It's the last week of the Supreme Court's term, and so the big 5:4 decisions are coming out. Tuesday the big decision was Koontz v. St. Johns River [Decision], a takings case. This completes the trilogy of takings cases in front of the Court this term; the others are Horne v. Department of Agriculture [Decision] and Arkansas Game & FIsh v. U.S. [Decision]
As I've mentioned before, the world of takings is infinitely complex and counterinuitive. I could write a book about any one of these decisions, let alone all three, but vita est nemis brevis (life is too short). So let's just identify some big picture points and add some musing as to further questions the decisions raise.
First, the big picture and general takeaways. All three decisions favor the property owner, but not in hugely radical ways. Horne said some interesting but not earth shattering things about jurisdiction. The Arkansas case was a fairly straight forward decision regarding temporary takings. Koontz may have the most impact.
Focusing on Koontz, the questions presented there related to the application of the unconstitutional conditions or exactions principle as applied in the takings context, per two predecessor decisions: Nollan v. California Coastal Commission, 483 U.S. 825 [Decision] and Dolan v. City of Tigard, 512 U.SA. 374 [Decision].
Put very simply, Nollan and Dolan stand for the proposition that if the state imposes, as a condition for granting a permit, that a property owner give something up, it must show a nexus between what it's asking for and a legitimate state interest, with rough proportionality between the size of what it wants and that interest. So, for example, if as a condition for a subdivision approval, a permitting authority wants an easement over the property, under Nollan and Dolan, there needs to be a legitimate reason for the easement, e.g., to get fire trucks onto the property, and the easement has to be limited, roughly, to what the state needs to fulfill that interest (e.g. you don't need an easement over an entire piece of property to get the fire trucks there).
The big question asked and answered in Koontz was whether what the state demanded had to be a property interest, or whether the Nollan-Dolan test applies to monetary, as well as property conditions: if the state instead of asking for an easement, conditions a permit on a cash payment, does the Nollan-Dolan test apply? The answer matters because the Nollan-Dolan test has more teeth in it than the ad hoc test that would otherwise apply. In this 5:4 decision, the Court found that Nollan-Dolan applied to monetary exactions.
Justice Kagan, writing for the dissent, basically said that the sky could fall down because now anyone who doesn't like an impact fee or other permitting payment can pursue a Nollan-Dollan claim. Justice Alito, writing for the majority, poo-poohed that prediction, saying that the reach of the stricter test is fairly limited, because it's easy to see what a tax or regulatory fee is (which wouldn't fall under this stricter test), as opposed to an exaction relating to a specific piece of property. As clarified in Koontz, the distinction for applying the stricter test is whether the condition relates to a particular identified piece of property, not whether the condition seeks money or a property interest (the stricter test applies when "the demand for money … burden[s] the ownership of a specific parcel of land.").
What the actual fallout will turn out to be on the permitting front must await further development before agencies and in the lower courts. Justice Kagan anticipates that this decision will kill negotiations about permitting conditions – the permitting authority will just deny a permit instead of identifying any possible condition that the applicant could then challenge later. Another issue that will need to be fleshed out in the lower courts is whether the demarcation between a condition falling under this stricter test relates to whether the condition is imposed in an adjudicatory context, applicable only to the particular property involved, or whether the test can apply to a more general condition with broader application.
The bottom line, from a property owner's perspective, is that this decision could curb agencies from imposing conditions on permits that don't have a logical relationship to the impact of the development. This is the takeaway from the decision – there may be more room now to complain about a condition imposed by a permitting body than before, if the condition is sufficiently draconian that it smacks of extortion instead of regulation. But like any takings question, the procedural and other associated hurdles in asserting a takings challenge are fiendishly complex, so just tossing this sort of argument into a direct 80B or 80C appeal would probably not only lose but might backfire and create some bad law from the perspective of property owners.
Indeed, here is just one procedural question, comprising Cathy's extra little musing on the decision. One issue this decision raises in my mind is whether the exhaustion or "ripeness" requirements adopted in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) [Decision] in non-facial regulatory takings claims should apply to a claim that a permitting decision violates Nollan-Dolan-Koontz. The answer to this question matters, because it may govern whether the claim can be pursued in federal versus state court. The prong of the Williamson test that requires finality to an administrative decision before suing can make sense to apply in this context – until the agency has actually done the allegedly bad thing, suing could be premature. But application of the second prong of the Williamson test — that the state avenue for seeking compensation (usually, and in Maine, an inverse condemnation claim) must first be pursued before any federal takings claim can be asserted — doesn't, at least at first blush, seem to make sense. The logical remedy for imposition of an unconstitutional condition is an injunction, not just compensation for a taking. As Justice Kagan pointed out in the dissent, if property isn't actually seized, then how can you get just compensation for it? But I'm pretty sure that our federal courts would not be thrilled at the prospect of state permitting decisions wandering over to their forum, which the Williamson test prevents. The FIrst Circuit has issued a series of decisions that basically say this – please keep zoning and other similar land use permitting cases out of here, thank you very much.
The Williamson ripeness test has been criticized over time, and at one point it looked like 4 of the 9 justices were ready to revisit it. From the decisions issued this term, including the Horne decision, it looks like the current members aren't eager to take up this issue. But I wouldn't be surprised if the Pacific Legal Foundation or a similar body didn't start the long road up to test this point, to see if the test can be nibbled away at, if not eliminated.
FInally, what does the Koontz decision mean in Maine? The SJC has recognized the Nollan-Dolan test previously (upholding a condition against such a challenge). Curtis v. Town of South Thomaston, 1998 ME 63, 708 A.2d 657 [Decision]. We will now need to wait and see how the SJC will apply the test to permitting conditions that do not involve surrendering a property interest in the land being developed.
