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Wednesday, June 26, 2013

A Few More Thoughts About Koontz

I agree with most of what Rick said yesterday in his excellent post about Koontz v. St. Johns River Water Management District, although I think I may be somewhat more sympathetic to the basic exactions/unconstitutional conditions project than he is.  Rick's post does a terrific job of explaining the challenge that federal courts face when inserting themselves into the sausage-making that is local land use regulation.  As I was reading Koontz, one question that kept coming into my mind was why, if Nollan/Dolan is just an application of unconstitutional conditions doctrine, does the Court seem so eager (desperate?) to put the underlying (unconstitutional) demand within the "takings" box?  

After all, the unconstitutional conditions doctrine would be triggered by any demand that, if imposed independently, would violate the constitution.  In an unconstitutional conditions claim, the denial of the discretionary state benefit is not itself the constitutional violation.  For example, in the land use context, the denial of the permit is not itself the basis of the takings claim.  If it were, the landowner could and would challenge it directly under Penn Central, or Lucas, or Loretto.  Instead, the claim is that it is the underlying condition that, if imposed directly, would violate the constitution.  

But there is no reason why the underlying constitutional violation has to be a taking -- it could be a first amendment violation, a violation of the due process clause, etc.  If a city required contributions to the mayor's reelection campaign (or required religious conversion) in exchange for development approval, that would also trigger an unconstitutional conditions analysis.  So why the insistence in Koontz that the state's underlying demands -- if baldly imposed -- would have violated the takings clause (as opposed to suffering from some other constitutional infirmity)?

One contributing factor (though certainly not the only one) may be the exact fear that Rick points to -- the desire to keep these cases from clogging the federal courts by fitting them within the procedural straightjacket of Williamson County and San Remo Hotel.  By calling Nollan/Dolan a kind of takings cousin, the Court can keep these cases largely in state courts.  But that only works if the condition (if simply imposed) would itself be a taking.  [Another reason is probably that absence of any plausible alternatives, at least in this case.]  Whatever the reasons, however, the majority's apparent urge in Koontz to shoehorn the case into Nollan/Dolan conceived as "takings" (as opposed to just the application of the generic unconstitutional conditions doctrine where the underlying violation would be a taking) comes at the risk of distorting the takings doctrine.

The biggest potential distortion is the way the majority deals with demands for payment of money.  This in turn implicates the distinction between takings (the demand for which triggers Nollan/Dolan) and taxes (the demand for which the majority concedes does not).  As I discussed in an article a few years back, the distinction between takings of money and taxes presents some conceptual challenges.  And yet the question whether something constitutes a tax or not-a-tax has consequences for the degree of scrutiny the measure receives.  

There are tools that courts can use (and have used) to draw a line between the two categories.  One avenue, which five justices seemed to embrace in Eastern Enterprises v. Apfel, was the distinction between demands by the state for some fixed pool of money (such as a bank account or the interest earned on a particular bank account) and a general demand from the state to pay a certain amount of money (from whatever source).  The former had been treated as takings by the Court in the IOLTA cases.  In Eastern Enterprises, five justices (Justice Kennedy, concurring, and the four dissenters) agreed that mere obligations to pay money were beyond the reach of the takings clause.

 Applied in the exactions context, Eastern Enterprises would seem to mean that, because a demand to pay a sum of money cannot be a takings violation (though it might violate, say, the due process clause), conditioning permit approval on a demand for such a payment could not form the basis for a claim under Nollan/Dolan.  (Of course, it might still give rise to a more generic unconstitutional conditions claim premised on the underlying due process violation.)  In dicta in Lingle v. Chevron, a unanimous court seemed to tip its hat towards this narrower reading of Nollan and Dolan when it described those cases as "involv[ing] dedications of property so onerous that, outside the exactions context, they would be deemed per se physical takings."  (Although Alito drops a cite to Lingle in the Koontz majority, he doesn't address its characterization of Nollan/Dolan.)

In Koontz, the state had coupled discussions of in-kind exactions from Koontz's land with proposals that he pay for mitigation elsewhere on the state's own land.  The latter was the equivalent of an obligation to pay money.  This would seem to place the state's demand (though whether it was in fact a "demand" is a matter of dispute, as Kagan's dissent points out) squarely within the distinction drawn by the five justices in  Eastern Enterprises and therefore beyond the reach of the takings clause.

Justice Alito's reasons for refusing to apply that aspect of Eastern Enteprises are not very convincing.  First, he argues that, if states could get out of Nollan/Dolan by merely demanding payment of money equivalent to the value of the property interest they want from the landowner, they could render Nollan/Dolan a dead letter.  But, presumably, one reason why five justices in Eastern Enterprises treated demands to pay a sum of money as not subject to the takings clause is because they are qualitatively different (in terms of their impact on property owners) from takings of distinct items of property. If that is the case, then the fact that states offer monetary payments ("in lieu" fees, as they are called) as an alternative should not be dismissed as an end-run around Nollan/Dolan.  The question is whether the fees are themselves somehow constitutionally infirm.

Alito's second reason is even weaker, but perhaps more troubling in its implications for the takings/taxes distinction.  He says that, unlike the financial obligation in Eastern Enterprises, the demand for payment in Koontz did in fact "operate upon . . . an identified property interest," thereby bringing it within the IOLTA line of cases.  The "identified property interest" was, according to Alilto, the property that Koontz wanted to develop.  But this is confused.  The constitutional rights whose burdening the unconstitutional conditions doctrine is supposed to prohibit is (in the Nollan/Dolan context) the constitutional property right whose waiver the state is demanding in exchange for a development permit it does not have to grant.  

Alito switches the focus to the property subject to the discretionary benefit, but by that logic, any condition imposed as part of a land use permitting process (even one that would not, if imposed unilaterally, violate the constitution) triggers Nollan/Dolan.  Imagine, for example, an owner who owns two properties, one of which he wants to develop and the other of which is a public nuisance.  If the city demanded that the owner abate the nuisance in exchange for development permission, the demand would not seem to fall within the unconstitutional conditions doctrine, because the demand would be constitutional, even if imposed independently.  And yet, under Alito's logic, it would fall within Nollan/Dolan because it burdens the owner's interest in the property for which he seeks a development permit.  There may be sound reasons to police this kind of linkage, and most states do have doctrines to accomplish this, but the analysis is hard to square with the treatment of Nollan/Dolan as a species of unconstitutional conditions.  The oddness is only exacerbated by the fact that Nollan and Dolan (and Koontz) proceed on the assumption that the mere denial of the permit would not itself constitute a taking.  

By reaching to extend Nollan/Dolan in the way he does, Alito brings the permit application (rather than the demand) to center stage.  This could have a couple of consequences for takings doctrine.  One is to narrow Eastern Enterprises pretty significantly (or expand the reach of the Eastern Enterprises plurality, which supported the use of the takings clause in cases involving the obligations to pay money).  On Alito's reading, anytime the government obligates the payment of money in connection with the development of land, the five-justice position in Eastern Enterprises does not apply and a takings analysis is appropriate.  This would likely sweep in a number of measures that we would normally think of as taxes and that we might previously have seen as shielded from takings challenge.

Second, on Alito's logic, any condition that burdens the parcel for which the permit is sought might arguably come under the Nollan/Dolan test, even if neither the demand nor the permit denial would themselves constitute takings of property under the traditional tests, much less clear per se takings.  By reducing the barriers to entry into Nollan/Dolan analysis, Alito seems to create the possibility that, rather than merely serving as an unconstitutional conditions test in the takings context, the federal exactions doctrine is a separate, free-floating takings test.  

UPDATE: Tim Mulvaney posts his thoughts on Koontz here.  The consensus reaction seems to be that the case re-muddles (or further muddles or fails to clarify, depending on your baseline) takings doctrine. 

Posted by Eduardo Penalver on June 26, 2013 at 04:39 PM | Permalink


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