Friday, October 5, 2012
Yesterday I noted that the U.S. Supreme Court was set to consider a cert petition in the “exaction” takings case of Koontz v. St. John’s River Water Management District. Today, the Court granted that petition, which the Pacific Legal Foundation had filed on behalf of Coy Koontz this past spring.
The Koontz case raises two important questions: (1) whether the Nollan/Dolan test applies to exactions beyond those that require public occupation of private lands; and (2) whether the Nollan/Dolan test is applicable at the point in time when an exaction is merely proposed. Drawing from several of my earlier posts on Koontz (available here and here), below I will attempt to provide a primer on the facts and the issues at stake.
Local governments routinely attach conditions, or “exactions,” to development permits in an effort to address the environmental and infrastructural impacts of individual projects. However, presumably to protect landowners from exactions that are either unrelated or disproportionate to the problems caused by their proposed development, the U.S. Supreme Court curtailed the exercise of this power in its conveniently rhyming Nollan and Dolan decisions by establishing a constitutional takings framework unique to exaction disputes. Under this peculiar framework, it is the government—as the defendant— who has the burden of proving that the exaction bears both an “essential nexus” to and “rough proportionality” with the development’s impacts.
Here, Mr. Koontz hoped to construct a shopping mall on his 14.2-acre lot, and sought permission from the Water Management District to dredge and fill wetlands within that lot that were part of a designated riparian habitat protection zone. While the Water Management District apparently could have exercised its authority to deny this request, it instead identified several possible exactions that, if accepted by Koontz, could allow for the development to proceed. Koontz, however, refused these proposals, and the government ultimately denied the development request outright. At the appellate level, Koontz prevailed on the theory that the Nollan/Dolan test (1) applies to exactions beyond those that require public occupation of private lands, and (2) is applicable at the point in time when an exaction is merely proposed.
The Florida Supreme Court reversed. On the first issue, the court sided with a considerable majority of the many state and lower federal courts that have addressed the question of whether the Nollan/Dolan test applies to exactions beyond those that require public occupation of private lands by answering this question in the negative. Still, select courts have answered the question in the affirmative, even in the face of arguably contrary dictum in the U.S. Supreme Court’s unanimous opinion in Lingle v. Chevron in 2005.
The second issue seemingly has not been addressed in the lower courts at near the same depth as the first. Nearly all of the many lower court applications of the Nollan/Dolan test have addressed final permit approvals, leaving the Florida Supreme Court with few cases on which to draw. Indeed, prior to Koontz, it appears that in only three instances—one federal district court opinion (William J. Jones Insurance Trust v. City of Fort Smith, 731 F. Supp. 912 (W.D. Ark. 1990)), one federal circuit court opinion (Goss v. City of Little Rock, 151 F.3d 861 (8th Cir. 1998)), and in a decade-old dissent from a denial of certiorari authored by Justice Scalia and joined by Justices Kennedy and Thomas (Lambert v. City & Cnty. of San Francisco, 120 S. Ct. 1549 (2000))—did members of the judiciary assert that a proposed exaction could, in and of itself, implicate the Takings Clause. [There arguably may be select other cases, such as City of Carrollton v. RIHR, Inc. 308 S.W.3d 444 (Tex. App. Dallas 2010), that fit the bill, as well.] Across these cases, the opinions provide thin and contradictory guidance on the complex questions surrounding whether such a novel claim presents a legitimate takings issue.
The Florida Supreme Court ultimately decided in Koontz that proposed exactions are not subject to the Nollan/Dolan test. I found it somewhat surprising that the Court did little to confront the rationale set out in any of the few preceding cases on the topic, even though, of course, none were binding upon it. And it was even more surprising that the Court dedicated only two pages of its opinion to this imposed-versus-proposed issue, and provided little justification for its conclusion. The Court said only that applying the Nollan/Dolan test to proposed exactions would prompt local governments to issue more outright denials “rather than risk the crushing costs of litigation.”
One might contend that applying the same tests to all conceivable exactions, whether they are proposed prior to an outright permit denial or imposed in a final development approval, makes sense. Otherwise, this argument might suggest, property owners would be beholden to the government’s extortionate exaction propositions, lest they side with the empty alternative of an absolute development prohibition. There is an instinctive appeal to the argument (which presumably must be grounded in the quite murky jurisprudence surrounding the “unconstitutional conditions” doctrine) that the denial of an application based on refusal to comply with an exaction demanded by the government is indistinct from a permit conditioned on that exaction. In a brief post on The Volokh Conspiracy this afternoon, Ilya Somin (George Mason) offers support for this type of approach.
However, there are at least three reasons to suggest that the above approach is inapt. First, where a proposed exaction is refused or withdrawn, it seems that no property interest has been "taken" from the applicant that can be protected by the Takings Clause. Second, judicial speculation on hypothetical exactions and their hypothetical economic impacts poses a wholly unmanageable system that could require courts to review countless cases that do not present actual controversies (and, in the process, further complicate the line separating due process and takings review). Third, and arguably most importantly as a matter of legal policy, burdening governmental entities with possible takings liability for statements made during pre-decisional negotiation sessions will place a chilling effect on regulator-landowner coordination.
I expound on the above ideas in this pre-Florida-Supreme-Court article. In addition, Mark Fenster (Florida) authored a very interesting post-Florida-Supreme-Court essay on the topic. Please stay tuned to the Environmental Law Professors Blog for updates on this latest takings case headed to the U.S. Supreme Court.
-Tim Mulvaney (firstname.lastname@example.org)