Scalia Gives the Government a Surprise Boost in Property Rights Case

Property rights advocates faced an unlikely opponent during Supreme Court oral argument this week.

The Supreme Court heard oral argument on Tuesday in a major case pitting property rights advocates against government regulators in a battle over the proper scope of the Takings Clause of the Fifth Amendment, which requires the government to pay just compensation when it takes private property for a public use. Going by what the justices said in the courtroom that morning, the government regulators appear likely to prevail in a divided ruling.

At issue in Koontz v. St. Johns River Water Management District is a decision by a Florida land-use agency to deny a building permit to a property owner because he refused to fund costly improvements to state-owned lands located several miles from his land. Had he agreed to fund this uncompensated upkeep of government property, the agency admitted in a pretrial stipulation, “the exact project [he] proposed would have been permitted.”

Attorney Paul Beard of the Pacific Legal Foundation, the national public-interest law firm representing property owner Coy Koontz Jr. in his challenge, told the justices that the St. Johns River Water Management District was guilty of imposing an “unconstitutional condition” on his client.

That argument found little traction with the Court’s liberals, however, who seemed leery of limiting the state’s regulatory flexibility. “Counsel, I’ve had a problem with your argument, okay?” declared Justice Sotomayor at the outset.

But the most surprising resistance came from conservative Justice Antonin Scalia, who questioned whether Koontz had suffered any injury at all under the Takings Clause. “What has been taken?” Scalia asked Beard. “The permit’s been denied. I can’t see where there’s a taking here. Nothing’s been taken.”

Those words may spell doom for Koontz’s challenge. Scalia is the author of a key 1987 decision by the Supreme Court striking down a California regulatory agency’s imposition of a similarly problematic condition on a building permit. Until his comments in the courtroom on Tuesday morning, Scalia was seen as a solid vote in Koontz’s favor. Now he appears to be the single biggest threat. Without Scalia, Koontz is unlikely to reach the five-justice threshold needed to win.

On the other side, Paul Wolfson, the Washington lawyer representing the Florida regulators, faced his toughest opponent in the form of Chief Justice John Roberts, who grilled Wolfson repeatedly about his sweeping endorsement of state power. “Is there anything in the Federal Constitution that limits the conditions that you can demand?” Roberts asked. Can the Florida agency “ask for the moon—before it will give a permit?”

Later, in a rhetorical move that was perhaps intended as one last shot at changing Scalia’s mind, Roberts returned to the issue of whether or not the Takings Clause had been originally triggered by the permit denial. “Are you saying that if you are confronted with an unconstitutional condition, you have to accept it, and then you can challenge it?” Roberts asked Wolfson, the incredulity evident in his voice and expression.

It was a good question. If the St. Johns River Water Management District did indeed place an unconstitutional condition on Koontz’s application for a building permit—and the evidence suggests that it did—then Koontz’s property rights were violated. Why should the timing of the permit process matter more than the illegal nature of the state’s demands?

Unfortunately for Koontz, Scalia and the Court’s four liberals appeared to see things differently.

The one silver lining for property rights supporters emerged in the Court’s approach to a separate question raised by the case: namely, whether the Takings Clause applies only to physical property, or whether it also covers government takings of “money, services, labor, or any other type of personal property.” This issue arose from the nature of the permit condition originally imposed by Florida, where the state told Koontz to fund uncompensated improvements to government land in exchange for the approval he needed to commercially develop his own property.

On that point, Scalia voiced sharp disagreement with the government. “As I understand your position,” he told Wolfson, “cash is magical, right? The government can come in and come into my house, take all of the cash that's there, and that is not the basis for takings claim... Does that make any sense?”

Liberal Justice Stephen Breyer seemed equally skeptical of the government on this question. “Why isn’t the answer yes, it is applicable?” he asked Deputy Solicitor General Edwin Kneedler, who was in court to argue the federal government’s support for the Florida regulatory agency. “Of course [the Takings Clause] is applicable” in at least some land-use cases where money is seized, Breyer maintained.

So it may not turn out to be a total loss for the property rights side if the Court rules against the government on this separate question. But on the key issue of whether the Florida agency violated Koontz’s rights by seeking to take his property for an uncompensated public use, Justice Scalia appeared ready to tip the vote in favor of the government.

A decision is expected by June.

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  • Fist of Etiquette||

    “What has been taken?” Scalia asked Beard. “The permit’s been denied. I can’t see where there’s a taking here. Nothing’s been taken.”

    Value can't be taken?

  • DJF||

    So it would be all right if the Federal Government had a law which allowed Scalia have his Judicial robes, but restrict his wearing them to only Leap Days and only if he wore them while cleaning up a Federal Park 50 miles from his home.

  • robc||

    It seems Scalia is arguing the other side in the other part.

    So, they cant take value OF THE PROPERTY, but they can require you to do "off property" changes of value.

    Which is a weird hair splitting if he goes that way.

    Of course, if you apply the value part properly, all zoning is a taking.

  • Night Elf Mohawk||

    Well, all zoning not already in place, anyway.

  • robc||

    Yeah. I thought about making that distinction, but Im not sure it applies. But, based on my SLT arguments, I guess it does.

    So, there, once the SLT is put into place and all other taxes eliminated, I will accept that pre-existing zoning at the time property is acquired is not a taking.

  • ||

    Nope. The government can forbid you from farming or building or pretty much doing anything at all on wetlands, and it's not considered a taking until they actualy seize the land.

    No matter if the land is now worthless because you aren't allowed to use it for anything. According to SCOTUS, it's not a taking.

  • ||

    I suppose you could view the requirement as a tax on building permits.
    That should get Roberts vote.

  • Robert||

    You really can't predict anything from oral argument, esp. with Scalia. They could be saying these things just to see what rxn they get, or just to rake the lawyers over the coals, put them thru their paces.

    But suppose you take the remarks seriously. A permit is a permit. If you didn't have permission to build initially -- and it was known when you acquired the property that permission would be required to build -- how can it be said that denial of the permit for any reason is a taking? How can something you never had to begin with be taken? I could see estoppel as a basis for a case, if the rules for giving permits were clearly one way and then arbitrarily changed, but not takings.

  • ||

    Personally, I think this starts to verge on "everything not required is forbidden".

    Why start from the assumption that you must ask permission of the government before building? Why not start from the position that you are by default permitted to build unless the government can show some compelling reason why you should not?

    What OUGHT to be the perspective of the law is that unless the government can show some actual harm caused by your building plans then they should be REQUIRED to issue a permit. They shouldn't be allowed to deny a permit just because you aren't coughing up cash to fund an unrelated project. The only additional payments should be fees that are universally applied to all building permits, not just yours.

    Otherwise, you will end up with bullshit like (say) the Mayor of Chicago requiring Chick-Fil-A to donate to a home for gay and lesbian teenagers as a requirement to build any new outlets.

    I don't expect that the court will agreee with this perspective, but that's how it ought to be.

  • Robert||

    You start from that assumption because the case wasn't about that. Neither party is saying laws requiring bldg. permits are invalid.

  • ||

    Yeah, but why do we have laws requiring building permits?

    Is it because we, as a society, are starting from the assumption that everyone has to get permission before building?

    Or is it only because we want to make sure that there is some way to CHECK to ensure that what you are building isn't dangerous or harmful to others?

    You can accept the legitimacy of building permit requirements on the latter basis. It doesn't have to be the former.

  • ||

    I'm saying they are invalid.

  • mad libertarian guy||

    I'm saying they are invalid.

    Yes.

  • Snidely Whiplash||

    Why?

  • ||

    Or just to take out the religious freedom angle, things like this could still be used to selectively persectute unfavored property owners by attaching arbitrary additional costs to obtain a building permit. The mayor of Chicago could just require Chick-Fil-A find a public day care or open a community swimming pool or whatnot for every outlet it opens.

    In this case, unless there's a law saying that all property owners getting permits within the jurisdiction must donate an equitable amount to the development of the state land in question, then it's arbitrary and a taking. You can't just assign extra costs to some landowners and not others.

  • Raston Bot||

    Wait, did he request a variance? Or is he developing by right and just needed a building permit?

    The local munis haggle for nearby firehouses, roads, storm drains, and other "infrastructure" development before they issue permits and I could see 5/9 Supremes letting that fly but not in this case where it's unrelated development 50 miles away. He's already offered up some sort of conservation easement too (isn't this that case?).

    It's getting difficult to keep all the takings abuses in order.

  • The Late P Brooks||

    Antonin Scalia emerged as a surprising opponent of the property rights side.

    I'm not surprised.

    At all.

  • Scruffy Nerfherder||

    barf

  • entropy||

    It's just like with Republicans. There's always one to vote with the democrats when it's needed to pass a bill. 4 justices can decide however they want, there'll be 5 to excuse the government, and they can take turns being the one in the barrel.

  • sonofloud||

    If Scalia being a fascist surprises you, you haven't been paying attention.

  • SIV||

    That makes him different how from 7 other SCOTUS justices?

  • Delroy||

    Alt text:

    "Property Rights"

  • The Late P Brooks||

    And we continue down the road of stealth taxes. The state won't openly increase taxes, they will impose other costs which will be passed along to the consumer.

    As I read this tale, that is precisely what happened here. The state of Florida, rather than raising taxes or fees outright, attempted to impose the costs on the business owner in the expectation he would just shrug his shoulders and pass those costs on to the consumer.

    Presto! Everybody wins!

  • EDG reppin' LBC||

    Scalia is the author of a key 1987 decision by the Supreme Court striking down a California regulatory agency’s imposition of a similarly problematic condition on a building permit.

    But this sort of thing still goes on in California. If the Port of Long Beach wants to expand it's operations, it has to get permission from the Coastal Commission. The Commission makes the permit conditional on the Port funding wetland restoration. The wetlands are at least five miles away in Long Beach/Huntington Beach. Granted, the Port is a government owned entity, that will pass on the restoration costs to it's customers (ocean shipping lines). But I think these types of arrangements are common in private, residential construction projects. I'm thinking specifically about a couple of projects in Manhattan Beach, and Redondo Beach. Interesting.

  • ||

    Yes, but, to be fair, expanding it's operations owuld mean destroying wetlands close to the port.

    So it's more of an exchange. You have permission to cause harm A, as long as you compensate the state with improvement B.

    In this case, there doesn't appear to be a finding that the building in question would constitute a harm that should be offset by an improvement elsewhere.

    It's more like if the Port of Long Beach wanted to renovate it's business offices and the government decided to make THAT building permit contingent on wetland restoration.

  • The Late P Brooks||

    The Commission makes the permit conditional on the Port funding wetland restoration.

    In theory, land swaps (if that is what you are referring to) are mostly* unobjectionable.

    *Devils, details, et c.

  • jili5||

    So the government wants a bribe in order to give someone a building permit. Why can't the supreme court see that and just call it like it is. Regulators say "take care of these buildings somewhere else at your expense and we won't take your freedoms away". So bribe us and then you can build like you want.

  • Stevecsd||

    This isn't much different than what Wal_Mart is in a lot of hot water for doing in Mexico. They are just paying the beauracrats directly. Maybe they need to apply those "foreign bribery" laws to this situation.

  • masmalute||

    You really can't predict anything from oral argument, esp. with Scalia. They could be saying these things just to see what rxn they get, or just to rake the lawyers over the coals, put them thru their paces.

    But suppose you take the remarks seriously. A permit is a permit. If you didn't have permission to build initially -- and it was known when you acquired the property that permission would be required to build -- how can it be said that denial of the permit Affordable Bridal Dress for any reason is a taking?

  • masmalute||

    Cheap Bridal GownHow can something you never had to begin with be taken? I could see estoppel as a basis for a case, Wedding Dress Shop if the rules for giving permits were clearly one way and then arbitrarily changed, but not takings.

  • masmalute||

  • ChrisO||

    I think what Scalia is getting at is the issue of "standing"--whether the property owner in this case has actually suffered harm that would allow them to bring their lawsuit in the first place.

    This has been a big issue in the Fifth Amendment "regulatory takings" arena for a long time. In normal "takings" cases dealing with zoning permit denials and the like, you can't go to court until you've been denied a permit and exhausted all of the various administrative remedies that local and state governments typically have.

    However, in many cases governments won't even process permit applications that they know in advance they will deny, let alone actually stamp them as "denied." So, the property owner can never get a final regulatory decision that will allow them to go to court. Savvy local governments know how to work this process very well to keep owners tied up for years and force them to agree to onerous conditions.

  • ChrisO||

    Pt. 2:

    The problem with Scalia's question is, this is a special type of takings dispute known as a "regulatory exactions" case. The difference is that the government isn't deciding on the merit of the land-use application itself, but requiring the owner to give up something else in return for the permit. Otherwise known as extortion.

    The issue of standing hasn't really come up in the Supreme Court's previous exactions cases, including Nollan, in which Scalia himself wrote the majority opinion in 1987. In those cases, the permit was granted but with conditions requiring the owners to turn over other land for public use.

    Roberts' question is the pertinent one here. Why should it matter whether the property owner "accepts" the exaction and then challenges it in court, or refuses the exaction and is then denied a permit? I hope Scalia can see past this, since a negative ruling in this case could put in jeopardy the entire line of cases he himself started with Nollan.

  • buybuydandavis||

    The problem with Scalia's question is, this is a special type of takings dispute known as a "regulatory exactions" case.

    Then that's how counsel should have responded to Scalia.

    I think everyone is jumping the gun on Scalia. More than most, he actually cares about the law, and not just who wins or loses.

    As you say, this is extortion. I'm not an expert on constitutional law, but extortion would seem to run afoul of equal protection and due process.

    Even if Scalia doesn't see this as a taking, it doesn't mean he won't rule against it on other grounds.

  • buybuydandavis||

    The first sentence above is a quote from the previous post. I tried to mark it with preceeding characters which weren't put were deleted when posted.

    Sorry for any confusion.

  • ChrisO||

    I have some previous expertise in this area of the law. However, I haven't paid close attention to this particular case, so I don't know whether it's procedurally in the same position as Nollan and Dolan (the other big exactions case) were. It may be that this new case has a certain procedural posture that brings legitimate concerns for Scalia (who is a notorious stickler for this sort of thing). However, I still hope he doesn't let it derail the important issue in the case.

    To answer your point about exactions seemingly being per se constitutional violations, the answer from Nollan and Dolan is that they violate the Fifth Amendment unless the government can show that the exaction it wants in return for the zoning permit is sufficiently connected to the permit request.

    For example, if I want to build a skyscraper that's going to house thousands of additional workers and generate a lot more traffic in the immediate vicinity during rush hour, the government might be able to get away with requiring me to help fund street improvements to accommodate that traffic. However, requiring me to fund a bird sanctuary across town is clearly unrelated to my skyscraper and would fall afoul of the Constitution.

  • buybuydandavis||

    Thanks for the detail.

    " It may be that this new case has a certain procedural posture that brings legitimate concerns for Scalia (who is a notorious stickler for this sort of thing). "

    That's what I was getting at. Scalia actually cares about correct legal reasoning and not just who wins and who loses, so that questioning the plaintiff's lawyer's reasoning does not mean he'll rule against him, it only means he questions the particularly argument given.

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