Pike, the ACA and conditions


What does the Maine SJC's decision in Pike Industries, Inc. v. City of Westbrook, 2012 ME 78 [http://www.courts.state.me.us/opinions_orders/opinions/2012_documents/12me78pi.pdf] have in common with the Supreme Court's recent decision on the Affordable Care Act?  [http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf]?  All is revealed below.

In the SJC case, Pike Industries quarries and blasts.  A neighbor complained.  Pike said it was grandfathered and asserted equitable estoppel.  The CEO partially agreed and disagreed, and both Pike and neighbors appealed to the Westbrook ZBA.  The ZBA found no grandfathered rights, but said it had no jurisdiction to rule on the equitable argument.  Pike appealed to the Superior Court under Rule 80B, and added "independent claims" to advance its estoppel, waiver and laches arguments.  The City counterclaimed under Rule 80K, and various neighbors intervened.  The 80B and "independent" claims were bifurcated.  The Superior Court affirmed the ZBA's ruling under 80B.  Eventually, while the remaining equitable "claims" were pending, Pike, the City and one neighbor negotiated the terms of a consent decree, which the City Council approved. The Superior Court entered the decree over the other intervenor neighbor objections, and those neighbors appealed to the SJC.

The SJC decision goes into "the standards and process a court should employ when it reviews a proposed consent decree that will substitute a decree's requirements for the otherwise applicable requirements of an existing land use ordinance." (P14)  But before we get into that, one nit.

This issue was not addressed, and doesn't appear material to the ruling, but I'm not sure the estoppel, laches and waiver arguments were, as a technical matter, independent claims.  They are defenses to the application of a zoning law.  Just because a municipal authority doesn't have the power to rule on a defense doesn't necessarily mean it's an independent claim.  For example, under Rule 80B's counterpart, Rule 80C, the Administrative Procedure Act expressly provides that in an 80C appeal, the court can grant relief based on the argument that the challenged state agency ruling was unconstitutional.  So let's say someone argues that an agency can't do X because the law it's acting under is unconstitutional.  Whether the agency has the power to find a state law unconstitutional and rule on that basis is at least debatable.  But even if it does not (a) you'd better raise the constitutional argument before the agency in the administrative proceeding or potentially lose the right to raise it on appeal on exhaustion grounds and (b) in any event, the unconstitutionality defense isn't a separate claim, since it's listed right in the APA as being a part of the 80C.

But I digress.   

In a nutshell, the SJC ruled that courts can enter consent decrees, as long as the parties have consented, notice and opportunity has been given for objections, the decree won't violate the constitutions, statute or "other authority," the decree is "consistent with express legislative objectives and other zoning-related public policy considerations," and the decree "is reasonable and is not legally impermissible in its effects on third parties." (P24)

Stopping on the last point and the general notice requirement for a moment, while abutters can have particularized interests such that they have the right to intervene, an 80B appeal is a claim by the plaintiff against the government, challenging governmental action, and so not all the non-governmental entities participating in the appeal have to sign onto the decree for the appeal to go away if the decree is approved.  The Court explains:  "It is well established that a court may enter a consent decree over the objection of intervenors as long as the decree does not 'dispose of an intervenor's valid claims.'" (P28)  The abutters' party participation in an 80B appeal doesn't make the appeal their "claim."  (Or as the court says, "if an intervenor has brought no independent claims against the other parties to the action, its opposition alone is insufficient to prevent those parties from settling and thereby ending the litigation.")  So, for example, while abutters can't stop the municipality from settling an 80B claim with the subject of the governmental action, it sounds like if the objecting intervenor neighbors had added a nuisance claim against Pike to the suit, the City and and Pike couldn't've gotten rid of that claim through their decree (although query if it was a public v. private nuisance claim).  

While the SJC found the process used and most of what happened fine under this five-part test, there was one hitch – the terms of this particular consent decree included all sorts of specifics about performance standards to be met by Pike which weren't not included in the ordinance.  The City, the SJC found, had no authority to enter into a decree with these kinds of terms.  It didn't matter that the City was acting in an executive as opposed to legislative capacity when entering the decree, because otherwise, the Court said, there would be a GIANT LOOPHOLE – municipalities could just regulate up a storm through "contracts, executive orders, or, as in this case, consent decrees, free from the Legislature's stated intention of imposing limitations on home rule authority."  (P36)  Dropping a footnote (n. 8), the Court said that there is no conflict with the doctrine of prosecutorial discretion (i.e. the ability of the City to decide whether to enforce) for "this reason" too. 

So, the Court said, the performance standards in the decree weren't enforceable unless adopted as a contract zoning agreement or amendment to the ordinance.  This means that final approval of the decree has to be conditioned on the City Council's adoption of the standards as either a contract zoning agreement or amendment to the zoning ordince, following the right procedures for such legislative action, as opposed to just a Council vote to approve the settlement.

So. Cathy, how is this in any way related to the Supreme Court's ruling in the ACA case upholding most of that health care act?  Because while neither uses this term, they both apply the doctrine of unconstitutional conditions.

In the ACA decision, the Court, among other things, held that Congress couldn't take away Medicare funds to coerce compliance with what Congress wanted them to do in the ACA (because that kind of coercion is no-go under federalism principles).  In Pike, the SJC said yes, municipalities can settle and enter consent decrees, but they can't include these kinds of performance standards in such decrees (because that would be circumventing legislative requirements).  So in the ACA case, Congress could have just taken away the existing funds period, and in Pike, the City could have just caved entirely and let Pike blast away, either by just not enforcing or entering a decree that totally capitulated.  Things start to get complicated when the government doesn't want to just say yes or no, but instead wants to impose conditions.  Congress didn't want to take away the existing funds from the states, and the City didn't want to let Pike simply blast away.  Both wanted to condition their expenditures/approval in order to obtain certain conduct from the subject of those conditions.

When the government enters into this conditioning arena, it needs to be careful.  So, for example, the Supreme Court has noted when a land regulator has a legal basis to deny a permit altogether, the regulator still can't condition a permit on an unconstitutional requirement – like forcing the permittee to hand over a piece of its property. (Nolan.)  Many unconstitutional condition cases involve governmental suppression of speech – the government may be able to deny approvals period, but it can't shut you up as a condition for giving them.   

In short, it's easier for the government to say yes or no, then to say yes, if or no, but. With the ACA situation, it was even more complicated, because as CJ Roberts noted, the U.S. can incent a state to do some things by, e.g., tying future funds to its compliance.  So some conditioning is ok.  But Congress can't use a sledgehammer and take away what it has already given – that's commandeering another sovereign. 

Hence, the problem with conditions can be found in many places.  We must ask, for example, (1) what is the nature of the condition?  (so the Nolan ruling that grabbing land without a proper nexus to the permitted conduct is naughty);  (2) what is the condition trying to do? (so the First Amendment cases, prohibiting speech suppression); (3) how is the condition trying to achieve its goal? (so the ACA ruling that sledgehammers aren't allowed against states); and (4) is the condition trying to circumvent what otherwise is demanded of the government? (so Pike – if the government want performance standards, they've got to be legislated).