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.