In Cementing Koontz's Legacy, the Florida Supreme Court Shows Why Taxpayers Will Foot an Enormous Bill for Government's Mistakes

Recently, the Florida Supreme Court refused to hear the Koontz case yet again. Too bad for taxpayers that it took the Court eighteen months to make a decision.

Recall that, in the long Koontz saga, in 1994, the government agreed to issue a permit to fill wetlands if the landowner paid to improve government culverts miles away. The landowner refused and sued when the government denied the permit. A decade ago, in 2006, the trial court found a taking and awarded $477,000 in just compensation.

The Florida Supreme Court said the landowner could only challenge the unreasonable permit demand after giving in to it. The U.S. Supreme Court, though, ruled for landowners (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work. Koontz v. St. Johns River Water Mgmt. Dist., 133 S.Ct. 2586 (2013). 

Not long afterwards, in late 2013, the Florida Supreme Court punted the case back to the appellate court for further proceedings. The 5th DCA made short work of the remand:

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

Yet again, in June 2014, the government asked the Florida Supreme Court to review the case. Over a year and a half later, the Florida Supreme Court has finally concluded this long saga, and the Koontz family will now return to the trial court to collect their just compensation. 

Which leads us to the difficult part for taxpayers: once the government made a bad decision, it doubled down for over twenty years. Now, taxpayers will be stuck not only with the bill for those bad decisions, but also the bill for the Koontz family's attorneys to prove that and the interest for the past two decades.

A new era of coastal construction in South Florida leads to new regulatory challenges and opportunities

The booming coastal construction market in South Florida means that buildings are being built bigger, taller, and deeper. What does that mean for the developer? When it comes to Coastal Construction Control Line (CCCL) permitting, it means new challenges - and some new opportunities.

I recently coauthored a new legal update with my colleagues at Stearns Weaver explaining the background to this new era and how regulators at the Florida Department of Environmental Protection (DEP) and within local governments are responding. We explained:

In the past, many projects could accommodate excavated sand onsite. When they could not, offsite placement on dry, sandy beaches was relatively easy. Oftentimes now, though, sites are too constrained, and offsite placement is becoming more challenging for two reasons. 

First, projects in some areas are not located near dry beaches that need sand. Traditionally, FDEP has only allowed excavated sand to be placed on the dry sandy beach nearby the development. Recently, we developed a new approach with FDEP on several projects to allow sand excavated from constrained development sites to be placed in eroded "hotspot" areas located within the wet sandy beach, below the mean high water line. Each project site must be evaluated independently to assess whether this approach will work from a timing and cost feasibility standpoint, keeping in mind the applicable regulations and permit conditions that will be applied to provide FDEP the assurances needed regarding the quality of sand. Since sand sources in Florida for local governments to maintain beaches are limited and costly, this approach should be viewed as a positive alternative for addressing targeted eroded beaches. 

The second reason offsite placement is becoming more challenging is due to some local governments regulating and controlling the quality and placement of sand despite FDEP's role and authority, and imposing more stringent requirements on this activity. We are seeing a variety of approaches by local governments, including: 

• Regulating when and how sand may be removed from or placed on coastal properties, using conditions that are stricter than FDEP's regulations;
• Providing for fines, penalties, or refusal to issue building permits if their sand management regulations are not met;
• Conditioning development approvals on sand quality, placement, and other actions;
• Requiring large bonds to be posted and/or agreements in order to assure future remediation of sand in the event the local government determines the sand quality does not meet their standards; and
• Seeking to have FDEP adopt more stringent testing requirements for excavated sand as a part of FDEP's ongoing CCCL program.

It will take time, but I predict that we will see these innovations spreading to Florida's other coasts in the near future. 

Please email me if you'd like to receive more legal updates like this as soon as they're released.

Did the Supreme Court Mean It When It Said Landowners Must Have a Practical Way of Challenging an Agency's Jurisdiction?

In my last post, I wrote about how the nationwide stay would likely remain in effect for WOTUS, the new rule written to redefine the meaning of the Waters of the United States under the Clean Water Act by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers. As I implied last month, if WOTUS survives the rule challenges, one effect may be that there are fewer Jurisdictional Determination (JDs).

If that happens, then it would make two cases that are being litigated by the Pacific Legal Foundation before the U.S. Supreme Court even more important. In U.S. Army Corps of Engineers v. Hawkes Co., Case No. 15-290 (2015), The Supreme Court will decide whether a JD can be challenged in court, or whether a landowner has to face the unenviable choice of having to spend tens of thousands of dollars to get a permit denied versus moving forward with a project without asking permission and risking fines and criminal penalties.

In Hawkes, a peat mining company wanted to mine in wetlands. The Corps issued a JD claiming jurisdiction, and issued the JD even after an administrative challenge. The peat company sued, but the district court dismissed, finding that the JD was not a challengeable final agency action. The Eighth Circuit reversed, splitting with the Ninth and Fifth Circuits.

The Eighth Circuit said that all final agency actions for which there is no other adequate judicial remedy must be able to be challenged. To be final, an agency’s action must be the end of the decisionmaking process, and it must have legal consequences for someone. Like every other court that has addressed the issue, the Eighth Circuit found that a JD was the end of a decisionmaking process. It disagreed with other courts, though, and found that the JD jad legal consequences, since the “prohibitive costs, risk, and delay of these alternatives to immediate judicial review” were inadequate substitutes. It held that the Supreme Court had mandated judicial review as a remedy in such cases in Sackett v. EPA, 132 S.Ct. 1367 (2012).

Another very similar case has been pending before the Supreme Court since late 2014. The Supreme Court initially denied certiorari of Kent Recycling Services, Inc. v. U.S. Army Corps of Engineers, Case No. 13-30262 (2014) (also known by the name of another plaintiff below, Belle Co., LLC). After the Hawkes decision by the Eighth Circuit, PLF moved for rehearing, which has yet to be decided.

Oral argument in Hawkes will be on March 30, 2016, so both cases should be decided soon. Ultimately, the Supreme Court will be decided a simple question: did it mean what it said in Sackett, that landowners must have a practical way to challenge an agency’s assertion of jurisdiction over their land?

WOTUS Breaking News: 6th Circuit to Hear Rule Challenge, Stay Likely to Remain in Effect

Big news today in the environmental world: the 6th Circuit has said it will hear challenges to a new rule developed by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers, known as WOTUS ("Waters of the United States"). This mean that the nationwide stay that the 6th Circuit issued last year is likely to remain in place until it comes to a final decision on the merits of the 20-odd lawsuits filed against the rule.

Readers of this blog have seen several posts on this topic in recent months because of its importance to landowners in Florida. As I wrote last month,

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory reach under the Clean Water Act (CWA). The CWA prohibits the discharge of pollutants into waters of the United States without a permit. Violators are subject to penalties of thousands of dollars per day (even if unintentional) or costly lawsuits by neighbors or environmentalists.

Many of the waters subject to federal jurisdiction are easy to identify: navigable water bodies, rivers, streams, creeks, impoundments of those waters, and wetlands directly adjoining any of those waters. Beyond those, though, what qualifies has been unclear for decades. A series of U.S. Supreme Court cases created confusion because the justices could not agree on just how far federal agencies could reach. This meant that, for many small waters and wetlands, the Corps had to perform a site-specific jurisdictional determination. While burdensome to the agencies, this analysis at least forced them to use science to determine whether more-isolated waters and wetlands had a “significant nexus” with a water that was subject to federal jurisdiction.

Now, the federal agencies have adopted WOTUS, a rule that will mean fewer case-by-case analyses. While this may make the process more “efficient” for the agencies, that comes at the expense of more areas automatically being deemed as falling under federal jurisdiction simply because the agency says so, rather than because of any scientific connection to another water.

Many groups filed suit last year, and after one federal district (trial) court in North Dakota issued a stay limited to the states involved in that case, the 6th Circuit issued a nationwide stay on the application of WOTUS. Then, the fight became about whether federal district courts or circuit courts should hear the substance of the parties' challenges to WOTUS. In the meantime, the 11th Circuit, which has jurisdiction over Florida's challenge, cancelled oral arguments on its case, saying it would reschedule once the 6th Circuit had made a decision.

Today, the 6th Circuit did just that, ruling that it had jurisdiction over the challenges, and not district courts. Although it is not yet entirely clear, the decision most likely means that the nationwide stay on any application of WOTUS will remain in place. Landowners should be pleased with the direction of this litigation so far.

New Brief Article: What Does WOTUS Mean for the Timber Industry and Forest Landowners?

My friends at the Southeastern Wood Producers Association recently published an article I wrote for them in their quarterly magazine, Out of the Woods: What Does WOTUS Mean for the Timber Industry. I've written several times about this issue and the Waters of the United States Rule. The problem comes down to the extent of the federal government's reach over water bodies and wetlands, especially those that have nothing to do with navigation or interstate commerce. The article is excerpted below.

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory reach under the Clean Water Act (CWA). The CWA prohibits the discharge of pollutants into waters of the United States without a permit. Violators are subject to penalties of thousands of dollars per day (even if unintentional) or costly lawsuits by neighbors or environmentalists.

Many of the waters subject to federal jurisdiction are easy to identify: navigable water bodies, rivers, streams, creeks, impoundments of those waters, and wetlands directly adjoining any of those waters. Beyond those, though, what qualifies has been unclear for decades. A series of U.S. Supreme Court cases created confusion because the justices could not agree on just how far federal agencies could reach. This meant that, for many small waters and wetlands, the Corps had to perform a site-specific jurisdictional determination. While burdensome to the agencies, this analysis at least forced them to use science to determine whether more-isolated waters and wetlands had a “significant nexus” with a water that was subject to federal jurisdiction.

Now, the federal agencies have adopted WOTUS, a rule that will mean fewer case-by-case analyses. While this may make the process more “efficient” for the agencies, that comes at the expense of more areas automatically being deemed as falling under federal jurisdiction simply because the agency says so, rather than because of any scientific connection to another water.

Thus, WOTUS now designates all tributaries and waters and wetlands “adjacent” to or “neighboring” other jurisdictional waters as under federal jurisdiction. In some cases, waters and wetlands 1,500 feet away from another water are considered “neighboring,” even if there is no hydrologic connection. Even ephemeral drains and ditches that water only flows in after a rain are now almost always under federal jurisdiction.

These changes may not seem important at first, since the timber industry has traditionally been excluded from many permitting requirements. For example, CWA permits are not required to manage the runoff from common forestry practices, such as site preparation, thinning, control burns, and road construction, as long as they are undertaken in accordance with standard industry practice. Even so, WOTUS is important to watch because it will expand the need for obtaining CWA permits for some commonplace practices, such as for application of herbicide and fertilizers in and near wetlands and for construction of some roadside ditches near wetlands. Prudent professionals will need to think twice about past common knowledge.

WOTUS has provoked fierce opposition. Legislation to block it is progressing, but it would likely face a presidential veto. At least half the states are challenging WOTUS in court. A federal judge has temporarily stopped the rule’s implementation, but it is not clear whether this will last. Therefore, the ultimate fate of WOTUS remains unclear. For now, the timber industry should be actively engaging elected officials to encourage them to take action.

As I mentioned last week in a post about another article I wrote on this topic, this issue is moving fast and there are a few updates since I wrote the article:

• The Government Accountability Office found that EPA broke federal lobbying and propaganda laws in its zeal for pushing the rule forward. 
• The Senate voted to kill the rule; the House did the same recently; and President Obama has vowed to veto any such measures.
• A federal judge enjoined the rule's implementation across the entire country, including Florida. However, it's not clear how long this injunction will last, and the legal wrangling is expected to continue for some time.

I'll have a more comprehensive update on the status of the litigation in the coming week.

New Brief Article: How Does WOTUS Affect Your Clients' Wetlands?

Many thanks to the Hillsborough County Bar Association, which published an article I wrote for their Lawyer magazine entitled How Does WOTUS Affect Your Clients' Wetlands? Readers of my blog will be familiar with my earlier posts on the Waters of the United States Rule. The question this new rule raises is how far does the federal government's power reach over water bodies and wetlands, especially those that have nothing to do with navigation or interstate commerce? The article is excerpted below.

On August 28, 2015, a new rule promulgated by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers took effect in Florida. 80 Fed. Reg. 37054 (June 29, 2015). The rule, called WOTUS, seeks to clarify the definition of “waters of the United States,” which is critical to those agencies’ regulatory jurisdiction under the Clean Water Act (CWA).

The CWA prohibits the discharge of pollutants into waters of the United States without a permit. The outer boundaries of what qualifies as a jurisdiction water have been unclear for decades. A series of U.S. Supreme Court cases have indicated that, while the agencies’ jurisdiction is broad, it does not extend to the outer reaches of the Commerce Clause. See Rapanos v. United States, 547 U.S. 715 (2006); Solid Waste Agency of Northern Cook Cnty. v. U.S. Army Corps of Eng’rs, 531 U.S. 159 (2001); Riverside Bayview Homes, Inc. v. United States, 474 U.S. 121 (1985).

One of these cases, Rapanos, created a great deal of confusion because the plurality, a concurrence by Justice Kennedy, and the dissent all developed different jurisdictional tests. The agencies have focused on Justice Kennedy’s “significant nexus” test. Under it, if a water has some appreciable impact on a traditionally-regulated water under the CWA (like a navigable water), then that water is also jurisdictional. This has meant that many small waters and most wetlands have been subject to the “significant nexus” analysis on a case-by-case basis. This led to a great deal of informal agency guidance, including wetland delineation manuals that attempted to use scientific methods to aid decision making.

According to EPA and the Corps, WOTUS increases regulatory certainty by reconciling past practices, science, and case law. It does so by expanding the scope of waters and wetlands that are categorically classified as jurisdictional, rather than subject to a case-by-case review. Tributaries and waters and wetlands “adjacent” to or “neighboring” jurisdictional waters are now categorically jurisdictional. In some cases, waters and wetlands 1,500 feet from a jurisdictional water are considered “neighboring,” even if there is no hydrologic connection. See 33 CFR § 328.3(c)(2). WOTUS also codifies some exclusions that are are based on agency practice, including for minor ditches and small artificial ponds. See 33 CFR § 328.3(b).

WOTUS has provoked fierce opposition. Legislation to block it is progressing, but it would likely face a presidential veto. At least ten federal law suits are challenging the rule (with at least half the states as plaintiffs), alleging that WOTUS expands federal jurisdiction beyond the CWA’s limits. A federal judge recently enjoined the rule’s implementation in thirteen states, but this did not include Florida. Therefore, while the ultimate fate of WOTUS remains unclear, what is certain is that Florida landowners will be required to comply with it in the short term. What is also certain that this new rule will result in more Florida wetlands being categorically defined as jurisdictional rather than being subject to case-by-case analysis.

I'll give a full update post on this topic soon, but since just since my article was published in late 2015:

• The Government Accountability Office found that EPA broke federal lobbying and propaganda laws in its zeal for pushing the rule forward. 
• The Senate voted to kill the rule; the House is expected to do the same soon; and President Obama has vowed to veto any such measures.
• A federal judge enjoined the rule's implementation across the entire country, including Florida. However, it's not clear how long this injunction will last, and the legal wrangling is expected to continue for some time.

 Stay tuned.This issue isn't going away anytime soon.

Development Permit Extension Deadline Approaching

I previously wrote about how the extensions to some development permits that were made available by Governor Scott's executive orders declaring states of emergency due to severe flooding and a tropical storm. Section 252.363, Florida Statutes, provides for deadlines for landowners and holders of these development permits who are seeking to take advantage of these extensions. While one deadline applicable to only a few counties has already passed, the deadline for the Governor's statewide emergency declaration is January 25, 2016. Landowners with eligible development permits should act quickly.

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

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

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

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

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

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

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

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

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

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