Koontz and Exactions: Don’t Worry, Be Happy

The St. John's River: Still there!
The St. John’s River: Still there!

As Rick pointed out the other day, with Koontz v. St. John’s River Water Mgmt. Dist., the Supremes finished their Takings trifecta for this term, with unsurprisingly the plaintiff winning in all three cases.  Koontz raised two issues: 1) do Nollan and Dolan apply when the government simply denies a permit, as opposed to attaching conditions to it?; and 2) do they apply to monetary exactions.  The Court said yes on both counts.

In today’s New York Times, John Echeverria claims that Koontz could work a “revolution in land use law” and decries the decision as fatally impairing sustainable development.  But this really does not withstand, well, scrutiny.

Echeverria cites Justice Kagan’s dissent for the idea that applying Nollan/Dollan to permit denials in the exactions context means that governments will simply not negotiate for fear of triggering stricter scrutiny.  But Kagan didn’t say that; indeed, as Rick points out, the dissent agrees with the majority that permit denials should trigger stricter scrutiny as the result of a refusal to accept exactions.  She just says that it didn’t happen here.  It is hard, as a matter of practical fairness, for a government to insist on an exaction, deny the project altogether, and then refuse stricter scrutiny.

Kagan does say that applying to Nollan/Dollan to monetary exactions is a terrible and dangerous idea, and of course Echeverria agrees.  But California’s experience belies this notion.  California has applied Nollan/Dollan to monetary exactions for nearly two decades, since Ehrlich v. Culver City, and it has hardly stopped the exactions process.  Far from it: as Ann and her co-author demonstrated in an article a few years ago, when municipalities were forced to quantify their monetary exactions for Dolan purposes, most of them found that they were too low.  There are issues raised by Nollan/Dolan, but it really is not that huge of a burden on municipalities.

It is true, as Kagan says, that there is a weird theoretical leap at the heart of the Court opinion.  Exactions of real property are subject to stricter scrutiny, claimed Justice Scalia in his Nollan majority opinion, because without the permit, they essentially represent a physical taking of property.  An outright expropriation surely generates stricter scrutiny.  Of course monetary exactions would not constitute this problem, because the government “expropriates” money all the time in the form of taxes.  But one can quickly see the problem here: it is simply too easy for the government to insist on a monetary exaction, get it under rational basis scrutiny, and then take the property through eminent domain, or otherwise burden a property right with these fees.  Even municipalities have to play fair.

Now, as the dissent argues, one could easily generate the slippery slope.  Once the Court starts subjecting monetary exactions to stricter scrutiny, it could start doing so to taxes.  In other words, Koontz could be the thin end of a Lochnerian wedge to subject all public finance to strict scrutiny.  That is a possibility, but there are two answers to it.

1)  That has not been the experience of those 25 states that have instituted stricter scrutiny for monetary exactions.  Sometimes the parade of horribles just doesn’t happen.

2)  I have little doubt that four of the justices would actually like to subject all public finance to stricter scrutiny.  They agree with reactionaries like David Sentelle and Janice Rogers Brown, who want to throw out most of the Progressive Era and the New Deal to protect what they lovingly call America’s “cowboy capitalism.”  But they don’t need Koontz to do that.  In fact, they don’t need anything to do that.  One of the bracing aspects of the Roberts Court’s plutocratic activism is that the Four Horsemen really don’t need precedent to do anything.  They overturned McCulloch v. Maryland sub silentio in the Health Care Cases.  They just overturned Section 4 of the Voting Rights Act because they could.  If they don’t need precedent to do anything, then Koontz won’t change the equation.  It will make the rest of the country look like California, and that’s not half bad.

So relax.  This Court will proceed apace with its revolution-from-above in good time.  But it didn’t do so here.

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Reader Comments

6 Replies to “Koontz and Exactions: Don’t Worry, Be Happy”

  1. Jonathan, you say: “Once the Court starts subjecting monetary exactions to stricter scrutiny, it could start doing so to taxes. . . . That is a possibility, but there are two answers to it,” and you go on to describe why the Koontz majority did not intend to do so here.

    If the majority’s intent is as you say, I wonder then why, in response to Kagan’s dissent, did the majority not explicitly limit its holding (per California’s Ehrlich standard) to “permitting fees that are imposed ad hoc, and not to fees that are generally applicable”? (Kagan dissent at p. 10.) In the meantime, it would seem J. Kagan is right to note that “the scope of [the majority’s] new rule now casts a cloud on every decision by every local government to require a person seeking a permit to pay or spend money.” (Id.) In other words, the Court may clarify the applicability of the Koontz rule in the future; but in the meantime, it certainly seems to have significant impact.

  2. Megan, good questions. I didn’t make any claims regarding what the Koontz majority intended: I made an argument about the effect of the decision. No doubt Alito would have liked to go farther, but Kennedy wouldn’t let him. So they left it blank. Since Nollan and Dolan only apply to ad hoc negotiations, it stands to reason that Koontz does also. Moreover, suppose they do apply to generally applicable fees: I am still unpersuaded that this means much. Under Ehrlich and relevant California statutes, Nollan and Dolan also apply to generally applicable fees, and the world hasn’t come to end. Far from it: if anything, it has enabled municipalities to RAISE their fees. Like you and Justice Kagan, I would have preferred a clearer statement, but in the end I don’t think it makes much of a difference.

  3. Thanks, Jonathan! I think Koontz may extend to generally applicable fees, as the majority opinion only draws a distinction between monetary payments subject to Nollan/Dolan and taxes. Thus, application of strict scrutiny post-Koontz could be even broader than under CA’s Mitigation Fee Act, extending to things like permit fees. Of course, in CA, Prop. 26 places a burden upon local governments to prove that all non-tax charges (incld. permit fees) bear a “reasonable” relationship to the cost of service provision/regulatory costs, which may be interpreted as equivalent to the Nollan/Dolan standard; still, as the Prop. 26 experience evidences, drawing a distinction between taxes and other payments is not as easy for state courts in practice as the majority would have it seem.

    I think the root of what’s troubling in Koontz is the majority’s divorce of takings from a “specific, identified property interest or right.” Now, we’re just in the wide realm of scrutinizing any government requirement related to land use permitting processes (or maybe even related to property owners). Koontz, I think, has brought takings jurisprudence somewhere new.

  4. Dear Jonathan,
    Your interest in Koontz indicates that your intellect is maturing which gives us hope that you may be starting to emerge from that adolescent global warming phase. Perhaps congratulations is in order.

  5. @Megan — “I think the root of what’s troubling in Koontz is the majority’s divorce of takings from a “specific, identified property interest or right.” Now, we’re just in the wide realm of scrutinizing any government requirement related to land use permitting processes (or maybe even related to property owners).” It seems to me that that’s just the Ehrlich rule, which California has had for two decades and several other states have as well. I don’t think that there is anything major in that.

    “As the Prop. 26 experience evidences, drawing a distinction between taxes and other payments is not as easy for state courts in practice as the majority would have it seem.” I think it was VERY easy for state courts to distinguish between the two. It was just that the plutocratic interest pushed through conflating them. Now, it’s quite possible that the majority wants to do the same thing here. But they didn’t do it in this case.

    I suppose that the root of our disagreement is that at the end of the day, I don’t regard Nollan and Dolan as that burdensome for land use authorities. They make their determinations and for the most part they are upheld. I don’t regard them as “strict scrutiny” in the equal protection sense; they just turn it up a notch. There are problems with Takings jurisprudence — I am still worried about the applications of Lucas, for example — but that’s not the case here. As Ann demonstrated, when authorities have to justify their actions, it’s pretty easy to do it. That’s why the plutocrats had to pass Prop 26 — requiring mere justification for exactions is pretty easy. So Prop 26 made it virtually impossible for the Legislature to do regardless of the justification. Once we are in the zone of rational justification, we win!

  6. The problem with the property rights bar is that

    1) It doesn’t believe in rights, only in power; and
    2) It loathes the scrutiny regime.

    Result? It refuses to uses the scrutiny regime to its own benefit–evne when it wins! The factual questions in Koontz are these:

    1) What are the factual indicia of property which also apply to facts besides property?
    2) What are the factual indicia of permitting which also apply to facts besides permitting?

    How about this: Koontz stands for the proposition that housing eviction must be narrowly tailored to achieve a compelling government purpose.

    Why is housing in fact different from property for Koontz purposes?
    Why is permitting in fact different from unlawful detainer for Koontz purposes?

    Why isn’t the property rights bar moving forward to argue that Koontz stands for the proposition that policy relating to property must be narrowly tailored to achieve a compelling government purpose (strict scrutiny)? The property rights bar needs to FORCE the Court to more clearly define–and WHY–the level of scrutiny in Koontz with respect to both permitting and property. It’s ridiculous to sit around and wait for the majority to more clearly articulate what even Kagan grants is an elevated level of scrutiny for property. And I don’t only complain of the property bar. The Court turned liberty from an interest to an individually enforceable right, raising the level of scrutiny for liberty above minimum scrutiny, in the Texas sodomy case. But it is only with the defense of marriage act case that litigators get Kennedy to articulate more of the right to liberty. It is utterly ridiculous that the bar is cowed by what everyone knows is a mediocre Supreme Court, to the extent that they won’t press the rights they have won. The bar is simply cowardly.

    Stop looking at the labels of government policy (permitting, regulation) as policies and simply examine them as facts–and force the COURT to examine them as facts. If YOU grant that they are repositories of scrutiny regime doctrine, then don’t expect the COURT to strip them of those attributes. The Court is not going to give you anything you don’t FORCE the Court to give you. If you don’t go into Court regarding what the government regards as “policy” to be “policy,” then you don’t have to argue the same deference, discretion, reasonableness and balancing nonsense over and over again. Get up off your knees and stop begging 9 idiots for crumbs. Property rights advocates seem to loathe West Coast Hotel/Carolene Products, but they certainly seem to be enslaved, disempowered and confused by it. Why? You have a new right: USE IT, PUSH IT.

    I think you will also find that Koontz makes Obamacare unconstitutional (see below). Indeed, Koontz shifts the burden of proof to government to show, by compelling evidence, that any tax is a general welfare tax, and not a dedicated tax–and it does so precisely because the exaction in Koontz was NOT a tax.

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2287280

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Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic – Land Use, the Environment and Loc…

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