opinion analyzing how to determine the relevant parcel. In Lost Tree Village Corp. v. United States, Case No. 2012-5008 (Jan. 10, 2013), the Federal Circuit writes:

In many cases, as here, the definition of the relevant parcel of land is a crucial antecedent that determines the extent of the economic impact wrought by the regulation. Definition of the relevant parcel affects not only whether a particular regulation is a categorical taking under Lucas, but also affects the Penn Central inquiry into the economic impact of the regulation on the claimant and on investment-backed expectations. The relevant parcel determination is a question of law based on underlying facts.

The Supreme Court has not settled the question of how to determine the relevant parcel in regulatory takings cases, but it has provided some helpful guideposts. First, the property interest taken is not defined in terms of the regulation being challenged; the takings analysis must focus on “the parcel as a whole.” Second, “parcel as a whole” does not extend to all of a landowner’s disparate holdings in the vicinity of the regulated property.  

This court has taken a “flexible approach, designed to account for factual nuances,” in determining the relevant parcel where the landowner holds (or has previously held) other property in the vicinity. In this inquiry, the “critical issue is ‘the economic expectations of the claimant with regard to the property.’” When a “developer treats several legally distinct parcels as a single economic unit, together they may constitute the relevant parcel.”  

Conversely, even when contiguous land is purchased in a single transaction, the relevant parcel may be a subset of the original purchase where the owner develops distinct parcels at different times and treats the parcels as distinct economic units. 

(Citations omitted). In the case at hand, the Federal Circuit reversed the trial court because the trial court incorrectly combined multiple parcels of property owned by the same company in a takings lawsuit related to a Clean Water Act permit. Even though the lots were contiguous and were held to make a profit, "the mere fact that the properties are commonly owned and located in the same vicinity is an insufficient basis on which to find they constitute a single parcel for purposes of the takings analysis." The company showed that it had "distinct economic expectations" for each parcel. Consequently, the trial court was ordered to determine the value of the only the taken parcel. A rare win for the landowner!

Koontz Heads to U.S. Supreme Court, Reply Brief Argues Government's Coercive Power Must be Limited

The Pacific Legal Foundation has filed the landowner's reply brief in Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). Here's the introduction:

The District skirts the first Question Presented, never explaining why a permit exaction resulting in permit denial should be exempt from review under Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). Instead, it writes and answers its own “question presented” based on a fundamental misunderstanding of Mr. Koontz’s claim, and an improper re-litigation of the record. Introducing a “straw man” argument, the District asks whether just compensation under Nollan and Dolan is available for the taking of land. But Mr. Koontz litigated his claim on the very different question of whether Nollan and Dolan apply to invalidate a permit exaction. That is the only issue the Florida Supreme Court resolved, the only issue before this Court, and the one  issue the District avoids for most of its brief. 

The District does address the second Question Presented of whether monetary exactions should be exempt from Nollan/Dolan review. After arguing—contrary to the lower courts’ findings—that it never imposed any permit condition, it urges this Court to simply exempt from Takings Clause review under Nollan and Dolan all monetary exactions. But the District’s proposed rule finds no support in this Court’s precedents, including the principal case on which the District relies, Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), which is a fractured decision easily distinguishable from the facts of this case. 

Nor is the exception supported by the District’s “the sky will fall” arguments. After Nollan and Dolan, land-use regulation did not come to a halt. And, in those states that apply them to monetary exactions agencies still impose all manner of exactions—only now, they must do so within the parameters of the Takings Clause, so that no unconstitutional conditions are imposed. 

In the District’s view, the Takings Clause should impose no limitation whatsoever on an agency’s flexibility to demand that an individual dedicate her money to a public use in exchange for a permit—presumably, because agencies can be “trusted” to not impose excessive exactions. Of course, the record in this case belies the District’s dubious assurances. It is undisputed that Mr. Koontz was unfairly singled out to bear a public burden (improving government-owned lands) that should have been borne by the public as a whole; the demand bore no connection or proportionality to the impact of Mr. Koontz’s modest project—a fact that the District itself recognized eleven years after imposing it, when it issued his permits without the condition. This kind of heavy handedness—exacting as much property out of a permit applicant as needed or wanted—will persist, so long as agencies know there is no Takings Clause limitation on their power. Trusting agencies to do the right thing is not the answer; making Nollan and Dolan review available to individuals faced with coercive property exactions—whatever their form and regardless of their timing—is.

I'll be at the oral arguments for this case, so I'll draft my reflections while I'm flying home for posting sometime late Tuesday night. Until then, check out my numerous posts on the development of this case in my archives. Here is a rundown of interesting articles and summaries on the web about the case:

• The Pacific Legal Foundation has a number of good blog posts
• Robert Thomas at Inversecondemnation.com has been following this case for quite some time
• Lawrence Hurley at Greenwire writes about the "velvet-covered hammer" of governments suggesting exaction options
• The Orlando Sentinel muses on the local implications of the Court's ruling
• Professor Richard Epstein discusses the case. In his opinion, this case comes down to fundamental concepts of fairness:
  
  The narrow issue before the U.S. Supreme Court is whether this condemnation claim is valid when the District’s aborted land use exactions are off-site. Unfortunately, the Water District offers no explanation as to why its price schedule (over three acres put aside for each acre developed) for mitigation is correct. More critically, it never explains why there should be any environmental mitigation doctrine at all. When the case came before the Florida Supreme Court, the state began its discussion by insisting that the “purpose behind the takings doctrine is to prevent government from forcing an individual to carry burdens that should be carried by the public as a whole.” Yet that is precisely what the government does by asking Koontz to underwrite the repair of its culverts and ditches for the benefit of the public at large.
  
  The significance of this issue, moreover, not only concerns fairness to individuals in deciding who pays for any repairs. Also relevant is whether the repairs should be made at all. Looming behind these distributional questions lies key issues about economic waste from the misallocation of social resources. By linking the permit to the proposed repairs, the District frames the issue by making the wrong comparison.

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

The Florida Bar's Environmental and Land Use Law Section has posted its column on the environmental and land use cases in Florida that you need to know about for the fourth quarter of 2012. This is the column that I formerly coauthored. Here are the summaries:

• Town of Longboat Key v. Islandside Property Owners Coalition, LLC, 94 So.3d, 1037 (Fla. 4th DCA 2012). As I discussed in detail previously, In certiorari review, a circuit court is not bound by a local commission’s longstanding interpretation of a local code if that interpretation is unreasonable or erroneous. 
• 19650 NE 18th Ave LLC. v. Presidential Estates Homeowners Ass’n, Inc., - So.3d -, 2012 WL 4448792 (Fla. 3rd DCA 2012). Where a deed of sale violated a county covenant requiring the deed to specify the number of units a buyer may build on the property, the remaining development rights associated with the property were not forfeited because such a condition was not included in the contract. 
• Garcia v. Andonie, - S. Ct. -, 2012 WL 4666458 (Fla. 2012). The homestead exemption statute’s provision requiring that a property owner reside on the property to be entitled to a homestead property tax exemption violated Florida’s constitutional provision governing the homestead exemption.
• Fla. Dept. of Agriculture and Consumer Services v. Mendez, - So.3d -, 2012 WL 3023214 (Fla. 4th DCA 2012). The statute permitting issuance of writ of execution against Florida departments for judgment in eminent domain actions does not permit issuances of writ of execution against Florida departments in inverse condemnation actions. Further, a constitutional challenge to section 11.066, Florida Statutes, is not ripe for adjudication prior to appropriation proceedings before the Legislature.

As always, if you're interested in previous case law updates, take a look at my past posts for previous cases I've summarized about Florida environmental and land use law.

U.S. Supreme Court Overrules Ninth Circuit in Its First Environmental Decision of the Term

This week, the U.S. Supreme Court decided Los Angeles County Flood Control District v. NRDC, No.11-460 (argued Dec. 4, 2012). This was the Clean Water Act case that I've said several times was not likely to amount to much. The lawsuit involved the Clean Water Act permit encompassing numerous sections of the Los Angeles River. The Court held that there was no discharge of a pollutant for it to consider. In a short opinion written by Justice Ginsburg, the Court summarized:

The Court granted review in this case limited to a single question: Under the Clean Water Act (CWA), 86 Stat., as amended, 33 U. S. C. §1251 et seq., does the flow of water out of a concrete channel within a river rank as a “discharge of a pollutant”?  In this Court, the parties and the United States as amicus curiae agree that the answer to this question is “no.” They base this accord on South Fla. Water Management Dist. v.  Miccosukee Tribe, 541 U. S. 95, 109–112 (2004), in which we accepted that pumping polluted water from one  part of a water body into another part of the same body is not a discharge of pollutants under the CWA. Adhering to the view we took in Miccosukee, we hold that the parties correctly answered the sole question presented in the negative.  The decision in this suit rendered by the Court of Appeals for the Ninth Circuit is inconsistent with our determination. We therefore reverse that court’s judgment.

Even though the Ninth Circuit's opinion favoring the environmental organization plaintiff was reversed and remanded, environmentalists agreed the Court's decision was a good one:

The Supreme Court ruled today that the 9th Circuit committed a legal error in holding the Los Angeles County Flood Control District liable for violations of its Clean Water Act (CWA) “municipal separate storm sewer system” (or MS4) pollution discharge permit. The suit, Los Angeles County Flood Control District v. Natural Resources Defense Council, had been initiated by NRDC and allied environmental groups, and its victory below was reversed. A loss for the environment? Actually, the careful and narrow Supreme Court ruling dodged a potential weakening of the CWA, and appears to have left open for consideration whether conceded permit violations by the Los Angeles County District meant it deserved to be held liable. The case potentially could have weakened the centrality of self-reported discharge permit violations and decades of rulings that such violations result in strict liability. The Court, however, dodged such a result, explicitly leaving that issue open in reversing and remanding the case.

Greenwire and the L.A. Times also have good reports on the decision.

The Forest Roads Litigation Gets Even More Complicated

As the National Alliance of Forest Landowners put it, "the forest roads legal quagmire is now here." The U.S. Supreme Court heard the forest roads case on December 3, 2012 (consolidated: Decker v. NEDC, No. 11-338, and Georgia-Pacific West, Inc. v. NEDC, No. 11-347). Recall that the main issues in this case are:

• Is the Silvicultural Rule defining forest roads as nonpoint sources of pollution 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 the environmental organization to file this case in a federal district court 30 years after the Silvicultural Rule became final?

After the oral arguments, I said it was "hard to imagine a scenario that doesn't keep this issue in litigation for years to come." And that is exactly what is happening.

First, the Supreme Court has requested supplemental briefing because EPA issued a new rule aimed at curing some of the issues in the case on the eve of the Supreme Court arguments. The Justices weren't happy about not having been informed earlier about this development, so it was no surprise that they wanted to further consider how EPA's actions would affect the case. The supplemental briefs are due January 22.

Meanwhile, out in the Ninth Circuit, the same environmental organization litigating this forest roads case has filed another. This time, it has requested review of EPA's new rule that was intended to the fix some of the problems. After the past week, one thing is for sure: forest roads litigation is here to stay. Landowners certainly aren't being helped by this morass of litigation and administrative rulemaking.

U.S. Supreme Court to Hear Water Rights Dispute Implicating Commerce Clause

The U.S. Supreme Court will hear a case dealing with how an interstate water compact relates to the commerce clause. At first glance, Tarrant Regional Water District v. Herrmann, 11-889 (cert. granted Jan. 4, 2013), doesn't look to be that important outside of Texas and Oklahoma. On a closer look, though, this dispute over whether the Commerce Clause is violated by one state's interpretation of an interstate water agreement (called a "compact" under the Constitution). The Water District explains in its petition for certiorari:

The question in this case is whether the Red River Compact—an interstate agreement between Texas, Oklahoma, Arkansas, and Louisiana that was intended to assure “equitable apportionment” of water among the signatory States—authorizes Oklahoma to discriminate against Texas consumers in the allocation of water, in a manner that otherwise would violate the Commerce Clause. The Tenth Circuit held that it does, pointing to general language in the Compact that gives the signatory States authority over the water allocated to them within their borders. As a consequence, Oklahoma is using avowedly protectionist rules to prohibit the transfer of water to petitioner Tarrant Regional Water District (“Tarrant”), a political subdivision of the State of Texas responsible for supplying water to nearly two million
people. 

This holding is wrong in two fundamental respects: it departs from this Court’s emphatic direction that congressional intent to waive the requirements of the dormant Commerce Clause must be stated expressly and unambiguously; and it misreads the plain language of the Compact, which allocates an equal portion of the disputed water to Texas and thereby preempts inconsistent Oklahoma law. 

The Tenth Circuit’s holding is of enormous significance. It will encourage protectionist legislation by States that participate in the dozens of interstate water compacts that use language indistinguishable from that of the Red River Compact, creating uncertainty about the long-standing network of interstate agreements that governs the allocation of water throughout much of the Nation. More broadly, it undermines the “clear statement” rule governing congressional abrogation of the dormant Commerce Clause that this Court has held vital to prevent economic Balkanization among the States. Most immediately, it denies millions of Texas consumers water that they desperately need and were allocated by the Compact. Review by this Court accordingly is imperative.

On the Commerce Clause argument, the State of Oklahoma responds:

In passing the Compact, Congress approved a perpetual allocation to Oklahoma of water from the Red River. Tarrant argues that it is an open question whether a federal court could undo that allocation relying on the judicially-created dormant Commerce Clause. That doctrine should never be held to displace express legislation taking action regulating commerce among the States. Such a holding would create a separation of powers dispute beyond the wildest conception of the framers.  

There is no question that compacts are federal law, and “congressional consent transforms an interstate compact within [the Compact Clause of the federal constitution] into a law of the United States” such that the construction of such an agreement “presents a federal question.” Cuyler v. Adams, 449 U.S. 433, 438 (1981); see also NYSA-ILA Vacation & Holiday Fund v. Waterfront Commission, 732 F.2d 292, 298 (2d Cir. 1984). As the Cuyler Court noted, “The requirement of congressional consent is at the heart of the Compact Clause. By vesting in Congress the power to grant or withhold consent, or to condition consent on the States’ compliance with specified conditions, the Framers sought to ensure that Congress would maintain ultimate supervisory power over cooperative state action that might otherwise interfere with the full and free exercise of federal authority.” Cuyler, 449 U.S. at 439-40. The “full and free exercise of federal authority” is particularly relevant to interstate compacts apportioning water among the states.  

Because the Red River Compact is federal law, as a matter of logic and law it cannot itself violate the dormant Commerce Clause. ... The dormant Commerce Clause was said to fill in the “great silences” in the commerce clause. Hood and Sons v. DuMond, 336 U.S. 525 (1949). When Congress allows the clause to remain dormant, action is required by this Court. When Congress approves a compact, however, it breaks its silence, and replaces dormancy with action. In that case, the dormant Commerce Clause has no purpose.

But what's this case really about, you ask? As the New York Times reports, it's about money. North Texas needs this water to continue it's phenomenal growth.

SCOTUSblog has posted the parties' briefs and the amicus briefs. The decision below from the Tenth Circuit is here. As an aside, I don't follow the Florida-Georgia-Alabama water wars closely, but I wonder whether this case could have implications for it. Do any readers know?

What Do Agricultural Landowners Need to Know about the Fiscal Cliff Bill?

Many thanks to my good friends at the Florida Forestry Association for putting together the list below of important takeaways from the Fiscal Cliff Bill (officially the American Taxpayer Relief Act of 2012). Although they're primarily aimed at forest landowners, these points are useful to other landowners in Florida and elsewhere:

• Estate Taxes: Estate tax levels were permanently set at a $5 million individual exemption ($10 million for couples) and a 40 percent tax rate.
• Farm Bill: Current provisions that expired September 30th, 2012, were extended for one year. With some limitations, forest owners maintained access to needed tools through conservation programs.
• Capital Gains Taxes: Capital gains tax rates remain at 15 percent for individuals with an annual income less than $400,000 ($450,000 for couples). For those with higher incomes, the rate increases to 20 percent.
• Conservation Easement Tax Incentives: Tax incentives for conservation easements, which had ended in 2011, were retroactively extended through 2013.
• Spending Cuts to Forest Programs: Across the board cuts on all federal spending, originally scheduled to be enacted January 1, were delayed for two months. 
• Payroll Taxes: The payroll tax was temporarily reduced in 2010 from 6.2 percent to 4.2 percent. The reduction expired Dec. 31, 2012, when neither side in Congress moved to extend it. Employers will not be affected because their side of the equation was never reduced; employees' take-home pay will decrease, however. Households making $45,000, for example, can expect to pay $900 more in taxes this year.

Overall, the bill may signal future cuts in farm and agricultural aid. If you're so inclined, the 153-page bill can be found here.

Amici Supporting Government in Koontz Ignore Protections of the Unconstitutional Conditions Doctrine

Thanks to Robert Thomas for posting the amicus briefs in support of the government agency in Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). As I've mentioned, my colleague and I filed an amicus brief in support of the property owner. In it, we focused on how exactions law protects "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 District failed to engage this argument at all. None of the amici address it convincingly.

The brief of the American Planning Association and others is the only brief that seriously discusses the unconstitutional conditions doctrine, but it refuses to consider the doctrine outside of the pure physical takings context:

As important, the doctrinal foundation of Nollan and  Dolan – this Court’s doctrine of unconstitutional conditions  – simply does not permit the application of their tests to the suggested conditions at issue in this case.  As the first step in any unconstitutional conditions inquiry, a claimant must demonstrate that he or she is being asked to give up a clear constitutional right in exchange for a discretionary benefit. See, e.g.,  Speiser v. Randall, 357 U.S. 513, 518-19 (1958). In the takings context, that requires the claimant to show that the permit condition would be a  per se taking if required by the government unilaterally. See Dolan, 512 U.S. at 384;  Nollan, 483 U.S. at 831. However, none of the conditions proposed by the District constitutes a per se taking, and thus Mr. Koontz’s claim fails even this threshold requirement under both  Nollan and Dolan.  Furthermore, applying  Nollan and  Dolan outside the context of  per se takings would once again blur the clear line that this Court drew between the Takings Clause and the Due Process Clause in Lingle v. Chevron, 544 U.S. 528 (2005), when it overturned Agins v. City of Tiburon, 447 U.S. 255 (1980), and reaffirmed the limited reach of Nollan and Dolan.

The brief various states and Puerto Rico says the Due Process Clause is the solution, but fails to connect that analysis with the unconstitutional conditions doctrine:

In contrast, the Due Process Clause provides a doctrinally sound and measured means for addressing governmental overreaching. It can be used to review abusive conditions without the contortions needed to fit monetary payments into Takings Clause jurisprudence. Moreover, due process’ more deferential review acknowledges the many private property protections that states already provide. It also promotes the policy of resolving land use disputes at the state and local levels. As Justice Alito explained, when reviewing an impact  fee case while sitting on the Third Circuit, “[l]and use decisions are matters of local concern” and a federal court should not be a “zoning board of appeals." United Artists Theatre Circuit, Inc. v. Twp. of Warrington, 316 F.3d 392, 402 (3d Cir. 2003).

The brief of several governmental associations argues that the law is just right as it is:

Petitioner’s proposal to extend the Nollan/Dolan standards where government has denied a permit application and imposed no exaction is illogical, unworkable, and unnecessary." While it touches on the unconstitutional conditions doctrine as the basis for exactions law, it dismisses that basis as worthy of consideration: "It is undeniable the  Nollan/Dolan standards involve a “special application” of this doctrine, Lingle, 544 U.S. at 547, but this case is more appropriately resolved by directly addressing the proper scope of the Nollan/Dolan standards, and the underlying rationales for these standards, rather than by resorting to abstract discussion of the unconstitutional conditions doctrine.

The brief of Former Members of the National Research Council Committee on Mitigating Wetland Losses seems to miss the point that the trial court found there was no connection between the work the property owner here was asked to complete and his permit request:

In short, the sound scientific and legal framework that bounds mitigation conditions requires a reasonable relationship between wetland functions lost due to permitted activity and wetland functions to be gained through wetland mitigation permit conditions. This required nexus between wetland functions lost and gained is essential to achieving “no net loss” of wetland functions and services.

Finally, the brief for United States cleverly attempts to sidestep many of the background arguments in the case by arguing that

The government’s denial of a development permit can be the basis for a Fifth Amendment claim for compensation under Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), but not under an exaction-takings theory. Similarly, the exaction-takings framework does not provide the appropriate analysis for a taking premised on the government’s conditioning of a permit on the expenditure of money.

The oral argument on January 15 is approaching quickly. Your humble correspondent will be in attendance. Before then, however, we'll see the property owner's reply brief next week. In the meantime, catch up on the previous briefs in this case in my archives.