inversecondemnation.com

Cert Denied Update

Last week's cert grant by the Supreme Court in Stop the Beachfront Renourishment, Inc. v. Florida Dep't of Environmental Protection, No. 08-11 (cert. granted, June 15, 2009) got us to thinking about other petitions in takings and land use cases which we've discussed, so here's an update on the cases denied review:

• Empress Casino Joliet Corp. v. Giannoulias, No. 08-945 (cert. petition filed Jan. 21, 2009) - the Illinois Supreme Court held (896 N.E.2d 277 (Ill. 2008) that a regulation which imposes a 3% "surcharge" on Illinois casinos with gross receipts over $200 million per year, and then gives the money to horse racing tracks is not a taking of property. Several casinos challenged the law asserting, among other arguments, that the redistribution of their money to tracks was a taking.  The Illinois Supreme Court held that the regulation was a tax, and not subject to takings analysis. Cert denied June 8, 2009.

• Fairbanks North Star Borough v. U.S. Army Corps of Engineers, 543 F.3d 586 (9th Cir. 2008)- the Ninth Circuit held that since the Corps' jurisdictional determination is not a final agency action, the property owner cannot immediately challenge it under the Administrative Procedures Act. Cert denied June 22, 2009.

• Joy Builders, Inc. v. Town of Clarkstown, 11 N.Y.3d 863 (2008) - the New York Supreme Court Appellate Division upheld the imposition of a fee in lieu of a dedication of land. Cert denied April 20, 2009.

• Navajo Nation v. United States Forest Service, 535 F.3d 1058 (9th Cir. 2008) - the Ninth Circuit determined it was not a "substantial burden" on the religious exercises of Native American tribes under the Religious Freedom Restoration Act for the Forest Service to allow a ski resort to make artificial snow from recycled sewage water on a mountain considered by the tribes to be sacred. Cert denied June 8, 2009.

• McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008) (cert petition filed Mar. 2, 2009) - the Ninth Circuit held that legislatively imposed exactions should be analyzed under the Penn Central ad hoc standards and not under Nollan/Dolan. Cert denied June 8, 2009.

• AmeriSource Corp. v. United States, No. 08-497 (cert. petition filed Oct. 15, 2008) - the Federal Circuit held that the seizure as evidence was not a taking for public use because the seizure was an exercise of the government's "police power," and not an exercise of eminent domain. Cert denied March 23, 2009.

Cert Denied In Ninth Circuit Legislative Exactions Case

Earlier this week, the Supreme Court declined review of the Ninth Circuit's decision in McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008). In that case, the Ninth Circuit held:

This case presents an issue of first impression in this Circuit — whether a legislative, generally applicable development condition that does not require the owner to relinquish rights in the real property, as opposed to an adjudicative land-use exaction, should be reviewed pursuant to the ad hoc standards of Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), or the nexus and proportionality standards of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). We affirm, holding that the Penn Central analysis applies to the 12-inch pipe requirement. 

The Ninth Circuit's opinion is available here. The Cato Institute which along with others filed an amicus brief urging the Court to review the case, summarized the case:

When Daniel and Andrea McClung applied for a permit to build a small business on their property, the City of Sumner, Washington, charged them nearly $50,000 to pay for improvements to the City's entire storm drainage system. The McClungs sued the City under the Fifth Amendment to the Constitution, whose Takings Clause prohibits the government from "taking" private property for public use without just compensation. They argue that the City cannot force them to pay fees for off-site pipes absent proof that their development would have a specific detrimental effect on the existing drainage system—and without any evidence that the impact was worth $50,000. The Ninth Circuit ruled in favor of the City, reasoning that money is not property (so there could be no unconstitutional taking) and that because the fees were imposed by ordinance (so the City's determination that the pipes needed upgrading was justification enough for the fees). The McClungs have now asked the Supreme Court to review their case. Cato, joined by the Pacific Legal Foundation and the Building Industry Association of Washington, argues that this case is a perfect vehicle for the Court to revisit the scope of Fifth Amendment protections. Our brief highlights the deep divisions among state and federal courts over several important issues, such as whether the Takings Clause applies to legislative (as opposed to bureaucratic) exactions and whether it applies to monetary exactions (not just burdens on land use). The Court should take this case to ensure that the standard for reviewing development conditions is uniform across the country and make clear that property right protections do not depend on ill-defined distinctions such as the form of property demanded by the government or the manner in which a condition is imposed.

The Supreme Court's denial of review does not establish any precedent, and McClung remains good law in the Ninth Circuit.

Op-Ed: Money Is Property - Monetary Exactions And Nollan/Dolan

The Washington Examiner has published an op-ed about McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008), petition for cert. filed May 2, 2009, "When the Government Takes Your Money, It Takes Your Property," by Cato Institute's Ilya Shapiro and Pacific Legal Foundation's Lauren Wiggins (who filed an amicus brief urging the Court to review the case).

McClung involves an exaction of money, and not land, as a condition of a development permit. The Ninth Circuit held that legislative exactions are not subject to Nollan/Dolan:

Courts are deeply divided over whether the Fifth Amendment applies to the taking of property by means of fees such as the ones the McClungs were assessed.  They are also split as to whether legislatively imposed conditions allow a local government to avoid making individualized determinations of a development’s impact.  Courts like the Ninth Circuit rely on the fact that the Supreme Court has never actually spelled out that money is property (an issue also at the heart of an otherwise unrelated case seeking high court review, Empress Casino v. Giannoulias).  Nor has the Court clearly stated that monetary conditions placed on development are subject to the same scrutiny as other restrictions and regulations.

Our summary of the Ninth Circuit's decision and the cert petition is posted here, along with the authors' amicus brief.

Tuesday Round-Up: Forced Farming, Tax Or Taking, RLUIPA Loophole

Several items of interest:

• California Coastal Commission: "You must farm" - As a condition of allowing a Northern California family to build a home, the California Coastal Commission demanded that they dedicate an "agricultural easement" on their 143-acre parcel.  In other words, as a condition of use, the Commission requires a family that has never farmed its land to use its land for farming.  More about the case from the Half Moon Bay Review here. The complaint is posted here.
  

  "What the Coastal Commission is asking us to do in return for a building permit is to put the remaining acreage into agriculture easement," Dan Sterling said. "But it doesn’t stop there. They want control of what and how we farm. And even then, they can come in here whenever they want." That’s Sterling’s biggest issue. He says he’d lose control over all but 10,000 square feet of his property but still be liable to keep it up to state standards. And as far as he’s aware, no one has ever farmed any portion of the property – terrain marked by steep hills of trees and brush.

• WSJ op-ed: Riverboat Robbery - When does a tax become an illegal 'taking'? - The Opinion Journal's thoughts on the pending cert petition in Empress Casino Joliet Corp. v. Giannoulias, No. 08-945 (cert. petition filed Jan. 21, 2009), a case we discussed here. 
  

In a time of fiscal pressure, Illinois-type actions may be increasingly tempting for state and local governments to get money to prop up politically favored businesses. In the long run, it will only encourage corruption and deny business the kind of transparency they need to operate and expand. As with all takings, for railroads or schools or highways, if the state believes that the increased purses of the Illinois racetrack are in the public interest, the state must be willing to pay for it.

• Closing a big loophole in RLUIPA - RLUIPA and Eminent Domain: How a Plain Reading of a Flawed Statute Creates an Absurd Result.  Eminent domain is not a "land use regulation" under RLUIPA, most courts hold, including Hawaii's. See City & County of Honolulu v. Sherman, 110 Haw. 39, 129 P.3d 542 (Feb. 28, 2006). Thus, while a local government's zoning may be scrutinized under RLUIPA, the actual taking of property is immune from review. 

  This article addresses the Religious Land Use and Institutionalized Persons Act of 2000. It argues that while the courts hearing RLUIPA cases have correctly held that eminent domain is not land use regulation under RLUIPA, Congress intended eminent domain to be covered under RLUIPA, sound public policy holds that sacred property ought to be afforded special protection from burdensome government action, and Congress must cover eminent domain under RLUIPA in order to adequately protect religious liberty in the land use context.

New Cert Petition And Amicus Brief On Nollan/Dolan Applicability To Legislative Exactions, In-Lieu Fees

A cert petition has been filed seeking review of the Ninth Circuit's decision in McClung v. City of Sumner, 548 F.3d 1219 (9th Cir. 2008), the case in which the court held:

This case presents an issue of first impression in this Circuit — whether a legislative, generally applicable development condition that does not require the owner to relinquish rights in the real property, as opposed to an adjudicative land-use exaction, should be reviewed pursuant to the ad hoc standards of Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978), or the nexus and proportionality standards of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). We affirm, holding that the Penn Central analysis applies to the 12-inch pipe requirement. 

The Ninth Circuit's opinion is available here.  The petition presents three questions:

As a condition for approving their building permit, the City of Sumner required Dan and Andrea McClung to replace a much undersized City-owned storm sewer that served their property and numerous other lots within a several block area.¹  While the McClungs' project contributed little to the need for the new larger pipe, they were nevertheless required to bear 85 percent of its cost. The McClungs ask the Court to resolve whether just compensation is due when a permit applicant is required to upgrade a public facility far beyond what is necessary to mitigate the impacts of the new development. The questions presented are:

1. When government requires a land use permit applicant to upgrade publicly-owned infrastructure facilities to legislatively prescribed standards, is just compensation due where the government fails to show that the burden of the upgrade is roughly proportional to the impacts of the new development?

2. Do the nexus and proportionality standards of Nollan v. California Coastal Commission, and Dolan v. City of Tigard, apply only to required dedications of real property, or do they equally apply to a monetary exaction that requires the permit applicant to upgrade a public infrastructure facility?

3. Is a property owner barred from seeking just compensation because he yields under financial duress to a permit condition that effects a taking of property?

-----------------------------------

1.  The first sentence of the Ninth Circuit opinion inaccurately implies that the storm water pipe at issue belongs to the McClungs: “the McClungs … learned that their underground storm drain pipe did not meet the City’s requirement....” (emphasis added). App. A at 4a. The pipe is not the McClungs’ pipe; it is the City’s pipe. That fact is uncontroverted. App. D at 52a, App. G at 59a–60a.

Download the petition here.  The Pacific Legal Foundation, the Cato Institute and the Building Industry Association of Washington have filed an amicus brief, available here.  The amicus brief is also posted at JD Supra here, along with a summary of the case:

When Daniel and Andrea McClung applied for a permit to build a small business on their property, the City of Sumner, Washington, charged them nearly $50,000 to pay for improvements to the City's entire storm drainage system. The McClungs sued the City under the Fifth Amendment to the Constitution, whose Takings Clause prohibits the government from "taking" private property for public use without just compensation. They argue that the City cannot force them to pay fees for off-site pipes absent proof that their development would have a specific detrimental effect on the existing drainage system—and without any evidence that the impact was worth $50,000. The Ninth Circuit ruled in favor of the City, reasoning that money is not property (so there could be no unconstitutional taking) and that because the fees were imposed by ordinance (so the City's determination that the pipes needed upgrading was justification enough for the fees). The McClungs have now asked the Supreme Court to review their case. Cato, joined by the Pacific Legal Foundation and the Building Industry Association of Washington, argues that this case is a perfect vehicle for the Court to revisit the scope of Fifth Amendment protections. Our brief highlights the deep divisions among state and federal courts over several important issues, such as whether the Takings Clause applies to legislative (as opposed to bureaucratic) exactions and whether it applies to monetary exactions (not just burdens on land use). The Court should take this case to ensure that the standard for reviewing development conditions is uniform across the country and make clear that property right protections do not depend on ill-defined distinctions such as the form of property demanded by the government or the manner in which a condition is imposed.

The Supreme Court's docket for the case is available here.

Court Of Federal Claims Round-Up

Here are the latest opinions of interest from the Court of Federal Claims, which has nationwide jurisdiction over inverse condemnation and regulatory takings claims against the federal government where the compensation sought exceeds $10,000:

• Energy Security of America Corp. v. United States, No 08-373C (Feb. 27, 2009) - "inherently unknowable" for purposes of the statute of limitations and failure to state a claim. 
  

• James v. United States, No. 01-2911L (Mar. 5, 2009) - subject matter jurisdiction, ownership of parcel in question; "scrivener's error."

• Fauvergue v. United States, No. 08-431L (Feb. 24, 2009) - class actions in rails-to-trails takings; applying John R. Sand & Gravel v. United States.

• Biery v. United States, Nos. 07-693L, 07-675L (Feb. 27, 2009) - more rails-to-trails takings - certifying questions of abandonment under Kansas law to the Kansas Supreme Court.

• Strategic Housing Finance Corp. of Travis County v. United States, No. 06-741T (Feb. 27, 2009) - subject matter jurisdiction of CFC and arbitrage tax rebates, conceding the illegality of the government action as precursor to CFC jurisdiction.

New Cert Petition - Dolan Proportionality And Individualized Determination Applies To In-Lieu Fees

A cert petition has been filed seeking review of Joy Builders, Inc. v. Town of Clarkstown, 11 N.Y.3d 863 (2008).  That decision was summarized by Professor Patty Salkin on the Law of the Land blog here. The New York Court of Appeals refused to hear the case, ordering "Appeal dismissed without costs, by the Court sua sponte, upon the ground that no substantial constitutional question is directly involved."

The cert petition was filed on February 27, 2009 and is available here.

The Question Presented:

A government violates the doctrine of unconstitutional conditions when it grants a development permit conditioned upon the compelled dedication of land for municipal purposes if: i) it has not made an "individualized determination" that an exaction is required because of the project's impacts, and ii) the quantity of land compelled is not roughly proportional to those impacts.¹  More and more governments have been conditioning development permits upon the payment of a fee in lieu of the dedication of land. Nationwide there is a split as to whether monetary payments are to be judged by the same constitutional standards. The following questions are thus presented.

1. Is a monetary fee imposed in lieu of a dedication of land held to Dolan's standard?

2. If so, does a fee imposed in lieu of the dedication of recreation land, based on a generic needs study not focusing on the project at hand and deliberately
disregarding an array of available public and private recreational facilities because they are not controlled by the imposing government, meet this test?

-----------------------------------

1.  Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) explained in Lingle v.
Chevron U.S.A., 544 U.S. 528, 546-548 (2005).

The petition points out the disarray in the lower state and federal courts on the issues, always a good indicator of certworthiness. The Court's docket report is here. The town's brief in opposition is due April 3, 2009.

Weekend Round-Up

Several diverse items of interest for your weekend reading enjoyment:

• "Impact Fees" - a response to this commentary about impact fees and the legality of "fair share" exactions by the County of Hawaii.

• "Substantive Due Process at Work" - analysis by our friend Dwight Merriam at the IMLA local government blog of a recent Montana Supreme Court decision that seems to hold that substantive due process in not available to challenge "as applied" zoning laws. You mean that local government is not constrained by the Due Process Clause from arbitrarily and capriciously failing to follow its own zoning laws?  

• "Condemnation Suit Goes to State Supreme Court" - "In order to resolve a condemnation case which questioned whether the city’s motives for property acquisition are indeed for public interest and not for private developers, the state supreme court has agreed to hear the issue on direct appeal." See also this report from the Seattle Post-Intelligencer and this report from the Seattle Times.

• "Planners propose to rejuvenate Balboa Park area" - from the San Francisco Chronicle a report about a plan to "revitalize" an "outdated" part of the city, and "transform the area into a transit village with new dense housing and retail." 

Planners envision a neighborhood where college students and residents linger at coffee shops and gather at a new plaza. They want residents to walk and ride their bikes to commuter trains on what has been a traffic-choked and often precarious Ocean Avenue. 

• "Ruling felt far beyond Superferry" - from Jerry Burris at the Honolulu Advertiser:

Say what you want about the Hawai'i Supreme Court decision that at least temporarily shut down the Hawaii Superferry, this much is for certain: It changes the rules of the game substantially for lawmakers who think they can tinker with, or manipulate, the state's economy. 

Out-Of-Proportion In-Lieu Affordable Housing Exaction Opinion Modified

The modified opinion in Building Industry Ass'n of Central California v. City of Patterson, No. F054785 (Cal. Ct. App. Mar. 2, 2009), a case we summarized here, has been further modified in this order. The latest modifications do not alter the judgment that the a city could not increase an in-lieu affordable housing exaction from $734 to $21,000 per house in a proposed development, because it failed to show the increase was attributable to the development.

Conference: ABA Section Of State & Local Government Law Virtual Spring Meeting

Instead of an in-person Spring Meeting this year, the ABA Section of State & Local Government Law will be "meeting" virtually from March 31-April 2, 2009.  As part of the meeting, the Section will be featuring a series of teleconference and live audio webcasts on a variety of subjects including topics near and dear to us: workforce housing, condemnation, land use, and green regulations. You can register for all programs, or individual subjects. A complete list of programs is posted here.

I will be participating as faculty in two of the programs: Condemnation Hot Topics (April 1, 2009 from 2:00 - 3:30pm EDT) and Hot Topics in Land Use Law (April 2, 2009 from noon - 1:30 EDT).  I'll be speaking about the issue of public use and pretext in eminent domain, and recent cases questioning the government's ability to take property.

Registration information is available on the links. If you can't make it for the live programs, the ABA is making recordings available also.  I hope you can join in.