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.