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CFC: Allegation That Gov't Ordered Destruction Of Bump Stocks Pleaded Physical Takings Claim

We're back to bump stocks. Indeed, we have covered cases raising similar issues so we're not going into too much detail on the U.S. Court of Federal Claims' recent decision in The Modern Sportsman, LLC v. United States, No. 19-449 (May 8, 2025), and we'll just assume you, like us, have been following along with this issue.

Suffice it to say that the federal government adopted regulations defining these devices as prohibited machine guns and gave those in possession 90 days to either turn them over to the government, or to destroy them. The plaintiffs destroyed their bump stocks and then sued the federal government for a taking.

The CFC dismissed the complaint under the government's "police power" authority to prohibit contraband and noxious items. As we noted in this post, the line between uncompensated destruction and compensated takings was not as clear at the CFC saw it (the Armstrong rationale cannot be ignored, even where a taking may be for a very good public reason), and thus the Federal Circuit affirmed, but shifted the rationale from police power to a lack of a private property interest. After the Supreme Court denied cert, "that was that." Slip op. at 2.

Meanwhile, other bump stock owners challenged the validity of the administrative rule declaring these things machine guns. And there, the owners found more success, with the Supreme Court eventually concluding that the agency lacked the authority to adopt the bump stock rule. The owners here "then asked this Court to revive this lawsuit, which the Court did ... [t]he next day, plaintiffs amended their pleadings to add an illegal exaction claim in addition to their takings claim." Slip op. at 3. 

The government sought dismissal, arguing that the bump stock owners alleged a physical taking but the government hadn't physically seized anything. It merely required the owners to destroy the bump stocks: as the CFC put it, the government "acknowledges that plaintiffs alleged that 'the Rule required bump stock owners to destroy or surrender the devices to ATF.' Reply 2. That does not pass muster for the government, however, because the government 'did not seize any devices or otherwise physically invade plaintiffs’ property.' Id. at 3." Slip op. at 4. In short, we didn't actually seize anything of yours, plaintiffs; we merely required you to destroy your property. Really. 

The CFC wasn't having any of that, and rejected this too-clever-by-half argument:

The Court cannot agree. Let us be clear that the government need not literally force private persons to turn over their property for a taking to occur; a legal requirement is sufficient. For example, in Horne, the Supreme Court held that an administrative order requiring raisin croppers to “give a percentage of their crop to the Government, free of charge” effected a compensable appropriation. 576 U.S. at 355. The government did not literally oust the farmers from possession of the raisins, yet a taking occurred because the order made a “formal demand” backed by fines and penalties. Id. at 362, 367–68. It is the same here. The Rule plainly states: “This final rule requires the destruction of existing bump-stock-type devices.” 83 Fed. Reg. at 66,549. It then instructs: “Individuals who have purchased bump-stock-type devices prior to the implementation of this rule must destroy the devices themselves prior to the effective date of the rule or abandon them at their local ATF office.” Id. Finally, it makes clear that “individuals are subject to criminal liability . . . for possessing bump-stock- type devices after the effective date of regulation.” Id. at 66,525. These statements undoubtedly constitute a formal demand to destroy or transfer possession of bump stocks, satisfying the standard under Horne.

Slip op. at 4-5.

If this argument strikes you as nonsense, welcome to our world, where arguments like this are put forth with a straight face on a regular basis. 

And if that wasn't enough, the government next argued that the regulations didn't actually require the owners to destroy their bump stocks, "but 'merely clarified' the 'longstanding statutory law' banning machineguns." Slip op. at 5. "Put plainly, the government essentially argues that the Rule is an informational document apprising the public of pre-existing legal obligations." Id. The CFC held "[t]hat too is incorrect." Id. That seems to be putting it mildly. What do you think would have happened to bump stock owners who didn't comply with this "informational" rule and held on to their bump stocks?

Short story: the complaint alleged a physical taking.

Next, however, the CFC rejected the exaction claim, based on the remedy sought. As we know, the CFC is limited to awarding monetary damages in these kind of cases. The CFC held that an "exaction" generally "involves money that was 'improperly paid, exacted, or taken from the claimant.'" Slip op. at 7 (quotations omitted). Here, the CFC held, no money changed hands and there's no statute otherwise authorizing a claim for money damages:

In sum, plaintiffs cannot be said to have paid money, directly or “in effect,” for a very straightforward reason: They lost personal property, not money. Indeed, plaintiffs have not alleged that they spent any money for any purpose; or paid any money to any In sum, plaintiffs cannot be said to have paid money, directly or “in effect,” for a very straightforward reason: They lost personal property, not money. Indeed, plaintiffs have not alleged that they spent any money for any purpose; or paid any money to any

Slip op. at 8-9.

The CFC wrapped up by -- get this -- calling out the property owners' lawyers for failing to expressly clarify that one of the cases they cited and relied on didn't actually hold that an exaction could be a demand for "money or property," only money. Slip op. at 9. The court acknowledged that the citation didn't actually misquote the case, but that the lawyers should have been more candid that they were arguing for an extension of the law, and that the case limited exactions to money.

We're fine with that (especially in the AI era), and requiring advocates to be candid. 

But where's the call-out of the government's horse hockey arguments, noted above? Dead silence, of course. In our view, the borderline frivolous, time-and-expense wasting, divorced-from-reality arguments the government made are equally if not more deserving of censure. 

Call us if that ever happens. We'll wait.

The Modern Sportsman, LLC v. United States, No. 19-449 (Fed. Cl. May 8, 2025)

New Report: "How to Protect Property Rights from Improperly Assessed Exactions" (Sweetland & Hodges)

Check out the new report by our Pacific Legal Foundation colleagues Kyle Sweetland and Brian Hodges, "How to Protect Property Rights from Improperly Assessed Exactions" (Apr. 2025).

This research in brief shows how exactions grew and increased home construction costs over a 16-year period. It provides a history of exactions, showing how they have frequently moved away from their original impact-mitigation purpose and how that shift in purpose risks violating the Constitution. It illustrates an improperly assessed exaction and provides examples of how exactions have hampered construction during the present housing crisis. It concludes by examining how state legislatures can help set boundaries on local exactions and protect property rights.

It's short, its sweet, it's straightforward and understandable. What more could you want? Oh yeah, unlike exactions ... it's free. No strings attached. Check it out.

Sweetland & Hodges, How to Protect Property Rights from Improperly Assessed Exactions (Pac. Legal Found. Ap...

Guest Post (Jennifer Polovetsky): "NY Zoning Law Mandating Contributions Deemed an Unconstitutional Taking"

Today we have a guest post by New York colleague Jennifer Polovetsky, who writes about an exactions case that is headed for the New York Court of Appeals. Disclosure: our firm represents the property owners in that court. 

Thanks to Jennifer (and to the New York Law Journal) for allowing us to republish her intriguing piece.

_____________________________

NY Zoning Law Mandating Contributions Deemed an Unconstitutional Taking

by Jennifer Polovetsky

A few years ago, on December 15, 2021, the City of New York (the City) amended §143–13 of the City Zoning Resolution (the ZR Amendment). A portion of this ZR Amendment required property owners to pay a mandatory, nonrefundable contribution to the SoHo–NoHo Arts Fund (Arts Fund), as a precondition to filing for a permit to convert joint living-work quarters for artists (JLWQA) to unlimited residential use.

What is the problem with the ZR Amendment, you may ask? Well, according to the recent Appellate Division decision in Coalition for Fairness in Soho and Noho, Inc. v. City of New York, 233 A.D.3d 433 (1^st Dept 2024); 221 N.Y.S. 3d 89 (the Soho/Noho case), it constituted an excessive exaction, which rose to the level of an unconstitutional taking under prevailing eminent domain laws.

In the context of eminent domain, exactions are conditions imposed by the government on a property owner that require the transfer of money or property as a prerequisite for the government’s approval of a proposed development plan.

Sometimes, when exactions are excessive or unrelated to the development's impacts, they can potentially constitute a "taking" under the Fifth Amendment of the United States Constitution and Article I §7 of the New York Constitution, requiring just compensation. That is exactly what happened in the case of this ZR Amendment.

In Soho/Noho, the New York Appellate Division held that the portion of the ZR Amendment requiring payments to the Arts Fund, as a condition precedent for permit filing, was an unconstitutional taking without just compensation.

The ZR Amendment established the Special SoHo–NoHo Mixed Use District, and provided JLWQA property unit owners a pathway to convert the use of their units to residential uses; provided that they first make a nonrefundable, mandatory contribution, calculated at $100 per square foot of floor area to be converted, to the Arts Fund, with annual increases, as a “…precondition to filing for or issuing of any building permit allowing the conversion [of] a joint living-work quarters for artists to a residence.” See ZR §143–13.

In concluding that this mandatory contribution to the Arts Fund constituted an unconstitutional taking, the Soho/Noho court explained that the permit condition contained in the ZR Amendment had failed the “two-part test modeled on the unconstitutional conditions doctrine,” as most recently outlined by the Supreme Court of the United States (SCOTUS) in Sheetz v. County of El Dorado, 601 U.S. 267 (2024), and colloquially known as the Nollan/Dolan standard(s). See Soho/Noho, id., citing Sheetz v. County of El Dorado, id.; see also Nollan v. California Coastal Commn., 483 U.S. 825 (1987); Dolan v City of Tigard, 512 US 374 (1994).

In Sheetz, SCOTUS referred to the Nollan/Dolan decisions and held that in order to not be deemed an unconstitutional taking, a permit condition: (1) “must have an ‘essential nexus’ to the government's land-use interest,” which “ensures that the government is acting to further its stated purpose;” and (2) the condition “must have ‘rough proportionality’ to the development's impact on the land-use interest.” See Sheetz, id. at 275-276 quoting Nollan, 483 U.S. 825; see also Dolan v City of Tigard, 512 US 374.

The Soho/Noho court, after applying the two-part test, found that the mandatory Arts Fund contribution fee requirement constituted a taking without just compensation in violation of both the Fifth Amendment of the United States Constitution, and Article I §7 of the New York Constitution. Soho/Noho, 221 N.Y.S. 3d 89; U.S. Const. amend. V; NY Const, art I, § 7.

First, the Soho/Noho court found that the City did not meet the first prong of the Nollan/Dolan and Sheetz test(s) because it failed to “identify an essential nexus to its land use interest” in the ZR Amendment, since the City had itself described the JLWQA use restrictions as “outdated,” had expressed goals of allowing a broad range of mixed uses in the new Special Soho-Noho district (which had previously been zoned industrial prior to the passage of the ZR Amendment), and had banned the creation of new JLWQA units (indicating a long-term land use goal of phasing out JLWQA units altogether).

The court held that the language of the ZR amendment, which stated that money from the Arts Fund “shall be allocated ... to support arts programming, projects, organizations, and facilities that promote the public presence of the arts within the [SNX] District and surrounding neighborhoods,” with priority given to “under-resourced organizations and under-served areas,” did not support the City's alleged goal of supporting art and local artists. See Soho/Noho, id.; see also Sheetz, 601 U.S. at 275, quoting Nollan, 483 U.S. at 837; ZR §143–02; and Dolan v City of Tigard, 512 US 374.

Second, the Soho/Noho court held that the City did not meet the second prong of the Nollan/Dolan and Sheetz test(s) because it failed to demonstrate that the mandatory Arts Fund contribution condition had “rough proportionality” to the conversion of the JLWQA units’ development impact on the land-use interest at issue.

 Specifically, the court held that “there is no evidence of negative impacts on certified artists arising from the changes in zoning,” because, as the City had represented, there was a “scarcity of certified artists able to purchase” JLWQA units in the first place, due to an “ever-decreasing number of annual artist certifications” over the last decade. See Soho/Noho, id.; see also Sheetz, 601 U.S. at 275, quoting Nollan, 483 U.S. at 837; ZR §143–02; and Dolan v City of Tigard, 512 US 374.

As we saw in Sheetz, and now in the Soho/Noho decision, the Nollan/Dolan test for whether a land use permit condition is a taking applies regardless of whether the condition requires the landowner to relinquish property, requires them to pay a monetary exaction instead of relinquishing the property, or requires them to pay a monetary exaction pursuant to a legislative or administrative precondition for acquiring a permit. See Soho/Noho, 221 N.Y.S. 3d 89; Sheetz, 601 U.S. 267.

Although not all exactions rise to the level of an constitutional taking, the Soho/Noho decision reinforces the core tenets of Sheetz and the Nollan/Dolan decisions—all of which, when taken together, demonstrate that courts take the protection of property rights very seriously, just like the Fifth Amendment intended. See Soho/Noho, 221 N.Y.S. 3d 89; Sheetz, 601 U.S. at 275,; Nollan, 483 U.S. at 837; Dolan v City of Tigard, 512 US 374; see also U.S. Const. amend. V; NY Const, art I, §7.

Reprinted with permission from New York Law Journal, © ALM Media Properties LLC. All rights reserved.

Join Us: "Property Rights and The Roberts Court: 2005-2025" (Feb. 27, 2025, UC Berkeley Law School)

Register now and plan on joining us on Thursday, February 27, 2025 at the U.C. Berkeley Law School for a one-day conference: "Property Rights and the Roberts Court: 2005-2025."

Here's the agenda. Here's a description of the program:

For much of the past century, property rights were relegated to second-class status compared to the rest of the Bill of Rights. However, under the Supreme Court leadership of Chief Justice John Roberts, this trend has begun to shift.

In recognition of the 20th anniversary of the Chief Justice’s elevation to the Supreme Court, Pacific Legal Foundation is partnering with Berkeley Law’s Public Law and Policy Program to host a day-long conference exploring the major property rights developments and future of property rights law in the Roberts Court.

We’ll hear from two different panels of renowned legal scholars and accomplished litigators, as well as a keynote lunch discussion between Richard Epstein, director of the Classical Liberal Institute and law professor at NYU School of Law, and John Groen, executive vice president at PLF.

A catered lunch will be provided.

Register here.

Agenda, Property Rights and the Roberts Court 2005-2025 (Cal Berkeley Law School, Thurs. Feb. 27, 2025)

New Cert Petition: To Have A Nollan-Dolan-Koontz Claim, Must You Be Forced To Give Up Land And Money?

Here's a recently-filed cert petition to watch. We won't go into the background, because the Questions Presented pretty much lay the foundation:

Respondent County of San Diego, et al. (County), a California land use agency, denied the land use permits for Village Communities et al. (Village) to develop a much-needed residential and mixed-use community in North San Diego County, California. The County denied the Project solely because Village “failed” to satisfy the County’s condition requiring Village to pay money to acquire offsite easements from 100 percent of the 50 property owners along a public road near Village’s property site in spite of the fact that the County made no individualized determination that the monetary exaction, a sum of approximately $2.5 million, bore an “essential nexus” and “rough proportionality” to the purported impacts associated with Village’s project as required by Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994).

The questions presented are:

1. Whether the Ninth Circuit’s holding that a land use permit applicant/landowner must show the government’s permit condition would coerce the applicant to give up both its own property and money to establish a Fifth Amendment takings claim under the unconstitutional conditions doctrine, conflicts with this Court’s decision in Koontz v. St. Johns River Management District, 570 U.S. 595 (2013)?

2. Whether the Ninth Circuit’s decision is contrary to Koontz, which imposes on the land use permit applicant/landowner only the burden to show that the government imposed an unconstitutional condition that required the applicant to give up property/money for which the Fifth Amendment would otherwise require just compensation under Koontz, Dolan, and Nollan?

Follow along on the Court's docket, or stay tuned here. Case set to be conferenced next month.

Petition for a Writ of Certiorari, Village Communities, LLC v. County of San Diego, No. 24-736 (U.S. Jan. 1...

CA8 Misses An Opportunity For Penn Central Clarity: No Taking When City Bans New Private Wells, Requires City Water

At first glance, it might seem like there's a lot there in the U.S. Court of Appeals' opinion in Becker v. City of Hillsboro, No. 23-3367 (Jan. 7, 2025).

After all, the city's prohibition on new private wells and another requirement that newly built homes connect to the city's water system seems a bit arbitrary (at least the opinion doesn't give a lot of detail why, other than "the city said so"). And the opinion evaluates a Lucas wipeout, a physical invasion, a Penn Central ad hoc taking, and a Nollan/Dolan claim. Even a Murr denominator issue. This case could have been a good vehicle to examine those questions in more detail that many courts do.

But after taking a dive in, our initial impression that this case would provide a lot of insight -- or even food for deeper thought -- didn't pan out. Take a look and see if you agree.

The case involved two separate but related city restrictions on how landowners use their property. The first was a prohibition on new private wells within the city's jurisdiction, put in place five decades ago. The second is more recent (2008), and requires all residences to get water service from the city.

The plaintiff here owed an undeveloped 156-acre parcel zoned for residential uses. A prior owner voluntarily annexed the land to the city in 2000. Flash forward, and the current owner tried to sell the property in 2020. It was only then, it asserted, that it discovered the annexation and the resultant well ban and city-water requirement. Complying with the city water requirement would cost way more than it is worth, and killed potential sales. 

Takings lawsuit next, cross motions for summary judgment followed. City's motion granted, appeal followed.

Physical invasion? No. The owners "are not being compelled to tolerate a permanent physical occupation because they are not being compelled to do anything at all." Slip op. at 9. No, this is a require that if they build homes, then those homes must be on city water. "If." No one is compelling the owners to build homes: the owner "still may choose whether to build a structure and comply with the ordinance or forego building a structure." Id. Simple: don't want to be on city water? Don't build nothin!

Well, what about the owners' argument that yes, we could choose to not build but that would force us into a Lucas wipeout. That, too, failed to convince the court. You might not be able to build homes, but hey, you "may still use the Property as it is for recreational purposes, or they could sell it." Id. And, worse yet, the owners' "own expert did not suggest that the property was rendered valueless by the City’s ordinances." Slip op. at 10. The requirements "only" reduced the property's value by 70%.

What about forcing the owner to choose (develop and use city water, or not develop and get whacked for 70% value) violates Nollan/Dolan? The court held that it couldn't address this argument because it had not been raised and argued in the district court. Hold on, the owners argued, whadda mean we didn't raise this -- our district court summary judgment papers used the terms "exaction" and "Nollan/Dolan." Not good enough the court of appeals concluded: "those references and citations were made in the context of arguing that the regulations are not impermissible exactions because the Trust is not seeking permits from the City. Furthermore, the trustees made no reference to exactions, Nollan, or Dolan in their Amended Complaint." Slip op. at 12.

Finally, the owners' Penn Central argument floundered on similar shoals. The court started off by rejecting the owners' claim that the denominator should be be each of the potentially subdivided lots ("as that's how they hope to sell the tract"), or was the court going to treat the property as the entire 156 acres? One big lot, the court concluded, applying the multi-factor Murr test. That settled, the court held that each of the Penn Central factors weighed against the owners.

• Economic impact: nothing "significant" here, because owners "presented no evidence" to show impact, because the expert only declared that "the cost to the Trust of extending the City water system to the Property made the development for that highest and best use economically unfeasible," and didn't conclude anything about the economic impact of other uses."Slip op. at 16.
• Investment-backed expectations: yes, the owners might have subjectively believed that they could developed without connecting to city water, and the prior owner voluntarily annexed the property, thus subjecting it to the city's regulations. Yeah, there's Palazzolo, which doesn't categorically bar you from forming reasonable expectations, but the regulatory regime can "shape" your expectations (what's the difference?) and other nearby owners paid to hook up city water, so there's that. Slip op. at 17.
• Character: the court acknowledged that the government's reasons for the regulations are not what the Supreme Court meant by "character of the government action," but in the same breath concluded that the the "likely" reason for the city's regulations was to prevent water contamination and depletion of the aquifer. Slip op. at 18.

The court's approach to Penn Central is perplexing. On one hand, it acknowledges--as it must--that the Supreme Court directs the factors to mean a certain thing (or not mean a certain thing), and are applied a certain way. Yet despite that acknowledgement, the Eighth Circuit just goes ahead an applies the test the same old way. You have to disprove all possible uses and values (and not let the trier of fact decide how much is too much), your post-regulation acquisition of the property doesn't kill your RIBE, but merely "shapes" them negatively, and "character" doesn't mean the government's reasons (yet it does).

So despite the initial promise that the Eighth Circuit would grapple with the issues presented in the case -- in particular an application of the Penn Central factors -- in the end it was a tale full of sound and fury, signifying nothing.

Becker v. City of Hillsboro, No. 23-3367 (8th Cir. Jan. 7, 2025)

Breaking News: Come Join Us For The 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference, San Diego, Jan 30-Feb 1

With our tongues firmly planted in cheeks, the Planning Chairs for the upcoming 42d edition of this popular and venerable Conference bring you this "breaking news" report from San Diego!

As you know, in addition to being the best nationally-focused conference on the subjects that we love and a venue that is nearly certain to have some of the warmest winter weather in the continental United States, and we went on-location from some of the local highlights: the beaches, Torrey Pines, the Zoo, Balboa Park, the Gaslamp Quarter, and Coronado to name but a few.

More about the Conference here, including registration information.

Here are some of the highlights:

• Property Rights at the Supreme Court: DeVillier and Sheetz and What's Next
• Slow Take: Possession, Rent, Relocation, and Offset
• The Jury's View: How Jurors See Your Case
• From Penn Coal to Penn Central: How to Prove "Too Far"
• Leveraging Expertise in Eminent Domain Litigation: Working with Land Planners, Engineers, and Other Predicate Experts
• Kelo at Twenty: What Changed, What Didn't, and What's on the Horizon
• Viva Las Vegas: How the Nevada Judiciary Upheld Property Rights in 180 Land's Inverse Condemnation Taking
• Ethics: Guiding the Trolley: Perspectives on Professional Ethics in Eminent Domain for Lawyers, Appraisers, and Right of Way Agents
• "I Think I Shall Never See" Just Compensation For a Tree: Strategies to Securing Recovery for Trees, Crops, and Fixtures

And more. Check out the complete agenda here. Registration information here. 

We especially welcome first-time participants, or those returning after an absence. Connect (or reconnect) with your colleagues from across the nation.

The 41st Conference was in New Orleans. Here's a report of that event, and here are our reports from prior conferences in Austin and Scottsdale.

Don't miss out on San Diego: we have had record attendance in recent years, so hold your space now. #EminentDomain2025

NY App Div: Requiring Art Fee "Donation" To Get Building Permit Lacks Nexus, Proportionality

In what might be the most cliched "New York City" land use situation, check out the Appellate Division's opinion in Coalition For Fairness v. City of New York, No. 2023-05338 (Dec. 5, 2024).

Want to convert your SoHo-NoHo artist live/work space to unlimited residential use? Be prepared to pony up and pay to the City's Arts Fund a non-refundable fee of $100 per square foot as a precondition of even filing a building permit. 

When owners challenged this fee as unconstitutional under Nollan/Dolan/Koontz/Sheetz, the trial division said no. But the Appellate Division held otherwise, concluding that the imposition of the fee lacked an essential nexus and was not roughly proportional to whatever impacts "certified artists" (who knew the government was in the business of "certifying" artists?) suffer when an owner converts.

The opinion, in true Appellate Division style is short (3 pages), so you can just read it. But here's how the court laid out the analysis:

The ZR’s prohibition on new JLWQA units, coupled with this stated goal of broadening uses and the ZR text providing for conversions away from JLWQA use, further indicates that the City’s long-term land use goal is to phase out JLWQA units (see ZR § 143-13). By contrast, the City’s asserted goal in its arguments on appeal, of supporting art and local artists, is not related to any land use interest (see Nollan, 483 US at 837). Nor does payment into the Arts Fund promote the asserted legitimate end of preserving JLWQA stock for certified artists, as the Arts Fund does not pay for joint living-work units or other housing for artists, much less offer benefits specifically to certified artists. Instead, money from the Arts Fund “shall be allocated . . . to support arts programming, projects, organizations, and facilities that promote the public presence of the arts within the [SNX] District and surrounding neighborhoods,” with priority given to “under-resourced organizations and under-served areas” (ZR § 143-02).

Slip op. at 3.

And no proportionality either, because "there is no evidence of negative impacts on certified artists arising from the changes in zoning. Instead, [the City] represented during the approval process that there was a 'scarcity of certified artists able to purchase' JLWQA units, due to an ever-decreasing number of annual artist certifications the previous decade." Id.

Declaratory judgment and injunction issued.

Check it out.

Coalition for Fairness v. City of New York, No. 2023-05338 (N.Y. App. Div. Dec. 5, 2024)

Registration For The 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference Is Underway (Don't Miss Out!)

Get ready to join your colleagues and friends in San Diego for the 42d ALI-CLE Eminent Domain & Land Valuation Litigation Conference.

The 41st Conference was in New Orleans. Here's a report of that event, and here are our reports from prior conferences in Austin and Scottsdale.

Here are some of the highlights of the upcoming Conference:

• Property Rights at the Supreme Court: DeVillier and Sheetz and What's Next
• Slow Take: Possession, Rent, Relocation, and Offset
• The Jury's View: How Jurors See Your Case
• From Penn Coal to Penn Central: How to Prove "Too Far"
• Leveraging Expertise in Eminent Domain Litigation: Working with Land Planners, Engineers, and Other Predicate Experts
• Kelo at Twenty: What Changed, What Didn't, and What's on the Horizon
• Viva Las Vegas: How the Nevada Judiciary Upheld Property Rights in 180 Land's Inverse Condemnation Taking
• Ethics: Guiding the Trolley: Perspectives on Professional Ethics in Eminent Domain for Lawyers, Appraisers, and Right of Way Agents
• "I Think I Shall Never See" Just Compensation For a Tree: Strategies to Securing Recovery for Trees, Crops, and Fixtures

And more. Check out the complete agenda here. Registration information here. 

We especially welcome first-time participants, or those returning after an absence. Connect (or reconnect) with your colleagues from across the nation.

Don't miss out: we have had record attendance in recent years, so hold your space now.

Come, join us!

Links From Today's ABA Land Use Session

Here are the cases and other materials we discussed in today's Section of State & Local Government Law Land Use group meeting on takings:

• By The Thinnest Of Margins, SCOTUS Declines Public Use Pretext "Spite Taking" Case
• SCOTUS Declines To Review NYC Rent Control Challenge
• Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It
• In DeVillier v. Texas, The Winner Takes It All
• Unanimous SCOTUS: "state law cannot be the only source" Of Property Rights, And "traditional property law principles" As Enforced By The Takings Clause Play A Role
• "Final decision" ripeness incentivizes government to be opaque, and avoid saying no.
• Texas takes a more practical (and realistic) approach to takings ripeness: City of Buda v. N.M. Edificios and City of Kemah v. Crow
• New Cert Petition: Does The Obligation To Provide Just Compensation Waive Sovereign Immunity?
• Inverse liability for wildfires?
• New Law Review Article: John Groen, "Takings, Original Meaning, and Applying Property Law Principles to Fix Penn Central," 39 Touro L. Rev. 973 (2024)
• Yee v. Escondido and physical occupation takings lower court split: CA8: Yee v. Escondido Doesn't Save Eviction Moratorium From Takings Review and CA9: No Physical Commandeering In Eviction Moratorium Because Yee Says "You Let The Tenants In, So You Can't Complain About Keeping Them (For Free)"
• Florida Appeals Court: TDRs, Beekeeping, And Camping Are Not Economically-Beneficial Uses, So Downzoning Is A Lucas Taking

PS: If you are not a member of the Land Use group, you really should be. We summed up the reasons why here.

Call For Papers: "Housing and Exactions: The Next Frontiers After Sheetz"

Our outfit (Pacific Legal Foundation) has put out a call for papers. on the topic of land use exactions and housing law. Honorarium included for accepted papers, and there will be a workshop to follow.

Here's the description:

This workshop seeks to build on the result of Sheetz v. County of El Dorado and chart the course of the next steps in exactions/unconstitutional-conditions law. From Nollan v. California Coastal Commission, through Dolan v. City of Tigard and Koontz v. St. John’s River Water Management District, and now including Sheetz, the Supreme Court has looked to the doctrine of exactions and unconstitutional conditions to ensure property rights are protected. In doing so, it has created a constitutional bulwark protecting the right to build housing on private property, an important stick in the property rights bundle.

The Supreme Court’s unanimous decision in Sheetz held that legislatively-imposed development-fee schedules are subject to judicial scrutiny under the doctrine of unconstitutional conditions. This ruling promises to change how local and state governments extract development impact fees from property owners in exchange for building permits; and it may very well do more. This is where you come in.

We seek papers that address the questions arising from the Sheetz ruling. We welcome proposals that look at this issue from legal, economic, political, historical, and related angles, including empirical and nonempirical approaches.

Some possible topics:

• Must a permit condition imposed by a legislative body on a category of properties be tailored with the same degree of specificity as a permit condition that targets a particular single development to be constitutional?
• An article exploring the Sheetz concurrences by Justices Neil Gorsuch and Brett Kavanaugh offering different arguments about the need for legislative exactions to be tailored.
• Beyond the analysis of Koontz, is there a basis in constitutional text, history, and/or case law for holding stand-alone impact fees (as opposed to in-lieu fees) subject to the doctrine of unconstitutional conditions?
• How does the requirement that the government “make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development” work when evaluating a generally imposed legislative exaction?
• What does “essential nexus” require to be constitutional?
• Are there economic models that prove or disprove the claim that inclusionary zoning meets the nexus requirement of the Nollan-Dolan-Koontz-Sheetz exactions test?
• Does inclusionary zoning create meaningful workforce and affordable housing?
• Alternatively, does inclusionary zoning have a negative impact on the production of affordable housing? Empirical studies of communities with inclusionary zoning policies in place could yield meaningful information if studied.
• Do all inclusionary-zoning schemes rely upon Kelo v. City of New London, and if they do, then would the right inclusionary-zoning challenge have the promise of overturning Kelo?
• How have states limited local government’s ability to legislatively impose fees on developers, and is there empirical evidence of more and cheaper housing in the states with those limits?
• True or false: The weaker the nexus, the more difficult it will (or should) be for the government to establish proportionality.
• How do impact fees affect housing supply and affordability? What is the tradeoff between property taxes and fees?
• How can YIMBYs incorporate the Sheetz decision into their work and build from it to successfully encourage communities to build more housing?
• Besides inclusionary-zoning fees, are there other government-imposed fees on builders and developers that may violate the nexus prong of the Nollan-Dolan-Koontz-Sheetz test? What are they and why is there a lack of nexus between the fee and the demand?

Fertile grounds for exploration.

Details here, including deadlines. Check it out, and then submit a proposal.

Imagining The Future Of Regulatory Takings: "Making Property Rights Cool Again"

Lawprof Ilya Somin (GMU Law), Mercatus Center's Charles Gardner,
and lawyer Emily Cruikshank Bayonne (Tubman Realty, LLC)
speaking on "How Policy Changes Can Address Incursions on
Property Rights Where Courts Have Failed to do So."
Jim Burling (PLF) moderating.

Recently, we attended a wonderful symposium co-sponsored by George Mason Law School's Journal of Law, Economics & Policy (congratulations to the student editors who ran the show that day), and our outfit Pacific Legal Foundation. Of course, with the subject being "Imagining the Future of Regulatory Takings," how could we resist attending?

If you missed it, it was not recorded unfortunately. But stay tuned for the full published symposium issue which shall include all of the articles and other pieces the speakers presented that day.

PLF's Ethan Blevins kicked off the day by
urging the speakers and the audience to
"make property rights cool again."

Brian Hodges (PLF) and Amy Boulris (Gunster)
on land use conditions, exactions, and unconstitutional conditions.

Circuit Judge (ret.) (and California Supreme Court Justice),
Hon. Janice Rogers Brown presented the keynote address
and responded to participants' questions.

Lawprof Donald Kochan (GMU), Lawprof Adam MacLeod (St. Mary's),
and Sam Spiegelman (Citizen Action Def. Fund)
started the day off with "Fixing the Text -
How We Can Better Approach Regulatory Takings."
Moderator: Judge Andrew Brasher (CA11).

The day's final program was "Takings on the Ground - Applying the
Takings Tests in Challenging Scenarios" with
lawyer William Shadbolt (Washington Bus. Properties Ass'n),
Lawprof Eric Claeys (GMU), and Michael Berger (Manatt) (aka Big Brother).
Moderator: Judge Ryan Holte (Court of Federal Claims).

Hawaii Dirt Lawyers: Don't Miss "Property Rights & Regulatory Takings" CLE At The HSBA Convention (In-Person & Webcast)

Hawaii lawyers (and those barred in the 808), take note: On October 21, 2024, the Hawaii State Bar Association will hold its annual Convention, and as always there's a full lineup of CLE programs so you can meet your MCLE requirements.

Thanks to the Real Property & Financial Services Section, there's a significant dirt law component. First, there's "Property Rights and Regulatory Takings" the program on which we are presenting along with Dwight Merriam and lawprof Shelley Saxer. Here's the official description:

This course will provide a survey of property rights and regulatory takings with an emphasis on recent decisions from the United States Supreme Court. Panelists include distinguished faculty and practitioners that will address impact fees, development rights, taking claims, rent controls, and other current issues.

Following us will be a program on "Land Use Conditions" with Cal Chipchase, Brad Saito, and a lawyer from the State of Hawaii Attorney General's office:

This course will provide a survey of the regulatory systems that govern land use in the State of Hawaii. Panelists will discuss regulatory frameworks at the state and city level together with recent legal developments from the Hawaii Supreme Court

You can attend in-person or remotely. This page has the registration information as well as more details and bios of the speakers.

As Jack Lord used to say: "Be here, Aloha."

CA9: Unannounced Inspections As Condition Of Falconry License Are Subject To Nollan/Dolan Challenge

On the surface, the U.S. Court of Appeals for the Ninth Circuit's opinion in Stavrianoudakis v. U.S. Fish & Wildlife Svc., No. 22-16788 (July 25, 2024) is about Article III standing (a highly technical gateway issue that is very federal courts wonky).

But taking a deeper look offers an insight into ways other than the usual Fifth Amendment arguments for protecting property rights. [Before we go on, a disclosure: this is one of our cases, argued and won by PLF colleague Daniel Woislaw].

This is a case involving the sport of falconry. Can't say that we knew too much about that -- until maybe the occasional movie -- until this case. First (and this may not come as a surprise to you who have been observing what things the government finds worthy of regulations and licensing), did you know that every state government except Hawaii has adopted regulations governing falconry? Nor did we, until now. Second, there used to be "parallel federal and state permitting systems," but the feds backed out in light of every state doing it; now, once the feds certify a state's regulations satisfy federal standards, the feds are out. 

California's regulations are one of those, and require that falconers renew licenses annually:

Consistent with federal requirements, California authorizes unannounced inspections: CDFW “may conduct unannounced visits to inspect facilities, equipment, or raptors possessed by the licensee, and may enter the facilities of any licensee when the licensee is present during a reasonable time of the day and on any day of the week” and “may also inspect, audit, or copy any permit, license, book, or other record required to be kept by the licensee under these regulations at any time.” Cal. Code Regs. tit. 14, § 670(j)(3)(A).

Slip op. at 8. To get a California license, a falconer must certify that he or she agrees that the premises, equipment, or the falcons themselves "are subject to unannounced inspection." If you don't agree, you are not getting a license or a renewal.

Several falconers and the American Falconry Conservancy sued the feds, and state officials in federal court, challenging past unannounced inspections under the First, Fourth, and Fourteenth Amendments, and the Administrative Procedures Act. The district court dismissed for lack of standing, but granted leave to amend the Fourth Amendment claim.

Here's the breakdown of the operative second amended complaint's claims against the unannounced-and-warrantless-inspections scheme:

• A facial 4A claim: conditioning a license on the licensee's agreement to forego his rights is an unconstitutional condition.
• The same unconstitutional conditions claim, but as-applied to these plaintiffs.
• The scheme allowing warrantless searches facially violates 4A.
• Same claim, as-applied.
• A co-habitant of one of the falconers asserted the scheme violates her 4A rights.
• APA claim.

The district court didn't find the amendments did much of anything and dismissed all 4A claims without leave to amend. The threat of future inspections was too speculative, and the Conservancy lacked associational standing.

A 2-1 panel of the Ninth Circuit reversed, in part. The court held that the falconers have standing to challenge the California officials, but not the Fish & Wildlife Service. We're not going to explore in depth the court's analysis (you can read that yourself, and we recommend you do so - start on page 12 of the slip opinion).

The most interesting stuff in the opinion (in our opinion) is the court's description of the claims. Yes, the government can impose conditions on the conferral of some benefit, but those conditions cannot include the relinquishment of a constitutional right. Slip op. at 13. We are used to seeing this in the land-use exactions context, where the right to compensation is the right a plaintiff is compelled to surrender. But here, the constitutional rights in the warrant requirement in the Fourth Amendment:

We have recognized that the unconstitutional-conditions “doctrine is especially important in the Fourth Amendment context” because, “[u]nder modern Fourth Amendment jurisprudence, whether a search has occurred depends on whether a reasonable expectation of privacy has been violated.” United States v. Scott, 450 F.3d 863, 867 (9th Cir. 2006) (citing Katz v. United States, 389 U.S. 347, 361 (1967) (Harlan, J., concurring)). “Pervasively imposing an intrusive search regime as the price of [a discretionary government benefit], just like imposing such a regime outright, can contribute to the downward ratchet of privacy expectations.” Id. Accordingly, the doctrine applies when the government attempts to “exact waivers of rights as a condition of benefits, even when those benefits are fully discretionary.” Id. at 866–67.

Id.

The injury for standing purposes occurs "when the government succeeds in pressuring the plaintiff into forfeiting a constitutional right in exchange for a benefit or the government withholds the benefit based on the plaintiff's refusal to surrender a constitutional right." Slip op. at 14 (citing Koontz). It's the dirty demand that is the problem, not "whether the government ultimately succeeds in pressuring someone into forfeiting a constitutional right[.]" Id. See also slip op. at 16 ("Therefore, the Falconers’ alleged injury in fact is the forced choice: retention of their Fourth Amendment rights or receipt of a falconry license, which is required to lawfully practice falconry.").

That being so, the plaintiffs have standing to bring such a claim against the California officials:

The question presented here is whether simply agreeing to submit to those inspections, in the absence of an actual inspection—see Part II.B—amounts to the relinquishment of Fourth Amendment rights. We conclude that it does. By successfully applying for a falconry license, the Falconers certify that they will forego a claim to Fourth Amendment protections. An inspection may not occur or, if it does, it may not violate the Fourth Amendment because it is reasonable. But the idea that the Falconers surrender nothing unless and until an unlawful inspection occurs—that California extracts a blanket waiver that is, in fact, entirely superfluous—defies logic. Rather, we take the regulation to mean what it says, and agreeing to unannounced, warrantless inspections without any consideration of the reasonableness of such inspections implicates Fourth Amendment rights.

Slip op. at 15.

The court did not view the claims the same way as against the USFWS, and concluded these claims are not ripe. The feds delegated falconry licensing to California, so the plaintiffs have not suffered an injury directly traceable to the feds. And the falconers have not sought, nor have they been granted, a federal license (indeed, they could not do either of these because as noted above, the feds no longer process falconry licenses, only the states).

The court affirmed the dismissal for lack of standing the as-applied warrantless search claims, primarily "because they have not alleged that they were subject to warrantless inspection under the challenged regulations." Slip op. at 22. Unlike the unconstitutional conditions claims, the court viewed the wrong here as not merely being subject to the requirement, but on the government actually making a warrantless search.

Slip op. at 23.

One judge concurred in part and dissented in part, agreeing that the lack-of-standing dismissal was ok because there's not been any actual warrantless searches, but arguing that the "Falconers have standing to challenge the state regulations under the unconstitutional-conditions doctrine[.]" Slip op. at 29 (S.R. Thomas, J., dissenting in part). The panel majority broke new ground in focusing on the demand as the constitutional wrong: "[i]ndeed no federal court has held that the act of giving consent itself constitutes injury absent an actual or imminently impending search. The majority’s assertion that Falconers are injured 'every time they renew their licenses,' is unsupported by precedent. Id. at 33 (S.R. Thomas, J., dissenting in part).

This case is a good reminder that there's more than one way to skin the property rights cat. Yes, we focus on the Just Compensation requirement. But we should not overlook other ways to protecting private property rights.

Stavrianoudakis v. United States Fish & Wildlife Service, No. 22-16788 (9th Cir. July 25, 2024)

Final Decision Takings Ripeness Is Based On All Circumstances, Not Hard-And-Fast Requirements (Read That Again: A Factual Question)

We suggest those of you interested in takings ripeness -- here, the so-called "final decision" requirement -- take a quick gander at the Texas Court of Appeals' opinion in City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (July 2, 2024).

We won't go into the details, except to say that a property owner developing its land entered into an agreement with the city, under which the owner would grant a drainage easement to the city to alleviate citywide flooding, while the city was obligated to construct drainage improvements. When the owner submitted a plan, the city instructed it to "provide additional drainage improvements on the property." Slip op. at 2. Not so fast, said the owner: the city, not me, is on the hook for these additional improvements. If you condition approval of my development plans on me providing more drainage stuff, that's a taking (what the court calls "an investment-backed or regulatory taking," which we assume means Texas's versions of Penn Central or Nollan).

The city asserted these claims were not ripe because the owner had not submitted an application, and the city consequently had not denied said application. No application, no decision. "Buda argues that a final decision typically requires both a rejected development plan and the denial of a variance from the controlling regulations." Slip op. at 4. The owner countered by pointing out the fact that at the city's lawyer's "direction," the city stopped the application process.

While it is true that in many cases, an application, denial, and variance are what ripen a claim, That's true, the court concluded, but the application rule is merely the "usual" rule, and not a requirement in every case:

"'[U]sually' does not imply a hard and fast rule but, rather, a determination dependent on relevant circumstances. Indeed, futility may be one of those circumstances, that is, requiring a complaint to engage in futile ventures. Thus, a 'final decision' may take different forms. And, we cannot see why exclusion from the castle should be less definitive because it came from the captain as opposed to the king. It is not farfetched to conclude that directives from the City's legal counsel to those at the gate could be found sufficient to render futile additional attempts by Edificios to gain entry into the realm of the city council. And, to the extent we have an affiant attesting that such directives were made, there exists a question of fact pretermitting our adoption of the City's position on ripeness.

Slip op. at 5-6 (citations omitted).

The court emphasized that these are factual disputes, not legal questions to be resolved at the pleadings/jurisdiction stage: "the issue as presented by Buda sounds more like an attack on the merits of Edificio's cause of action rather than a jurisdictional inquiry. As said previously, consideration of the underlying merits of the claim generally lies outside the scope of review when address pleas to the trial court's jurisdiction." Slip op. at 6-7.

The court concluded: "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter." Slip op. at 7.

It's good to see at least one court that "gets it." In many cases where a takings plaintiff's complaint alleges that it received some kind of final decision from the government about development plans -- even where that decision is not via the government's claimed official or usual process for eliciting such decisions -- it should be a factual question, not one for the court's pleading-stage gatekeeping.

If a factual allegation is Twiqbal-plausible that the government has made a decision such that the court on the merits can measure the owner's property losses – a determination that should not be based on any judgment call on the merits of the claim at this stage, but only on whether the facts as alleged are within the realm of possibility, that should be enough to get to the next stage.

It may be, in the court's view, a weak claim. But don’t weak - but plausible - claims have the right to move past pleadings? The purpose of 12(b) screening is to get rid of cases where there’s no actual controversy ((b)(1) jurisdictional ripeness), or those where the alleged facts are fantastic and don’t add up to a claim ((b)(6) (i.e., the complaint pleads only a diminution of value and doesn’t allege anything about character or expectations). It is the function of Rule 56 summary judgment to weed out those claims that are factually weak and should not waste judicial resources with a trial. Not, as many courts conclude, Rule 12 dismissal.

As the Texas court noted, "[s]uch review will happen, if it happens at all, after the trial court has been presented with a fully developed record and comes to a final substantive judgment on the matter."

Study this one.  

City of Buda v. N.M. Edificios, LLC, No. 07-23-00427-CV (Tex. Ct. App. July 2, 2024)

New Article - "Sheetz v. County of El Dorado: Legislatures Must Comply with the Takings Clause" (Brian Hodges & Deb La Fetra)

Check this out: our Pacific Legal Foundation colleagues (Brian Hodges and Deborah La Fetra we on our Sheetz SCOTUS team), have posted a new scholarly piece on SSRN, "Sheetz v. County of El Dorado: Legislatures Must Comply with the Takings Clause."

Here's the Abstract:

For more than 30 years, the Supreme Court has recognized that building permit conditions requiring a dedication of property to the public implicate the Fifth Amendment’s Takings Clause and are therefore subject to the unconstitutional conditions doctrine as set out by Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). But for nearly as long as the Nollan/Dolan doctrine has been in place, state and lower federal courts have divided on the foundational question of whether the doctrine applies equally to all branches of government, or if it applies only to administrative exactions imposed by agencies on an ad hoc basis. See, e.g., California Bldg. Indus. Ass’n v. City of San Jose, 136 S. Ct. 928, 929 (2016) (Thomas, J., concurring in denial of certiorari) (acknowledging a decades-long split of authority); Parking Ass'n of Georgia, Inc. v. City of Atlanta, 515 U.S. 1116, 1117-18 (1995) (recognizing that the split of authority raises an important question of constitutional law).

The United States Supreme Court’s unanimous decision in in Sheetz v. County of El Dorado settled this split of authority by ruling that the unconstitutional conditions doctrine applies to all branches of government, including the legislature. 601 U.S. 267, 280 (2024). Although the holding drew support from the full Court, the opinion drew three concurring opinions commenting on additional questions may need to be determined on remand or in future litigation. Id. at 280-84.

This article reviews the state of the law regarding Nollan/Dolan’s special application of the doctrine of unconstitutional conditions both before and after the Sheetz case and discusses the questions posed by the concurring opinions—i.e., whether an impact fee is an exaction subject to Nollan and Dolan and whether class-based exactions should be held subject to the same heightened scrutiny, “essential nexus” and “rough proportionality” tests as all other exactions. The article then discusses the decision’s implications on other emerging takings issues, including whether sovereign immunity can bar property owners’ recovery of just compensation and the cognizability of judicial takings claims.  

Download the article here.

Highly recommended.

Hawaii: Permit Conditions Not Subject To Nollan/Dolan When There's No Taking Claim

A short one (for us takings types) from the Hawaii Supreme Court.

In In re Surface Water Use Permit Applications, No. SCOT-21-0000581 (June 20, 2024), the court considered a challenge to the State of Hawaii Commission on Water Resource Management's authority to impose conditions on a water permit. The applicant asserted that the nexus and proportionality requirements of Nollan and Dolan must have been complied with.

No, the court concluded, those standards only apply where there's a takings claim present. And there's no takings claims here:

WWC relies on Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), to argue that any conditions the Commission attaches to its SWUP for system losses must relate to those losses. WWC attempts to frame Nollan and Dolan as providing a “clear statement of the unconstitutional conditions doctrine,” but fails to specify which constitutional provisions the conditions violate and of which constitution. Nollan and Dolan specifically apply to takings claims. WWC is not asserting a taking. Thus, WWC’s reliance on them necessarily fails.

Of course, the Commission cannot condition SWUPs on anything it wishes; as WWC states, those conditions must relate to the Commission’s jurisdictional powers. That is the applicable limit on the Commission’s powers – not Nollan and Dolan. And as explained above, the conditions here are within the Commission’s broad jurisdictional powers to implement and administer all aspects of the Water Code.

Slip op. at 129-130 (footnotes omitted).

How can we call a 134-page opinion "short?" Well, the good stuff is only at the tail end, and only a couple of pages long, and was just one sidebar issue in a whole panoply of arguments.

What about the rest of it? No surprises there: like many Hawaii Supreme Court opinions on water rights and the public trust, it is is gargantuan, detailed, and the Commission fares no better in this case than it does in practically every other case it is involved in in this court (it loses).

Unless you fancy yourself a 808 water rights maven, you can skip all but the good stuff.

In re Surface Water Use Permit Applications, SCOT-21-0000581 (Haw. June 20, 2024)

Vermont: Environmental Court Doesn't Have Jurisdiction To Determine Property Rights, But We're Going To Find No Cedar Point Taking Anyway

DJK was adding a bedroom to an existing residence and needed a wastewater permit from Vermont's environmental agency. The agency has a "presumptive isolation zone" around potable water supplies and septic systems in which a property owner is presumed to be barred from doing anything sewage related. In this case, the isolation zone for DJK's property crossed over onto the property of their neighbors, the Crowleys.

The agency granted DJK the permit, which contained a provision that not only no sewage-related construction could take place in the isolation zone, but that "[n]o buildings" could be construction which "might interfere with the operation of a wastewater system or potable water supply[.]" Remember, the isolation zone was located partially on the Crowley property.

The Crowleys were not very appreciative, so appealed (to a Vermont trial court sitting as the Environmental court). They argued that the permit was invalid because it worked a taking of their land, imposed an unconstitutional condition, and they had not received notice and an opportunity to be heard before the permit was issued.

The Environmental court granted the agency summary judgment, concluding the court lacked jurisdiction over what it called the "property-related issues and rights." But the court continued and considered if the permit imposed an uncompensated taking ("The court did consider if 'the Rules, as applied to [neighbors] by way of the Permit, amount[ed] to a taking due to the State’s placement of potential development limitations on their propert[y].'"). We're not all that clear on the distinction being drawn and how a court without jurisdiction can make a ruling on the substance of the claim, but there it is. The court concluded the permit did not impose a physical invasion taking, and the Crowleys got all the process they were due.

In In re DJK, LLC, No. 22-AP-269 (June 14, 2024), the Vermont Supreme Court affirmed. The court rejected the Crowleys' assertion that the case "involves the legality of permit conditions," which would mean that the Environmental court had jurisdiction under the Vermont statute which grants jurisdiction over such claims. Slip op. at 10.

Not so, held the court, "[t]he fact that the Environmental Division [of the trial court] has authority to consider permit appeals does not authorize it to adjudicate private property disputes, such as the existence of easements. The civil division, not the Environmental Division, has jurisdiction over such matters." Slip op. at 11. This is a "private property dispute," slip op. at 12, and thus no jurisdiction. Slip op. at 14 ("Neighbors offer no persuasive authority in support of their assertion that the Environmental Division had jurisdiction to determine if the permit created an easement in their property and we reject their first claim of error.").

Well, okay then. End of this story, no? If the Environmental division doesn't have jurisdiction but the civil division does, the Crowleys can go file their constitutional claims there, right? You might think a "no jurisdiction" conclusion would mean that any rulings by the Environmental division would be ultra vires, yes? Or maybe not:

¶ 35. As referenced above, the Environmental Division did consider if the permit condition effected a taking under the analysis in Cedar Point Nursery, that is, whether the regulation authorized a physical invasion of their property. This was consistent with its authority to consider “property-related issues and rights . . . within the scope of the regulations governing the permit application.”

Slip op. at 14-15.

Wait, what? To get to this conclusion, the Supreme Court had to make a very nuanced distinction: the Environmental court didn't have jurisdiction to consider the constitutionality of the agency's actions, but nonetheless could reach the conclusion that the permit did not impose a physical invasion taking, and this is consistent with its jurisdiction to consider property issues "within the scope of the regulations governing the permit application." See slip op. at 15 ("¶ 37. Neighbors fail to show that the court erred in finding the absence of any physical invasion here.").

There might have been an easement created by the isolation zone (and that is a matter beyond the jurisdiction of the Environmental court), but the court concluded that there hasn't yet been an "actual physical invasion" of the Crowley's property. Slip op. at 16. 

If you can figure this one out in a way that makes sense, please let us know.

In re DJK, LLC, No. 22-AP-269 (Vt. June 14, 2024)

"Breaking Down the Supreme Court Ruling on Permit Fees" (Thursday, Apr. 25, 2024, 4pm ET/1pm PT)

Be sure to join our Pacific Legal Foundation colleagues Brian Hodges and Larry Salzman, and Paul Beard (arguing counsel) and Chance Weldon (Texas Public Policy Foundation) tomorrow, Thursday, April 25, 2024, at 4pm ET for a free webinar on Sheetz v. El Dorado County, the Supreme Court's recent decision holding that all permit conditions are subject to the nexus and proportionality tests of Nollan and Dolan.

Here's the description:

Pacific Legal Foundation just won its 18th Supreme Court victory! Join us for a virtual discussion to learn more about the case, Sheetz v. County of El Dorado, and how it helps secure property rights (and lower housing costs) for everyone. 

When George Sheetz wanted to build a modest manufactured home on the property he bought in El Dorado Country, California, the government told him he was going to have to pay a “traffic impact fee” of more than $23,000 in exchange for a building permit. Even worse, the fee would go toward projects that were not tied to the actual impact of George’s home.  

George challenged the fee as an unconstitutional abuse of the permitting process. On April 12, the Supreme Court sided with George in a unanimous decision. At this post-victory discussion, attendees will hear from Paul Beard, the former PLF attorney now at Pierson Ferdinand who argued George’s case before the Court. You’ll also hear from PLF attorney Brian Hodges, who worked on George’s case, and Texas Public Policy Foundation’s Chance Weldon as they break down the Sheetz decision and its significance for property rights and housing costs. 

Register here (free)!

 

Our thoughts on the decision here ("Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It").

Sheetz pt. II: The Concurrences - Does Nollan/Dolan Operate Differently When Exaction Affects A Class?

Note: this is the second of our posts on the recent Supreme Court opinions in Sheetz v. County of El Dorado, the case in which the unanimous Court held that exactions imposed by legislation are not exempt from the essential nexus (Nollan) and rough proportionality (Dolan) standards. Here's our first post, which covers the case and the main opinion ("Sheetz pt. I - 'Radical Agreement' At SCOTUS: 'Your Money Or Your Rights' Isn't OK Just Because A Legislature Does It").

[Disclosure: this case is one of ours.]

In this post, we cover the three very short concurring opinions.

* * * *

The Court took no position on whether the County's traffic impact fee has an essential nexus to the Sheetz development, or whether $23 grand is roughly proportional to any traffic his proposal might be responsible for. For this and more, the Court remanded the case. Notably, the Court also did not decide whether "a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development." Slip op. at 9-10.

Now that the Court has expressed unanimity on the Question Presented in Sheetz (does the government have the unfettered ability to demand "the goodies" simply because a property owner needs the government's approval to make use if his or her land? No.), let's take a look at the three concurring opinions. 

Sotomayor & Jackson: Hands Off Taxes!

Justice Sotomayor joined by Justice Jackson, wrote separately to restate their agreement with the narrow holding (answering the Question Presented and only the Question Presented) that legislatively-imposed exactions are subject to Nollan and Dolan.

But they noted that this case assumed the "predicate" inquiry that "government could not have constitutionally ordered the person asserting the claim to do what it attempted to pressure that person into doing." Concurring op. at 1 (citing Koontz). thus, "[t]he question presented in this case did not include that antecedent question: whether the traffic impact fee would be a compensable taking if imposed outside the permitting context[.]" Concurring op. at 2.

What we think they are getting at is that straight-up government requirements that some, or all, persons pay money for something (also known as taxes or sometimes fees), are not subject to nexus or proportionality (or at least not in the same way as property exactions are). Fees and taxes may be subject to other limitations, but they are not, generally speaking, evaluated as "takings." 

It probably shouldn't be surprising that Justice Sotomayor concurred on this basis, since during oral arguments, she seemed particularly concerned with the line between exactions, fees, and taxes.

Gorsuch: Broadly-applicable exactions are no different than parcel-specific exactions

Justice Gorsuch preemptively addressed a question that was bandied about at oral arguments, but that the entire Court determined was not presented by the case (so the majority opinion avoided doing more than mentioning it):

The Court notes but does not address a separate question: whether the Nollan/Dolan test operates differently when an alleged taking affects a "class of properties" rather than "a particular development."

Concurring op. at 1. He answered his own question: "But how could it?"

He goes on to note that "[n]othing about" the Nollan/Dolan test "depends on whether the government imposes the challenged condition on a large class of properties or a single tract or something in between." Concurring op. at 1-2.

Short story: there's no reason to not apply the Nollan/Dolan tests to "class" exactions.

Kavanaugh, Kagan, & Jackson: class exactions subject to different nexus and proportionality tests

Three Justices expressed a slightly different view, noting that "today's decision does not address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new development through reasonable formulas or scheduled that assess the impact of classes of development rather than the impact of specific parcels of property." Concurring op. at 1. The three wrote to note that these type of exactions may be subject to different standards, and that the Court did not address or decide that issue. Big hint for those of us who are asking "what might be next?"

Tropebusters! 

What to make of Sheetz? It does resolve, fully and finally, the longstanding question of whether legislatively-imposed exactions are just plain old land use regulations subject to only the rational basis test. Answer: no, they aren't. Does Sheetz leave open some follow-on questions? It seems so to some Justices, at least.

We do know that several longstanding tropes of land use law generally -- and exactions  doctrine specifically -- seem to be gone, while a couple of others may have continuing life:

• Land vs. money? Demanding money or demanding land...all the same thing.
• Labels not controlling. Relatedly, labeling a condition as an "exaction" or "in lieu" fee doesn't matter. Or "legislative" vs "administrative." The opinion refers to the County's traffic impact fee as a "permit condition," an "impact fee." What counts is what the condition does, not what someone calls it. 
• Ministerial vs discretionary. This longstanding distinction in land use and administrative law did not seem to carry a lot of analytical weight with the Court. The opinion referred to "permit conditions," here a condition on a presumably ministerial building permit. We always thought that conditions can only be placed on discretionary approvals, not on things like building permits that are "must issue" when the application conforms to the technical requirements of the governing code.
• Judicial Takings. Fans of the doctrine take note: all nine Justices just signed on to the notion that "there is 'no textual justification for saying that the existence or the scope of a State's power to expropriate private property without just compensation varies according to the branch of government effecting the expropriation." Slip op. at 7 (quoting Stop the Beach Renourishment). Yes, the STB plurality opinion just garnered all nine Justices. Justice Scalia lives; how much wood could a woodchuck chuck!

Sheetz v. County of El Dorado, No. 22-2074 (U.S. Apr. 12, 2024)

Sheetz pt. I - "Radical Agreement" At SCOTUS: "Your Money Or Your Rights" Isn't OK Just Because A Legislature Does It

Guess where we stopped for coffee this morning?
(A reminder: this case has nothing to do
with the convenience store.)

Note: this is the first of two posts on the recent Supreme Court opinions in Sheetz v. County of El Dorado, the case in which the unanimous Court held that exactions imposed by legislation are not exempt from the essential nexus (Nollan) and rough proportionality (Dolan) standards. Here's the second post, which covers the concurring opinions.

[Disclosure: this case is one of ours.]

In this post, we cover the background, and the Court's unanimous opinion.

* * * *

Does the government have the unfettered ability to demand "the goodies" (as one municipality's chief land use planner famously called them in the 1980s), simply because a property owner needs the government's approval to make use if his or her land?

That's the issue the Supreme Court agreed to resolve (or more accurately, clarify) in in Sheetz v. County of El Dorado, No. 22-1074 (Apr. 12, 2024).

Confessing Judgment: Game over man, game over!

After oral arguments a bit over three months ago, the Court's unanimous opinion by Justice Barrett issued last week wasn't too hard to predict. Especially because during the arguments the advocate for the County expressly acknowledged that there was "radical agreement" on the Question Presented in the case:

The question presented is whether a permit exaction is exempt from unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

The unanimity of the resulting decision reflects that with the County's acknowledgement on the record, it was all over but the shouting: the Court, as predicted, held that a blanket exaction (in this case a traffic impact fee) isn't exempt from the "essential nexus" and "rough proportionality" standards that have long governed exactions imposed ad hoc. See slip op. at 1 ("The Takings Clause does not distinguish between legislative and administrative permit conditions.").

Which leads to an obvious question: if the County was going to confess judgment by agreeing that legislative exactions are not categorically exempt -- a conclusion it contested in the lower courts -- why did it let the case get to decision stage at the Supreme Court? We're not at all sure. [Disclosure: this case is one of ours.]

Anyway, with that question asked (but not answered), let's see what the entire Court thought about this, and why.

Laying the Foundation: Nollan, Dolan, (and Koontz)

In 1987, the Court held that before the government can force a property owner into the choice between giving up something in return for government land use approvals, there must be an "essential nexus" between the demand and the owner's proposed use of land. Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987). And in 1994, the Court refined the requirement by recognizing the need for a "rough proportionality" between the burdens the owner's proposed use is predicted to put on the public, and the magnitude of the government's demand. Dolan v. City of Tigard, 512 U.S. 374 (1994). In Koontz v. St Johns River Water Management Dist., 570 U.S. 595 (2013), the Court further refined the doctrine by holding that demands for money are subject to the nexus and proportionality requirements as much as demands for land.

The close nexus and rough proportionality requirements were designed to check the government's temptation to use the land use approval process as an opportunity to leverage its power to regulate in furtherance of the public health, safety, welfare, or morals to exact land, money, or other property out of the applicant.

These requirements were motivated primarily by two concerns. First, if the government wants land or other property from an owner, it has the means to do so -- eminent domain, which comes with the requirement to provide the property owner just compensation; it should not use the land use regulatory process to get by regulation for free what it is required to pay for by a compensated taking. Second, there is something unseemly about the government demanding that an owner give up one of her constitutional rights (the right to compensation for a taking of property) as a condition of exercising another constitutional right (the right to make reasonable use of land). The government has no business forcing people into these kind of "money or your rights" choices.

But many lower courts refused to understand how broadly the close nexus and rough proportionality requirements applied, and for the longest time, they were split. Some held that Nollan and Dolan's requirements applied any time the government conditioned land use permits on either a surrender of land or money. Others, like California, held that unless the government was demanding the donation of land, and did so on a case-by-case basis as an exercise of discretion and not as a product of a legislative-imposed ministerial requirement, that nexus and proportionality were not required.

With a longstanding lower court split, the stage was set for Supreme Court review.

California Courts: We Don't Ask Whether The County's $23k Traffic Impact Fee Is Related, or Proportional, to Sheetz's Proposed Home

The facts of the Sheetz case are straightforward. George and Mrs. Sheetz, property owners in unincorporated rural El Dorado County, California, sought a building permit to "build a modest prefabricated house on the parcel, with plans to raise their grandson there" on their residental-zoned land. Slip op. at 3. The County was okay with issuing the permit, but only if Sheetz first paid the County's $23,420 traffic impact fee.

The impact fee was determined by the preset fee schedule in the County's General Plan, and not on a determination that the Sheetz home would increase the County's traffic burdens. California law treats the County's General Plan as legislation. In recent years, the area has seen dramatic growth, with related demands on infrastructure, the County uses the traffic fees to fund improvements to county roads. The rates for the traffic impact fees are fixed, and set by the schedule:

The fee amount is determined by a rate schedule, which takes into account the type of development (commercial, residential, and so on) and its location within the County. The amount is not based on "the cost specifically attributable to the particular project on which the fee is imposed."

Slip op. at 2 (citation omitted).

The General Plan prohibited the County from issuing building permits without collecting the fee, so "Sheetz paid the fee under protest and obtained the permit." Slip op. at 3. He filed suit in state court for a refund, arguing inter alia, that the County's conditioning the issuance of a building permit was an unlawful exaction of money, because the County had not demonstrated either a close nexus between the requested building permit for a "modest prefabricated house" and any additional traffic burdens this use of the property created in the County, or a rough proportionality between the scheduled amount of $23k and those same supposed traffic burdens.

The trial court prohibited Sheetz from asserting the claim. Under California law, the Nollan/Dolan requirements apply only "to permit conditions imposed 'on an individual and discretionary basis[,]'" and do not allow for any kind of judicial inquiry into nexus or proportionality when the condition is imposed on every applicant by broadly-applicable legislation. Slip op. at 3 (citation omitted).

The rule in California (and some other other jurisdictions) is that broadly-applicable rules like this, imposed ministerially on everyone and not individually, are just plain-old land use legislation, to be examined by courts (like zoning regulations) only under the rational basis test. And you know what that means: nearly everything passes muster.

As noted above, other courts went a different way. North Carolina, for example. See slip op. at 4 & n.3, where the opinion lays out a part of the lower court split of authority.

A Regulatory Takings Primer: the Right to Just Compensation and the Police Power "seem more like in-laws than soulmates"

The next portion of the opinion is a worthy read if you want to get an overall flavor of what all nine Justices of the Court think about regulatory takings today. Yes, the theory has been recognized as a federal constitutional doctrine for more than a century, but any insights we get into how the current Justices view the doctrine are going to be helpful. And there are a lot of clues embedded in Justice Barrett's opinion:

• Public Use. The opinion starts off with the idea that "[w]hen the government want to take private property to build roads, courthouses, or other public projects, it must compensate the owner at fair market value." Slip op. at 4. Focus on the examples the opinion lays out. All are "classic" public uses, and the opinion conspicuously avoids citing Kelo, its most recent eminent domain decision, where the project involved taking Kelo's property and turning it over to another private owner. So maybe that omission is a hint that Court would be open to revisiting Kelo's very reviled opinion.
• Takings law spreads the cost. The opinion next lays out the Armstrong rationale: the point of the Takings Clause and the requirement that government "pay for what it takes," is to avoid focusing the cost of public burdens on individual property owners. Id. Good to know that all nine Justices understand the big vibe of both eminent domain and de facto takings.
• De facto takings by over-regulation. Next, the opinion highlights the essential tension behind the regulatory takings doctrine and straight up eminent domain (what the Chief Justice calls an "upfront taking;" see PennEast Pipeline Co. v. New Jersey, 594 U.S. ___ (2021)). The essential question is when does an exercise of regulatory power "go too far" such that it has the same effects on the property owner's rights as an exercise of eminent domain?
• Per se regulatory takings. The Sheetz opinion noted the government's "substantial authority to regulate land use" on one hand, and on the other the various rules the Court has established for when that authority goes too far and triggers the obligation to pay compensation. Slip op. at 4-5. Things like when a regulation physically appropriates property, or "otherwise interfere[s]" with the owner's right to exclude others = easy analysis, compensation always required. 
• Euclid and land-use regulations. But "different rules apply" when government "merely restrict[s] how land is used." Slip op. at 5.
• Substantially advance? You takings mavens can be forgiven for a bit of an inside baseball chuckle for how the opinion lays out those different rules. The Court described the regulatory takings test thusly: "'[T]he Fifth Amendment is violated when land-use regulation does not substantially advance legitimate state interests or denies an owner economically viable use of his land[.]"” Id. (quoting Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1016 (1992)  (internal quotation marks omitted).
• Whoa!  Has Agins been resurrected? (Recall that in Lingle, the unanimous Court rejected Agins's "substantially advance" standard as a regulatory takings test.) No, we doubt that this was intended to bring back Agins. But this also doesn't seem to be merely a (mis)citation to the takings test as set out in Lucas (1994) before the Court clarified it in Lingle (2005).
• Character of the government action. Instead, we're viewing the Court's recitation of the regulatory takings test that "[a] use restriction that is 'reasonably necessary to the effectuation of a substantial government purpose' is not a taking unless it saps too much of the property's value or frustrates the owner's investment-backed expectations[,]" as meaning that Penn Central's "character of the government action" factor requires that regulation be reasonably necessary for the effectuation of a substantial government purpose." That isn't the rational basis test that many courts currently apply when asking about the character of the government action, is it? If so, this is a major clarification that deserves more attention.  
• Double whoa! Justice Barrett also treats Penn Central as a disjunctive test ("or frustrates the owner's investment-backed expectations"). That's a correct view of the Penn Central test we think, but many (many) lower courts have not received the message and treat it as a "one strike and you're out" (conjunctive) rule and not a series of factors to be weighed by a jury -- where a single factor could be dispositive, but also where failing to convince on a single factor is not an automatic loss. See Hodel v. Irving, 481 U.S. 704 (717) (1987) (proof of a single Penn Central factor alone could be sufficient to show a taking; in the case, "the character of the Government regulation ... is extraordinary"). 
• Very cheeky. The money quote in this part of the opinion might just be Justice Barrett's assertion that the relationship between the police power to regulate the use of property, and private property owners' right to just compensation is "more like in-laws than soulmates." Slip op. at 4. Probably not BFFs, but more like frenemies, Your Honor? We recommend lawprof Josh Blackman's take on this turn of the phrase ("Justice Barrett on the Takings Clause and the Police Power").

On To Exactions...Err "Permit Conditions"

The special application of the takings rules to permit conditions is "more complicated."

The opinion starts off with the premise that if the government can deny a building permit for some "'legitimate police-power purpose,' then it can also place conditions on [a grant of] the permit that serve the same ends." Slip op. at 5 (citation omitted).

[Sidebar: no one has adequately explained to us how the County could condition a building permit -- the classic example of a "must issue" ministerial permit -- on anything but the application's failure to comply with the Building Code. An application for a building permit does not involve any exercise of the government's discretion, at least in our experience.]

Here, if Sheetz's home would "substantially increase traffic congestion," then the County could legitimately condition its approval of the building permit on Sheetz's willingness to pony up land or money for road improvements. This, according to the Court is "the hallmark of responsible land-use policy." Id. (citation omitted). When this situation exists, then the government is within its authority if it tells the owner that it must accept the condition or else no government approvals will be forthcoming.

But (and this is a significant "but"), "[t]he bargain takes on a different character when the government withholds or conditions a building permit for reasons unrelated to its [legitimate] land-use interests." Slip op. at 5-6. (Remember, the County's police power interests here are limited in the Court's view to traffic mitigation.) In such a case, the condition isn't being employed to further the health, safety, or welfare of the public (traffic mitigation), but takes on the character of "an out-and-out plan of extortion[,]" an "abuse of the permitting process." Slip op. at 6 (citation omitted). Show us the money!

After reciting the Nollan "essential nexus" and Dolan's "rough proportionality" requirements, the opinion next noted that the "nexus requirement ensures that the government is acting to further its stated purpose, not leveraging its permitting monopoly to exact private property without paying for it." Id. The rough proportionality requirement serves the same function, but from a slightly different angle: "[a] permit condition that requires a landowner to give up more than is necessary to mitigate harms resulting from new development has the same potential for abuse as a condition that is unrelated to that purpose." Id.

Wait, since when can legislation be subject to more exacting judicial review than the oft-applied rational basis test? After all, California law considers the County's General Plan to be legislation, adopted by a legislative body. Why isn't this treated like other legislation? The opinion stated it succinctly:

Nothing in constitutional text, history, or precedent supports exempting legislatures from ordinary takings rules.

Slip op. at 7.

We're going to emphasize the "takings rules" part of that sentence because it highlights what we've always thought was the problem with the analysis applied by those lower courts which focused on the form or source of the condition (legislative/legislature) rather than the effect the condition had. Perhaps applying the tiers-of-scrutiny method is what is called for when the challenge asks whether a regulation arbitrarily and capriciously interferes with a constitutional right. But the entire Court, it seems, views takings as a independent limitation on the power of government, subject to different rules. 

The opinion next laid out seriatim the "text, history, [and] precedent" to support its conclusion that conditions-from-legislation are to be treated on "equal footing" with every other condition, regardless of source.

• Text. After chiding the framers for the syntax of the Takings Clause ("[t]he Clause ... speaks in the passive voice"), the opinion noted that it "does not single out legislative acts for special treatment. Nor does the Fourteenth Amendment, which incorporates the Takings Clause against the States." Id. On one hand, this seems very noncontroversial. Of course legislation and legislatures are subject to the limitations the Fifth and Fourteenth Amendment place on them. Yet we've had several decades of some lower courts concluding otherwise, mainly because (in our view) they can't get past the form (legislation) to the substance (your money or your rights). 
• History. Legislation was how governments exercised their eminent domain power (today and historically), so "[s]pecial deference for legislative takings would have made little sense historically[.]" Slip op. at 7. This analysis tells us that once regulation is deemed a taking requiring compensation, the entire Court views the regulation as having taken on a different character. Instead of merely regulating property's uses, these regulations require compensation as if the legislature had exercised its eminent domain power, and not its police power.
• Precedent. The opinion noted that "[w]e have applied the per se [physical takings] rule requiring just compensation to both legislation and administrative action." Slip op. at 9. And to regulatory takings. Indeed, in the "big one" (Pennsylvania Coal Co. v. Mahon), the Court held that a Pennsylvania statute went "too far" was was a taking.

The Court also put the Nollan/Dolan test into a larger context, the "unconstitutional conditions" doctrine that covers other areas like free speech, the right to travel freely, and other constitutional rights, noting that in these areas, legislative conditions are regularly challenged. See slip op. at 10.

In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators.The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.

Id.

The majority opinion summed up by noting the "radical agreement" and the County's oral argument acknowledgement that it agreed with Mr. Sheetz (at least on the Question Presented):

The County no longer contends otherwise. In fact, at oral argument, the parties expressed “radical agreement” that conditions on building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them. Tr. of Oral Arg. 4, 73–74. The County was wise to distance itself from the rule applied by the California Court of Appeal, because, as we have explained, a legislative exception to the ordinary takings rules finds no support in constitutional text, history, or precedent.

Slip op. at 10.

The Court took no position on whether the County's traffic impact fee has an essential nexus to the Sheetz development, or whether $23 grand is roughly proportional to any traffic his proposal might be responsible for. For this and more, the Court remanded the case. Notably, the Court did not decide whether "a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development." Slip op. at 9-10.

In our next post, we'll cover the three concurring opinions, to thoughts about what Sheetz might mean, and what's on the horizon.

Sheetz v. County of El Dorado, No. 22-2074 (U.S. Apr. 12, 2024)

Sheetz Round-Up

Here's what folks are saying about yesterday's unanimous U.S. Supreme Court decision in Sheetz v. County of El Dorado, where the Court held that impact fees and exactions imposed by legislative action are not categorically immune from the close nexus and rough proportionality requirements already applicable to ad hoc/administratively-imposed exactions under Nollan, Dolan, and Koontz.

• Ilya Somin, "Supreme Court Rules There Is No 'Legislative Exception' to the Takings Clause" (Volokh) ("At oral argument, it seemed like the justices might be interested in going beyond the legislative exception issue, possibly addressing the underlying question of whether the fee imposed in this case was a taking or not. However, the Court chose not to deal with that question, which will now be remanded back to the California state courts for their consideration.")
• Editorial Board, "A Bad Day for Greedy Politicians at the Supreme Court" (Wall St. Journal) ("But Justice Neil Gorsuch wrote in a concurrence that the Court’s Nollan and Dolan tests should apply similarly when “an alleged taking affects a ‘class of properties’” as with a particular development. We tend to agree, and the question may return to the Court. The good news for now is that elected officials can’t extort property developers with impunity")
• Amy Howe, "Court rules for property owner in building fee dispute" (SCOTUSblog) ("In her 11-page opinion for a unanimous court, Barrett explained that nothing in the text of the Constitution indicates that the takings clause does not apply to fees imposed by legislatures. The same is true, she continued, for the history of the takings clause. 'In fact,' she wrote, 'special deference for legislative takings would have made little sense historically, because legislation was the conventional way that governments exercised their eminent domain power.' Nor, she added, do the Supreme Court’s cases interpreting the takings clause distinguish in any way 'between legislation and other official acts.'")
• Charles Gardner and Emily Hamilton, "Opinion: This Supreme Court case from California could ease housing shortages everywhere" (Los Angeles Times) ("When 'impact fees' are unmoored from the increased costs a city or county will incur because of a new house or development, the fees can do more than present someone with an unfair bill — they can also reduce housing construction. In a country where a shortage of homes has led to sky-high prices, this matters more than you might think.")
• Amanda Karras, "Supreme Court Decides Impact Fee Case" (IMLA blog) ("The Court’s narrow ruling was not entirely surprising after oral argument as it noted that the parties agreed on this bottom line holding as the County conceded at oral argument that 'building permits are not exempt from scrutiny under Nollan and Dolan just because a legislature imposed them.' The silver lining was that in reaching this narrow holding, the Court declined to address any other arguments 'including whether a permit condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development.' In other words, the Court did not rule on Mr. Sheetz's arguments that Nollan and Dolan require local governments to make individualized determinations regarding the impact fees.")

We'll have more, including our own thoughts soon.

Unanimous SCOTUS Delivers A YIMBY Blow: "The Takings Clause does not distinguish between legislative and administrative permit conditions."

This just in: the U.S. Supreme Court has issued a unanimous opinion in Sheetz v. County of El Dorado, a case we've been following (not only because it is one of ours).

The Court, as predicted, held that an exaction (in this case a traffic impact fee) isn't immune from the Nollan/Dolan nexus and rough proportionality requirements merely because the exaction is imposed by legislation.

At heart, this is a very pro-YIMBY decision because it gives property owners and housing builders a path to object to barriers to creating housing and the government's use of the land use approval process as a way of exacting "goodies" that increase housing costs.

While we digest the opinion and the multiple concurring opinions -- we shall post more once we do so -- you can either read the opinions themselves, or see what we thought after the oral arguments. Or both.

Stay tuned.

Sheetz v. County of El Dorado, No. 22-2074 (U.S. Apr. 12, 2024)

Thursday Round Up: Pretextual Takings, Squatting, Unconstitutional Conditions

Here's what we're reading today:

• Michael Berger, "Is a taking based on pretext constitutional?," Daily Journal (a take on the Second Circuit's recent decision holding that a property owner could not assert a pretext claim where the allegedly pretextual use did not confer a private benefit.
• Christian Britschgi, "Are 'Squatters' Rights' Out of Control?" Reason (the "squatting" issue has roared into the public zeitgeist lately; if you haven't been following it closely, here's a good place to start).
• Remember that case, currently pending the North Carolina Supreme Court, about what remedies are available if a court invalidates a taking, but the condemnor just goes ahead and seizes the property anyway? Here are all the briefs in that case, including our amicus in support of the property owner).
• Levine, Nash & Schapiro, "The Unconstitutional Conditions Vacuum in Criminal Procedure," 133 Yale L.J. 1401 (2024) (in which the authors argue that the unconstitutional conditions analysis (aka Nollan/Dolan) should be applied in situations where criminal defendants are subject to government coercion; it is interesting to see how those outside the Dirt Law bubble view the doctrine).
• Bianchi, Brifkani, Halaby, Huang, "Court rules for PhRMA in challenge to Oregon drug price transaparency law" JDSupra (a breakdown and summary of a recent District Court decision concluding that an Oregon statute that requires the disclosure of trade secrets is a Ruckelshaus v. Monsanto taking; includes a link to the court's opinion).

Check 'em out.

We've Been Pronouncing "Nollan" Wrong All These Years?

The Chief Justice calling the case for oral arguments.

Who knew?

(And in case you are wondering, yes -- we're joking.)

New Article: "Fines, Forfeitures, and Federalism" (Jessica Asbridge)

When it comes to property rights, we're most often focused on takings, compensation, and due process. But as you all know, the concept of property rights encompasses a whole lot more.

Our colleague, lawprof Jessica Asbridge, has posted on SSRN an article that is forthcoming in the Virginia Law Review, "Fines, Forfeitures, and Federalism," in which she delves into the question of how the Excessive Fines Clause applies to state and local forfeitures and fines. To resolve the federalism concerns she identifies, the article argues that courts "should look to the exactions doctrine under the Takings Clause."

Count us as intrigued.

Here's the Abstract:

Fines are ubiquitous in modern society, and they are imposed for both serious crimes and minor civil wrongs. The U.S. Supreme Court recently recognized that the Constitution’s Excessive Fines Clause applies to the states, but that decision raises previously unexplored questions as to how to enforce the Clause’s protections in the states. A key question is what role, if any, federalism should play in crafting doctrinal rules that apply the Clause’s protections to state and local fines and related property forfeitures. This Article is the first to accord in-depth treatment to that important question.

The extent to which federalism principles should apply does not have an immediate and obvious answer. On the one hand, federalism plays a significant role in the Court’s jurisprudence on the Cruel and Unusual Punishment Clause. The Court therefore generally takes a highly deferential approach in reviewing sentences of imprisonment. Lower courts have applied that same deferential review in the context of the Excessive Fines Clause. On the other hand, fines and forfeitures are unlike other forms of punishment—such as prison—because they are often used as a revenue source for state and local governments, creating a conflict of interest for state and local decision-making bodies.

To address this conundrum, this Article makes the novel argument that the Court should look to the exactions doctrine under the Takings Clause, which often implicates similar concerns of government self-interest and overreaching. Exactions and excessive fines are conceptually similar, but scholars thus far have overlooked the close relationship between them. The exactions doctrine gives minimal weight to federalism concerns, and it applies a heightened-scrutiny standard that is well suited to the excessive fines context. Indeed, differences between federal practice and state and local practices as to fines suggest that discretionary state and local fines should be subject to closer constitutional scrutiny than federal fines. As a recent example illustrates, such heightened scrutiny would ensure that the Excessive Fines Clause is not merely a parchment barrier, while still accounting for variations between states and localities in terms of their communities’ values and needs.

Check it out. Download your copy on SSRN here.

Too Soon For CA5 To Figure Out Whether City Demolishing Property For Code Violations Is A Taking

In Rhone v. City of Texas City, No. 22-40551 (Feb. 14, 2024), the U.S. Court of Appeals for the Fifth Circuit held that a municipality's conclusion that Rhone's apartment building had not been properly maintained, and a subsequent municipal court demolition order, might be a taking ... or it might not be.

We won't get too far into the facts, except to say that Rhone argued that the city had it out for him, and that the municipal court judge who issued the demolition order was in a contractual relationship with the city by which the judge had to submit for approval all of the court's decisions to the city attorney (the very party pressing the nuisance claims against Rhone). Weird, but apparently a product of Texas law. Short story, according tot the court: "[a]ll of this, facially at least, is a declaration of a lack of independence of judge and city." Slip op. at 12. Yowza!

The district court deemed any pecuniary interest the judge may have had as "de minimis," but the Fifth Circuit noted that "[t]here is evidence that the City Attorney has final authority on what the order on his own petition for abatement would say." Slip op. at 13. Thus, the court ordered a "limited remand" to the district court for a determination of whether the municipal court's demolition order was or was not the product of independent decision-making. If it was, Rhone's constitutional claims would not survive. But "[i]f that premise changes, this opinion will as well." Slip op. at 13. In other words, if the judge's decisions were too tightly controlled by the city -- one of the parties to the very litigation the judge was deciding -- then there might be something there.

The court also rejected the city's argument that the demolition of the building rendered the takings claim moot. "Importantly, demolition of the apartment buildings does not eliminate a takings claims; indeed, it may create one. See Knick v. Twp. of Scott, Pa., 139 S. Ct. 2162, 2167 (2019). This right allows for the property owner to have “some way to obtain compensation after” the government’s unconstitutional actions. Id. at 2168." Slip op. at 7.

So what did the court say about Rhone's takings claim? Jump forward to page 13 for this:

Our limited remand will keep open the issue of whether the Municipal Court’s determination that the property was a nuisance and allowed demolition was not the result of sufficiently independent decision-making. The remainder of the opinion is premised on the Municipal Court’s decision’s being a valid one. If that premise changes, this opinion will as well.

Rhone challenges the district court’s dismissal of his Fifth Amendment takings claim, saying there are fact issues requiring a trial. A property owner may bring a Fifth Amendment takings claim under Section 1983 as soon as the government takes his property without just compensation. Knick, 139 S. Ct. at 2170. Rhone maintains he was subjected to a taking without compensation by the City’s imposing of unnecessary and expensive repair obligations before Rhone would be allowed to use his property; by requiring he keep the property vacant; and by interfering with his efforts to repair, sell, or otherwise address the identified deficiencies in the property. This claim relies on the City’s actions prior to the Municipal Court’s order of abatement that allowed the property’s demolition. Rhone’s legal argument includes that these compliance costs were invalid under the doctrine of unconstitutional conditions. See Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013).

Slip op. at 13-14.

The court concluded that what Rhone was pressing was not really an unconstitutional conditions takings claim (because, after all, the city wasn't really forcing him to choose between two rights, but was merely telling him to stop using his property as a nuisance). But the court noted, that "[t]o be fair, Rhone is not disputing that." In short, the essence of his claim is that the city's safety officials who concluded his property was a nuisance should not have been given unreviewable authority to make that determination. See slip op. at 15.

In the end, this doesn't really look all that much like a takings claim after all does it? On that, the opinion sort of wanders away into other civil rights territory, without a clear statement of what happens to the takings claim after remand. Check out pages 15 and 16 if you doubt us. We think the takings claim survives, based on the court's earlier statement that "[i]f that premise [the judge/city relationship] changes, this opinion will as well." Slip op. at 13. But maybe not.

The common law litigation process was all about narrowing, winnowing, and processing claims by forcing them into predefined forms with their own remedies. Did that occur here? Hard to say. 

Rhone v. City of Texas City, No. 22-40551 (5th Cir. Feb. 14, 2024)

Pass A Good Time: Our Report From The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

When it comes to the longstanding ALI-CLE American Law Institute-CLE Eminent Domain and Land Valuation Litigation Conferences, we're always ready to go. You know that. But this year's version -- the 41st -- was buzzing like no other in recent memory.

Maybe it was the New Orleans venue with its atmo, food, and music for our after-class activities, or even the timing (the second-to-last week on the Mardi Gras parade season, and our conference hotel was right on the routes). It might have been the nice weather (oh, it rained buckets one evening, but there wasn't an ice storm like we experienced in Austin in 2023). Or maybe it was the capacity crowd, and new topics and speakers on the agenda. Or maybe it was just the prospect of seeing our friends and colleagues again after a year.

Here's a photo essay of some of the Conference highlights.

And if you missed out, the webcast was recorded and is available for viewing. Or, better yet, hold on your calendar January 30 through February 1, 2025 for the 42d Conference, to be held at the Westin Bayside San Diego.

Excitement this way...

The view from the podium.
Say "hello" to our opening plenary session in wide-angle.

Prepping the space.
The finished stage that Conference attendees
see isn't how the room starts off.
It takes a lot of work by the ALI-CLE staff
to get the place camera-ready.

The live webcasting of the sessions also takes a lot of
set-up and a ton of equipment. This is just some of it. 

Here's more. 

The badges were arranged on the table with care...

...in trust that our faculty and registrants would soon be there.

No conference would be complete without swag.
Here is but a sampling.

As always, a huge thank you to our generous sponsors.
Without your support, this Conference would not be as
good as it is, year after year.


The Conference site was right on the routes of several parades.
It was difficult to keep focusing on severance damages and larger parcel
when the music and excitement was just outside.
But we tried.


The opening plenary session -- on the U.S. Supreme Court's
big takings case -- got us off to a solid start.


Thanks to Christina Martin and Steve Silva for speaking
on Tyler v Hennepin County.

The view from the podium as Amy Boulris speaks about the most
significant eminent domain decisions of 2023.

The speakers are a mix of practicing lawyers, judges, other eminent domain
professionals, and legal academics. Here, two property scholars --
Timothy Harris and Jessica Asbridge --
discuss how state property law and state courts
can drive the constitutional issues.

Kinnon Williams, Esq. and Christina Thoreson, SR-WA, MAI, CRE 
present on "Valuation of Wasting Assets."

Lawprof Emilio Longoria and attorney Tony Francois
on "What Condemnation Lawyers Need to Understand
About the Clean Water Act After Sackett"
(hint: it goes to highest and best use).

Matthew Ackerman, Marianna Baggett, and Kenneth Haywood
on "The Pitfalls of Objectively Measured Just Compensation:
When Market Value Isn't Enough."

It was not all work and no play.
Again, a big thanks to our generous sponsors.

Our speakers take questions, of course.
We solicit them the old-fashioned way (thanks, James Masterman).

William and Mary Law School Professor
Emerita Lynda Butler (and her former student, North Carolina's
Jeremy Hopkins" discuss property rights in an age of coastal retreat.

Luis Gallardo-Rivera, Dana Berliner, and (off-camera)
Sophia Holley on "Proving and Defending Pretext,
Public Use, and Necessity."

James Masterman and Martye Kendrick on "Preparing Your Witness
to Overcome Obstacles to Highest and Best Use."

Jeff McCoy, Robert McNamara, and Kristen Renfro on
"Getting to Federal Court and Staying There:
Navigating Procedural Mazes in Federal Takings Claims."

Sean Metherell and Nathan Farris zero in on
"How to Win a Future Highest and Best Use Claim: Proving Reasonable
Probability of Rezoning and Other Issues."

Michael Berger is Watching You:
SCOTUS Property Rights Maven Michael Berger zooms in with his
annual "Regulatory Takings Update."

We always hold a spot for Jim Burling on Saturday.
Why? Because his tours-de-force always are interesting
and put people in seats, even on a Saturday morning.

More Big Michael.
Here, sharing his memories of Professor Gideon Kanner.

See you in San Diego!
January 30 - February 1, 2025
Westin San Diego Bayside

Today, 12:30pm ET: Professor's Corner - Legislative Exactions & Sheetz v. County of El Dorado (ABA RPTE)

Join us at 12:30pm ET today, Tuesday, February 13, 2024, for the ABA's Section of Real Property, Trust and Estates' monthly Professor's Corner, where we will join exactions experts Prof Tim Mulvaney, Andrew Gowder, and Prof Elizabeth Elia to discuss the Supreme Court arguments, the issues in the case, and what may be down the road.

Here's the description:

Can legislative action constitute an exaction subject to the Nollan/Dolan/Koontz test? In his concurrence to the Supreme Court's 2016 denial of certiorari in California BIA v. City of San Jose, Justice Thomas made clear that he was eager to examine this issue. Justice Thomas's wait is over; the Supreme Court granted certiorari to address this very question during the 2024 session in the case Sheetz v. Co. of El Dorado. Our expert panel will discuss all sides of this extremely interesting case and its implication for takings jurisprudence.

Free, but you gotta register. Join us!

Dig Property Rights? Join Our Firm As A Courtroom Property Rights Lawyer

If you dream such dreams as this photo, read on.

My law firm, Pacific Legal Foundation, is on the hunt for lawyer to join our Property Rights group (yours truly is the Director of Property Rights Litigation, so you will be working with me and the other takings and con law mavens in our practice). Here's the full description of the spot:

You: An entrepreneurial freedom fighter with a passion for property rights litigation. You work with more senior-level attorneys to find and win cutting-edge property rights cases in trial and appellate across the country. You work as a part of a collaborative team, but are also self-motivated and able to work independently with minimal supervision. You are eager to learn, relentless, and a focused lawyer.

Them: Bureaucrats, city councils, mayors, governors, and federal agencies stripping Americans of their rights every day. There’s a lot of government overreach out there, and it’s backed by seemingly endless resources. But fortunately, like all lumbering giants, abusive government is most vulnerable when countered by individuals who act strategically and nimbly, take calculated risks, have each other’s backs, and are confident in, and passionate for, the cause—the very sort of property rights swashbucklers we employ in spades here at PLF.

Us: We fight back. Pacific Legal Foundation is the nation’s first and most successful public interest law firm dedicated to vindicating individual liberty and protecting the fundamental right to property as the “guardian of every other right.” PLF has an unmatched record in the United States Supreme Court, with 17 victories in the Court. We also are actively litigating more than a hundred cases in trial and appellate courtrooms across the nation.

We are a next-generation public interest law firm. What does “next-generation” mean for a legal nonprofit? It means we aren’t interested in doing the same thing as everyone else. We aspire to be the best player in a constantly changing game.

Here’s what you get to do in this role:

You will be a courtroom lawyer in PLF’s Property Rights Practice Group. From Nollan to Koontz to Knick to Cedar Point Nursery to Tyler, PLF’s property rights litigation is unparalleled. You will help find and win the next important Supreme Court property rights case, becoming recognized as a nationwide leader on property rights litigation. Occasionally, You will have opportunities to speak at conferences or with the media about your cases or important property rights issues.

You will be a key contributor to PLF’s property rights practice group. You will work in teams with junior and senior attorneys, growing in your expertise and knowledge and elevating the team’s efforts to defend property rights. You will have the latitude to think big and the resources to execute. At PLF, you will be at the forefront of shaping property rights for all Americans.

In a nutshell, we’re seeking someone passionate about liberty and property rights, someone who is magnanimous, and someone who is a bold and relentless freedom fighter.

Getting down to brass tacks, your specific job duties likely will include:

• Winning property rights cases! Finding, developing, and litigating important property rights cases.
• Working with other attorneys to develop and litigate PLF’s property rights cases to protect the constitutional rights of Americans.

Qualifications

• 1-3 years of litigation or judicial clerkship experience
• Passion to litigate property rights cases
• A deep understanding of the moral and constitutional basis for property rights is a huge plus
• A track record of successful legal work
• Outstanding interpersonal communication skills
• A knowledge of, and passion for, the ideas of freedom and individual liberty
• The ability and willingness to travel approximately 10% to 15%

General Information

Pacific Legal Foundation identifies and litigates important legal issues to set landmark precedents that benefit Americans nationwide. Using strategic and principled litigation, communications, and research, we battle for freedom in the nation’s courts and the court of public opinion.

As a national nonprofit organization, PLF has brick-and-mortar offices in Sacramento, California; Arlington, Virginia; and Palm Beach Gardens, Florida, although approximately half of the staff work from home offices across the country. You can work physically in any of our offices or request to work virtually. This position is particularly suited for a lawyer who would like to be in one of our offices, or who is a focused and relentless self-starter eager to take advantage of our cross-country virtual office environment by proactively collaborating and communicating with colleagues, clients, and other professionals.

This is a full-time, permanent position. PLF is committed to recruiting and retaining the highest-quality talent available nationwide, and we offer a total compensation package that includes a competitive salary, medical and dental insurance, and employer-paid retirement savings. We take work-life balance seriously through our generous paid leave and flextime policies. We have a flexible, collaborative, positive, and collegial work environment. We take pride in investing in your future and encourage internal advancement. PLF is the place for someone principled, tenacious, and determined to succeed in positively shaping the future of our country and restoring real limits on government power. Join us.

To Apply

Qualified candidates should submit the following application material:

• Your resume or C.V., including your experience in the liberty movement and relevant professional experience.
• A cover letter explaining why PLF is the place for you, why you want to fight for liberty, and what distinguishes you from typical applicants; your letter should detail your courtroom experience, including any experience in trial preparation and civil discovery.
• A recent writing sample, no longer than 10 pages, that demonstrates your analytical and advocacy skills.

More here, including a link to submit your application packet.

If you fit the bill, here's your chance to join us.

No FOMO: There's Still Room For You To Join Us In New Orleans Feb 1-3, 2024 For The 41st ALI-CLE Eminent Domain & Land Valuation Litigation Conference

Don't miss out!

We promise: this is the last time we're going to try to entice you to the upcoming ALI-CLE Eminent Domain & Land Valuation Litigation Conference in New Orleans. We are getting close to capacity, but there is still room. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin last year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration is still open. Sign up now, and don't miss out.

Sheetz Argument Round-Up

Here is a collection of commentary on the oral arguments in Sheetz v. El Dorado County, heard by the Supreme Court earlier this week. (Our own thoughts here.)

• Lawprof Tim Mulvaney, "Mulvaney of Sheetz v. County of El Dorado" (PropertyProfBlog) ("In light of that concern, perhaps such scrutiny, Justice Jackson ruminated, should be applicable only to those legislative permitting schemes that require the dedication of land for the state’s possession. Justice Alito countered, though, that any such framework is manipulable, for a fee could be construed as offsetting the government’s acquisition of a 'no-build easement.'").
• Lawprof Ilya Somin, "Supreme Court Oral Argument Indicates 'Radical Agreement' that there is no 'Legislative Exception' to the Takings Clause" (Volokh) ("All or nearly all of the justices seem to agree there is no legislative exception. Indeed, even counsel for the County of El Dorado agreed.").
• "An interview with the attorneys behind the SCOTUS case Sheetz v. County of El Dorado" (Pacific Legal Foundation) ("Brian Hodges: What surprised us was how focused the Court was just on the question presented, which was whether legislative exactions are subject to Nollan and Dolan. The government briefs really didn’t address that issue. That’s the issue that the Court granted cert on, but they didn’t really address it. They tried to change the topic. And the fact that the Justices didn’t really take the bait was a bit surprising.").
• Bradford Kuhn, "A Taking of Just a Fee?" (California Eminent Domain Report) ("The Supreme Court’s decision will be one we’ll continue to monitor closely, as it could have widespread implications to government agencies in California if they need to change the way impact and permit fees are calculated across the board.").
• Ben Christopher, "Supreme Court case about impact fees could have huge consequences for housing in California" (Cal Matters) ("Many court watchers expect the court’s conservative majority to side with the burdened property owner and require the cities and counties to work a bit harder to justify the fees they impose on new home construction. It remains unclear for now just how far such a ruling could go and whether it might place fresh limits on other widely used housing and revenue-raising policies.").
• Chuck Slothower, "A Taking Or Just A Fee? Justices Seek To Make Distinction" (Law360) ("Court ustices adopted a skeptical line of questioning Tuesday in response to arguments that government permit fees constitute a taking under the Fifth Amendment in a case that could have broad implications for American land use planning.").
• Noel Sterett, "Supreme Court Considers Whether County Can Exact a $23,000 Fee to Build a Single Home" (Dalton Tomich) ("If the Supreme Court decides in the County’s favor, many other local governments could follow suit and enact similar legislation. As local governments look to increase revenue without raising taxes, they may look to use their permitting powers to exact money from property owners like Mr. Sheetz.").

Today's Arguments In Sheetz v. El Dorado County: "[R]adical [A]greement" On The Key Issue

If you were looking for deep clarity from the Justices about land use law and whether a legislature imposing monetary conditions on property development always gets the free judicial pass of rational basis review in this morning's oral arguments in Sheetz v. County of El Dorado, you may not discover a lot of predictive insight when you listen to the argument recording or read the transcript.

But it is definitely worth your time to listen or read. Yes, there were some head-scratching moments as several of the Justices struggled with how to differentiate between monetary land use exactions that are subject to the nexus and rough proportionality standards, and other government requirements to pay money such as user fees, tolls, and property taxes that presumably are exempt. But there were also moments of clarity. Important moments.

In other words, there's gold in them thar transcript hills if you look closely. (Sorry, we had to get that out of the way.)

[Disclosure: this is one of ours, so we're not going to get into it too deeply.]

We think the outcome may turn on the Question Presented, and how "tightly" a majority of the Justices want to answer that question, and go no further. As our preview of the case noted, here's the Question Presented:

The question presented is whether a permit exaction is exempt from the unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation

Read that closely. It isn't asking whether the County's traffic impact fee violates the nexus and rough proportionality standards, but whether a property owner can even ask the question. Remember that this case comes up after the trial court sustained the County's demurrer without leave to amend (for you non-Californians, read this as a "granted the County's 12(b)(6) motion to dismiss"). In other words, the trial court held that an exaction is categorically exempt from the Nollan and Dolan standards if the exaction is authorized by legislation (in other words, is not imposed ad hoc via an administrative proceeding on a discretionary permit).

You can never even ask the nexus and proportionality questions, property owner, much less have a court answer it.

In our listen, while there was a lot of noise and confusion in today's argument, there was also a lot of focus on that narrow question. Which augurs well, we think. If the only question the Court needs to resolve is whether legislatively-adopted exactions are 100% outside the reach of Nollan and Dolan 100% of the time, then perhaps such a decision won't be too hard to get to a majority or more. And if you are searching the transcript for today's "money quotes" (or maybe "money colloquies") to back up that thought, we suggest you couldn't do better than these.

First, Justice Thomas laid the foundation. As he put it in the first question out of the gate to Paul Beard, arguing for Mr. Sheetz: 

JUSTICE THOMAS: Do we have to decide any more than whether Nollan/Dolan scrutiny applies to -- can apply here to legislative exaction?

MR. BEARD: Justice Thomas, the Court is -- is able to just answer the question presented, which is simply whether there's some kind of a legislative generally applicable exception to Nollan and Dolan, yes.

JUSTICE THOMAS: If -- if the -- if - if Respondent concedes that, is there anything else we should do?

MR. BEARD: There's nothing for the Court to do. That is the question presented.

Tr. at 5.

Later, Justice Kagan "circled back" and seemingly closed the deal during her questioning of the County's advocate. She stated there is "radical agreement" on whether an exaction should "get a pass" just because it is generally-applicable (the Question Presented), concluding that it doesn't. The County's lawyer agreed without reservation:

JUSTICE KAGAN: So, Ms. McGrath, I want to follow up on Justice Gorsuch's idea of radical agreement. And I -- I -- I want to give you -- suggest what it is that there is radical agreement on and what it is that there is not radical agreement on, and see if you agree with me.

So what there is radical agreement on is that you don't get a pass from unconstitutional conditions analysis just because you've passed generally applicable legislation. And that's, of course, true in unconstitutional conditions analysis generally, and so too it's true of unconstitutional conditions analysis in the property area. If there has been a taking and that taking is being leveraged in the permitting process by generally applicable legislation, there's no pass just because that's the mechanism that's being used.

So first let me ask you if you agree with that?

MS. McGRATH: I agree.

Tr. at 73-74.

If that's it, then game over right? Question Presented has been answered, and the follow-up questions are just gravy for remand.

Justice Kagan continued, pointing out that there might be a dispute over whether there could be a taking if the County denied a development permit (because the owner refused to voluntarily pay the exaction):

JUSTICE KAGAN: Okay. Here are two things it seems to me that the parties fundamentally disagree on, which is probably - one of these two things is going to answer this dispute in the end, but there are two things. Is -- number one, was -- is there a taking at all? Because if this is just something like a tax, unconstitutional conditions analysis never comes into play, and you say it never comes into play, and Mr. Beard says it absolutely comes into play. So that's one question that you're very much at odds on. Is that correct?

MS. McGRATH: That's correct.

JUSTICE KAGAN: The second question that you're very much at odds on is, even if you assume that there has been some kind of taking here and that unconstitutional analysis does come into play -- and by that, I mean what we have in past cases called Nollan/Dolan analysis, right?

Tr. at 74. That dispute doesn't seem to stand in the way of a narrow ruling here because this is up on a demurrer and the complaint adequately and plausibly pleaded that denial of the permit would be a taking. You don't have to figure out whether there's been a taking at this stage, only whether Sheetz has been required to choose between his plausibly-pleaded right to just compensation for the taking of his right to use and develop his land, and his plausibly-pleaded right to keep his money.

Finally, Justice Kagan suggested that there is a dispute over whether legislative exactions might be subject to some sort of different nexus and proportionality standards than applied to parcel-specific conditions: 

Even if you assume that that unconstitutional analysis comes into play, it might look very different from what Nollan/Dolan analysis looks like just because Nollan and Dolan were focused on individual parcels, individual property owners, and this is a general scheme, and it would be very difficult to apply Nollan and Dolan analysis literally to a general scheme.

So that there might be ways in which Nollan/Dolan analysis becomes something that, you know, really looks different in application. And I think Mr. Beard says no, not really, and you say, yes, really. Is that correct?

MS. McGRATH: That's also correct.

JUSTICE KAGAN: So that's the agreement. Those are the two big disagreements?

MS. McGRATH: I think that is correct, Justice Kagan.

JUSTICE KAGAN: Okay. I just wanted to make that clear.

Tr. at 75.

Again, that should not stand in the way of a decision here on the Question Presented (are legislative exactions categorically exempt?). The Court may hold that no, legislative exactions are not 100% exempt, but remand for more on how that test is to be applied here (something on which there's no actual, developed factual record in case -- again, blame the demurrer).

A couple of final observations:

• We didn't hear any of the Justices take issue with calling the County's demand an "exaction." As you know, some lower courts fixate on semantics (is the challenged requirement an "exaction" or is it a "zoning ordinance?"). No SCOTUS Justice today seems similarly hung up on wordplay. They all seemed to look at what the ordinance does, not what the County called it.
• There seemed to be a lot of confusion wrought by the way the Court has framed the question as one of "takings" here and in past decisions. We think the more helpful view is that of "unconstitutional conditions," and not takings. Yes, one of the rights that Sheetz is being required to choose between is his right to compensation, but at heart this seems more like a question of "your money or your rights" than one about whether there's been a taking by overregulation.

Now we wait. What's your prediction?

Transcript, Sheetz v. County of El Dorado, No. 22-1074 (U.S. Jan. 9, 2024)

Sheetz v. El Dorado County Argument Preview: Do Blanket Exactions Present The Same Risk As Ad Hoc Exactions?

Get ready for Sheetz v. El Dorado County, No. 22-1074, the "legislative exactions" case at the Supreme Court. [Disclosure: this is one of our firm's cases, so we won't be doing an analysis here. Besides, you already know where we stand on the issue.]

With the final merits brief filed last week (Petitioner's Reply), the case is now teed up for argument next week. Wow, that seemed to come at us very quickly.

Here's the Question Presented:

George Sheetz applied, to the County of El Dorado, California, for a permit to build a modest manufactured house on his property. Pursuant to legislation enacted by the County, and as the condition of obtaining the permit, Mr. Sheetz was required to pay a monetary exaction of $23,420 to help finance unrelated road improvements. The County demanded payment in spite of the fact that it made no individualized determination that the exaction-a substantial sum for Mr. Sheetz-bore an "essential nexus" and "rough proportionality" to the purported impacts associated with his modest project as required in Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837 (1987) and Dolan v. City of Tigard, 512 U.S. 37 4, 391 (1994).

Mr. Sheetz challenged the exaction as an unconstitutional condition under Nollan and Dolan. A California trial court upheld the exaction, holding that, because it was authorized by legislation, the exaction was immune from Nollan/Dolan review. In a published decision, the California Court of Appeal affirmed, and the California Supreme Court denied review. California's judicially-created exemption from Nollan/Dolan scrutiny for legislative exactions conflicts with the decisions of other federal and state courts across the country, and is in strong tension with this Court's more recent precedents.

The question presented is whether a permit exaction is exempt from the unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

Check out all of the merits and amici briefs on the Court's docket.

• Sheetz's merits brief
• El Dorado County's merits brief
• Sheetz's reply
• Federal government's amicus brief (the SG has asked the Court for argument time)

To find out more, register for "What's at Stake: Sheetz v. County of El Dorado," a free webinar preview on Thursday, January 4, 2024, 3-4pm ET ("At this event, panelists will give background on the case and its far-reaching implications. They’ll also discuss key precedents that laid the groundwork for this fight, including Nollan v. California Coastal Commission, Dolan v. City of Tigard, and St. Johns River Water Management District v. Koontz.").

Brief of Petitioner, Sheetz v. County of El Dorado, No. 22-1074 (U.S. Nov. 13, 2023)

Cases And Links From Today's ABA State & Local Govt Law Land Use Presentation

Here are the cases that Michael Berger and I discussed in today's presentation to the ABA State and Local Government Law Section's Land Use group. It was good seeing everyone, even virtually:

• Sheetz v. County of El Dorado - are legislatively-imposed exactions subject to the nexus and proportionality requirements of Nollan/Dolan? (SCOTUS)
• Devillier v. Texas - must the government consent to be sued for just compensation? (SCOTUS)
• Watson Memorial Spiritual Temple of Christ v. Korban - the payment of a final just compensation judgment is ministerial, and may be compelled by a writ of mandamus (Louisiana Court of Appeal)
• The New York Rent Control cases - two still pending (SCOTUS)
• Gearing v. City of Half Moon Bay - abstaining from adjudicating a regulatory takings case under Pullman abstention (Ninth Circuit; cert. denied)
• Ateres Bais Yaakov Academy of Rockland v. Town of Clarkstown - RLUIPA claim is ripe; court rejected the "land use is local" trope (2d Cir.)
• Catholic Healthcare Int'l, Inc. v. Genoa Township - RLUIPA claim ripe because Township had taken a "definitive position" on what uses were allowed and not allowed on plaintiff's property, even though there remained a possibility that the Township might allow the use (6th Cir.)
• Yes in My Backyard v. City of Los Angeles - the general plan is law, and controls over zoning (Cal. Super. Ct.)
• Idaho Power Co. v. Bean - some precondemnation entries are takings (Or. Cir. Ct.)
• Town of Apex v. Rubin - after a taking is invalidated for lack of public use, what if the condemning agency just takes it anyway? (N.C. S. Ct. review granted)

Check em out.

And if you are not a member of the ABA State and Local Government Law Section, you should be. Come, join us!

Legislative Exactions Merits Brief (Ours): "the text and history of the Takings Clause admit no exception for legislative takings"

Here's the merits brief in a case we've been following (naturally, because it is one of ours). This is Sheetz v. El Dorado County, the case which asks whether a condition on development (aka an "exaction") is exempt from the close nexus and rough proportionality standards of Nollan/Dolan/Koontz simply because the exaction is imposed on every owner who asks for permission to use its property, and not via an ad hoc administrative permit procedure.

Because this is one of ours, we're not going to go into in further, but leave to you to read our brief:

In this Court’s key exactions precedents—Nollan, Dolan, and Koontz—it held that when government exacts money or real property as a condition on the right to use or develop land, it must establish that the exaction bears an “essential nexus” and “rough proportionality” to an adverse public impact caused by the owner’s proposed project. In this case, the Court should confirm that Nollan/Dolan review applies, not just to so-called ad hoc or discretionary conditions, but to legislatively mandated exactions as well, such as the fee that El Dorado County imposed on Mr. Sheetz. That rule follows inexorably from this Court’s precedents, as well as the history and purpose of the Takings Clause and the unconstitutional-conditions doctrine. The rule is easy to implement. And the rule ensures that any exaction serves as genuine mitigation for public impacts attributable to the proposed use or development rather than a veiled attempt to skirt the compensation requirement of the Takings Clause.

...

[T]he text and history of the Takings Clause admit no exception for legislative takings. “The Takings Clause . . . is not addressed to the action of a specific branch or branches,” but is instead “concerned simply with the act, and not with the governmental actor.” Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Env’t Prot., 560 U.S. 702, 713–14 (2010) (plurality op.). Holding all exactions accountable to the Takings Clause ensures the fulfillment of the Clause’s fundamental purpose: “to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).

Stay tuned.

Follow along here, or on the Court's docket.

Brief for Petitioner, Sheetz v. County of El Dorado, No. 22-1074 (U.S. Nov. 13, 2023)

Here's The Program For The 41st ALI-CLE Eminent Domain And Land Valuation Litigation Conference, Feb 1-3, 2024, New Orleans

Here's the brochure and the full agenda and registration information for the upcoming ALI-CLE Eminent Domain and Land Valuation Litigation Conference at the JW Marriott in New Orleans, February 1-3, 2024.

This is the long-running nationally-focused conference on all things eminent domain, takings, valuation, and related. We have three tracks, from which you can choose a la carte - Practice, Substantive, and Condemnation 101:

For over 40 years, we’ve been bringing eminent domain practitioners together to examine the latest issues, engage in healthy debate, and get the information they need to stay current in their practice. This year – our 41st – is THE perfect time to reunite with your eminent domain colleagues. There will be plentiful opportunities to meet and mingle with the faculty and other registrants – throughout the conference and at evening social events. Attendees come back year after year to make new friendships and renew longstanding ones – in a welcoming environment and amongst others who share the same passion for this area of the law.

Please check it out. Over the next couple of weeks we shall bring you details of the various programs.

If you have joined us in the past, you know what a worthwhile conference this is. If this will be your first time, welcome; we hope that you will become a long-term colleague.

Register now, and reserve your spot. In the past few years, we've sold out the hotel block and the Conference seats. So don't miss out!

2024 ALI-CLE Eminent Domain and Land Valuation Litigation Conference Brochure, Feb. 1-3, 2024, New Orleans,...

Supreme Court Property Rights Round-Up

Here's what we're reading about the Supreme Court's property rights docket -- some good, some disappointing -- this day.

• Niina Farah, "Supreme Court flooding case could ripple across the energy sector" (E & E News / Energywire) - About the Devillier case (which we summarized here), in which we were quoted: "The Supreme Court decision to hear the Devillier case comes after a concerted effort in recent years to convince the court to address procedural maneuvers that have made it challenging for property owners to bring their claims to court, said Robert Thomas, director of property rights litigation at the Pacific Legal Foundation. The nonprofit is among the groups that has asked the court to address takings cases and has lent its support for the property owners in Devillier in a 'friend of the court' brief. 'There’s a lot of gamesmanship going on trying to avoid getting to the actual core question — is compensation owed for the take?' Thomas told E&E News. 'You will see local governments, and often the federal government, interposing these procedural defenses to move the chess pieces around.' This case is an example of how court procedure is being used to stymie damage claims from property owners, he added.
• Bob Egelko, "U.S. Supreme Court agrees to decide legality of fees charged to California homebuilders" (San Francisco Chronicle) - About the Sheetz case (which we summarized here), "Christopher Elmendorf, a UC Davis law professor who has written extensively about housing issues, said a ruling in Sheetz’s favor could also allow challenges to 'inclusionary zoning' rules in San Francisco and other communities, which require new developments to contain a certain percentage of affordable-housing units. That might encourage more housing construction in the short run, he said, but it probably wouldn’t have a major impact on the housing shortage in California.
• Suzannah Cavanaugh & Kathrun Brenzel, "Supreme Court didn't save landlords. now what?" (TheRealDeal) - About the Court's denial of one of the three petitions challenging New York's draconian amendments to its rent control law (there are two other cert petitions, both of which were relisted; see here and here).
• Andria Cheng, "Supreme Court Denies Challenge to New York's Rent Regulation Law" (CoStar News) - More on the rent control petition denial.

Let's hope there's more good property rights news from SCOTUS to report soon.

 

Cert Grant #2 - SCOTUS (Finally!) To Resolve Whether Legislative Exactions Are Subject To Nollan-Dolan-Koontz Nexus And Rough Proportionality

"I'll take 'Words I Like to See' for $800, Alex."

In this Order, the U.S. Supreme Court agreed to hear two important property rights cases (are there any other kind?). Both are cases we've been following -- and indeed are now playing a part in.

The first is detailed in this post.

In the second, Sheetz v. El Dorado County, the Court is finally getting to the long-unresolved question of whether an exaction or permit condition is exempt from the usual requirements of "logical nexus" and "rough proportionality" simply because the condition is imposed uniformly by legislation, and not ad hoc via an administrative or other permit decision.

We commented on the Sheetz case in this post ("Whether $23K Traffic Fee Is Proportional To One Single-Family Home Is Beyond The Ken Of Judges") and won't repeat the facts or comments here.

But here's the cert petition -- which did a pretty good job of summarizing the case and issues -- including the Question Presented:

George Sheetz applied to the County of El Dorado, California, for a permit to build a modest manufactured house on his property. Pursuant to legislation enacted by the County, and as the condition of obtaining the permit, Mr. Sheetz was required to pay a monetary exaction of $23,420 to help finance unrelated road improvements. The County demanded payment in spite of the fact that it made no individualized determination that the exaction—a substantial sum for Mr. Sheetz—bore an “essential nexus” and “rough proportionality” to the purported impacts associated with his modest project as required in Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987) and Dolan v. City of Tigard, 512 U.S. 374, 391 (1994).

Mr. Sheetz challenged the exaction as an unconstitutional condition under Nollan and Dolan. A California trial court upheld the exaction, holding that, because it was authorized by legislation, the exaction was immune from Nollan/Dolan review. In a published decision, the California Court of Appeal affirmed, and the California Supreme Court denied review. California’s judicially-created exemption from Nollan/Dolan scrutiny for legislative exactions conflicts with the decisions of other federal and state courts across the country, and is in strong tension with this Court’s more recent precedents.

The question presented is whether a permit exaction is exempt from the unconstitutional conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

There it is. Finally.

Congratulations to Paul Beard (the lawyer who argued and won Koontz, by the way) on the hard-won grant. Our law firm colleague Brian Hodges (in our estimation, the nation's leading and most seasoned expert on the exactions issue) filed this amicus brief which urged the Court to take up the case.

Lawprof Ilya Somin offered his thoughts on the cert grant and the case here ("Supreme Court Will Hear Case on Whether there is a 'Legislative' Exception to the Takings Clause") ("But the Court need not even consider such political economy issues. They can just rely on the basic principle that the whole point of constitutional rights is to impose constraints on the political process—including legislatures."), via Volokh.

Follow along with the case here, or on the Court's docket.

Brief Amicus Curiae of Pacific Legal Foundation in Support of Petitioner, Sheetz v. Cnty. of El Dorado, No....

ALI-CLE's Eminent Domain & Land Valuation Litigation Conference (Feb 1-3, 2024, New Orleans): Why Attend? Here's Why.

Why is it, you ask, that the ALI-CLE Eminent Domain & Land Valuation Litigation Conference (scheduled next February 1-3, 2024, in New Orleans) is an event that seems to be growing in popularity and attendance. In recent years, we have standing room only in the Conference halls, and have sold out the hotel block. After all, this is a pretty niche area of law. So what gives?

When we were in Austin earlier this year, we thought it might be nice to try and answer that question. We asked Conference participants why they come, year-after-year (and in Austin, despite massive travel disruptions). Yes, it is the various venues (Nashville, Austin, Scottsdale, Palm Springs, to name a few recent locations), and yes, it is the excellent and useful programming.

But as we suspected it is more than that. As the above video notes, the consistent response from our participants about why the attend is the participants. The faculty and other attendees, the vendors. The collegiality, the chance to renew long-standing friendships, and especially the chance to make new friends and colleagues who share our passion for this area of law. The welcoming environment, and our desire to have lawyers and other professionals new to this area of law or new to the Bar feel at home and welcomed.

I can personally attest to that one, having been welcomed to a Conference long ago by Toby Brigham, who although he was one of the Chairs of the event, made it a point to notice that I was a new attendee, and to introduce me around to the "old hands."

We have also made a big effort in the last few years to include a range of professionals from various perspectives, including lawyers, legal academics, jurists, appraisers and MAIs, planners, right of way and relocation experts, and jury and trial consultants. Family members also welcome (there are a lot of "adjacent" social and networking events, and families are welcome as long as they don't mind a lot of "shop talk"). Our program is a mix of practical and substantive sessions.

We also have a special track on the first day of the Conference designed as a crash course in Eminent Domain law ("Condemnation 101"), which is a good place for an overview and introduction to the practice, or as a refresher course for those with more time under your belt.

In short, we try and make the Conference not just a place to learn the latest in eminent domain and related topics, but somewhere you can return to each year, and feel welcome.

So if you have not attended before, give us a try! We'd love to see you in New Orleans in just a few months. Registration and hotel reservation now open. Sign up now, and don't miss out.

DC Circuit: US Copyright Office's Requirement To Turn Over Copies Is A Taking

The buried lede in the U.S. Court of Appeals for the D.C. Circuit's opinion in Valancourt Books, LLC v. Garland, No. 21-5205 (Aug. 29, 2023) is that the government doesn't have that big of a role in copyrights, at least in the bare minimum of copyright protections.

We're no copyright experts (that's an understatement), but we knew the basics here: in order to have a copyright and all the rights that entails, the owner need do nothing more than fix the work in a tangible medium. No formalities are necessary, including publication. As the court put it, "[c]opyright thus accrues automatically upon creation of an original work in a tangible medium, and creators need not take any further action such as publication or registration to gain the protection." Slip op. at 4.

You may register your copyright to obtain certain other benefits -- for example, registration is prima facie evidence of validity, and in order to bring a copyright infringement claim, you must be registered -- but you don't have to register a work.

The copyright statute, however -- adopted under the authority of the Constitution's Copyright Clause -- requires that upon publication (as opposed to creation), the owner deposit with the U.S. Copyright Office one (or in some situations two) physical copies of the work for the Library of Congress. If the owner does not do so, the Office may impose a modest fine, unless the Office grants "special relief" from the deposit requirement under the statute if doing so imposes a financial burden for example. The deposit requirement -- apparently a legacy of the now-supplanted copyright system which tied all the benefits of copyright to registration -- is not conditioned on registration.

Valancourt is an on-demand book publisher that focuses on out-of-print books. It neither registers its copyrights, nor deposits copies of its books with the Office. Somehow this caught the attention of the Copyright Cops, who sent Valancourt a notice to send in 341 books it had not deposited. No deal, Valancourt responded, providing copies would be prohibitively expensive and would overburden its free speech rights.

A takings lawsuit followed. Not in the Court of Federal Claims as in typical takings claims seeking just compensation from the federal government, but in the District Court for the District of Columbia, because the relief sought was an injunction against enforcement. The district court entered summary judgment in favor of the government because this is not the government forcing a copyright owner to turn over property, but rather the owner seeking a governmental benefit which can be conditioned on the owner complying with conditions.

The D.C. Circuit reversed. The takings stuff begins on page 13 of the opinion. The court characterized this as a physical appropriation and applied the categorical rule that flows from that characterization. The government demands you give up your raisins...you gotta pay. Same with books. Relying on the recently-decided Tyler decision, the court concluded this is a "classic" taking. Slip op. at 13.

When copyright owners deposit copies of works with the Library of Congress, they “lose the entire ‘bundle’ of property rights” in the relinquished copies, including “the rights to possess, use and dispose of” them.

Slip op. at 14.

The court rejected the district court's conclusion that Valancourt was only required to deposit the books as a condition of receiving a governmental benefit. The court acknowledged that when the government confers a benefit, it may, within limitations, demand the owner give up property. But here, Valancourt had not registered its copyright and was not seeking any of the benefits of doing so. Nonetheless, the Office insisted that the requirement to deposit the work did not turn on whether the owner registered the work.

Here, as in Horne, copyright owners receive no additional benefit for the works they forfeit pursuant to Section 407’s deposit requirement. Mandatory deposit is not required to secure the benefits of copyright. Copyright first “subsists” when an author “fix[es]” a work “in any tangible medium of expression.” 17 U.S.C. § 102(a). So, when a writer puts words on a page, that work gains copyright; when an artist paints on a canvas, that work gains copyright. Copyright thus is “both instant and automatic,” in that it “vests as soon as a work is captured in a tangible form, triggering a panoply of exclusive rights that can last over a century.” Georgia v. Public.Resource.Org, Inc., 140 S. Ct. 1498, 1513 (2020). Authors need not take any affirmative step to obtain

Slip op. at 15. Any benefits a copyright holder may have that are not dependent on registration exist by virtue of the work being fixed in a tangible medium, and are not governmental benefits. Slip op. at 16. Copyright may not be a "natural right," but any benefits a copyright holder may possess are not related to giving up a copy for public use.

The court responded to the government's argument that the deposit requirement isn't really a "requirement" but more like a voluntary exchange because a copyright owner can disavow copyright protection, by acknowledging that may be true, but here there's no apparent or easy way to opt-out. Slip op. at 21 ("If there were a simple, seamless, and transparent way to opt out of copyright protection, perhaps mandatory deposit would fall outside the realm of the Takings Clause because any forfeiture of property might arguably be voluntary.").

Will the government stop here, or will there be more? Stay tuned.

Valancourt Books, LLC v. Garland, No. 21-5205 (D.C. Cir. Aug. 29, 2023)

Tex App: Nollan/Dolan Challenge To Annexation Fees Not Ripe: You Have To Apply For Annexation To Find Out What The Fee Will Be

The city told an owner whose three parcels were outside of the city's jurisdiction that if it wanted the city's permission to replat into 74 parcels, it would need city water and sewer service to each of the proposed lots.

So the owner asked to connect to the city's water and sewer system (deliberately overbuilt to account for future users, apparently), and in response, the city told the developer that it would have to do two things. First, it would have to contribute to the cost of building the system by purchasing water/sewer chits (our term). When the system was built, the city anticipated future connections and created a chit system by which future connections would help pay for the cost of construction. Second, in order to purchase these chits, the buyer's property must be included within the city's jurisdiction. And that meant a voluntary annexation. Annexation does not come free, because a city ordinance set the price tag of annexation between $220k - $350k.

The developer was ok with buying the chits, but not with paying the annexation fees, and sued the city. It argued it had a right to purchase the chits, and the city's ordinance worked a taking under the Texas Constitution because the city had not shown an essential nexus and proportionality between the fee and the annexation exaction (apparently, the unconstitutional conditions test is the same under Texas' constitutional law as the Nollan/Dolan/Koontz federal standards).

In Consolidated Towne East Holdings, LLC v. City of Lardeo, No. 04-22-00130-CV (July 12, 2023), the Texas Court of Appeals held that Consolidated's takings challenge was not ripe. The costs were not yet "authoritatively set." Slip op. at 10. You have to apply for annexation to find out what the actual fee will be:

Consolidated’s takings claim presents an unusual challenge. Unlike in Nollan, Dolan, and Stafford Estates, in which the conditions required for the permits and plats were authoritatively determined by the government entity wishing to impose the exaction, here, the conditions the City requires for annexation and the annexation fees have not been finally determined. See Dolan, 512 U.S. at 379–83 (permit conditioned on dedication of property for use as public greenway and path); Nollan, 483 U.S. at 828–29 (permit conditioned on creation of public easement); Stafford Estates, 135 S.W.3d at 623–24 (plats conditioned on rebuilding road with concrete). The City argues that, by failing to apply for annexation, Consolidated has deprived the City of an ability to consider and rule on actual costs related to annexation. The result, according to the City, is that “actual or roughly proportional costs cannot be established,” and it asserts Consolidated is seeking an advisory opinion about hypothetical costs.

Slip op. at 9.

The court also rejected the owner's argument that the annexation fees (whatever they might be) have no nexus to water and sewer hook up, because the nexus has already been accounted for in the price of a hook-up chit. Not so, held the court, because the annexation fee covers other things: "While annexation is required to obtain [chits], the purpose of annexation, according to the City, is not coextensive with the purpose of [chits], and, therefore, the cost to annex addresses different government interests than the cost for [chits]." Id.

So let's see if we get this right: you have to apply for annexation so the city can determine how much it is going to charge for annexation? Yes. According to the city:

Although the costs may vary from year to year, they are applied using calculations based on the level of development selected by the developer and the development plans. The calculations apply to all annexation applicants based on, among other things, lot size, number of lots, and whether the property will be for residential or commercial use.

Slip op. at 10.

That was enough for the court. No final decision applying the rule to the owner's use and development plans, so any takings challenge is premature:

We stress that Consolidated’s takings claim complains principally about annexation costs. In other words, Consolidated does not complain about annexation alone. In fact, its attorney stated at the hearing on the parties’ motions for summary judgment: “There is no dispute that the City certainly can annex property within its extraterritorial jurisdiction within its discretion. [Consolidated] has no objection to that. [Consolidated] has no objection to being annexed by the City in that capacity.” However, because we do not know the cost to annex, we cannot perform the fact-specific, rough proportionality inquiry required by Nollan and Dolan.

Slip op. at 11-12 (footnote omitted).

Consolidated Towne East Holdings, LLC v. City of Laredo, No. 04-22-00130-CV (Tex. Ct. App. July 12, 2023)

Chump Alert! Developer's Claim That City Can Be Held To Its Contract Limiting Exactions Goes About As Well As You'd Expect

We're not going to dwell all that much on the California Court of Appeal's recent opinion in Discovery Builders, Inc. v. City of Oakland, No. A164315 (June 22, 2023), mostly because it seems entirely predictable.

The developer thought it had an agreement with the city to pay certain fees (dare we say "exactions") the city required in order to approve and provide what the court calls "project oversight." The contract "provided that the fees set forth in the agreement satisfied 'all of the Developer's obligations for fees due to the City for the Project.'" Slip op. at 1. You know where this is headed, don't you?

That's right, eleven years later while the project was still underway, the city adopted new ordinances imposing new impact fees. When the developer sought additional building permits ... no permit without paying the additional exactions. The trial court thought the contract took care of that issue, and ordered that the city could not impose any new fees beyond what it had agreed to impose.

The court of appeal made short work of that, and held (as you probably predicted) that the city's agreement was pretty worthless because the new fees were a valid exercise of police power, and "the government may not contract away its right to exercise the police power in the future." Slip op. at 12. Against public policy, etc etc. You know the vibe.

"We trusted you," and "we had a deal," don't go very far when it comes down it it, and anyone who thinks they can actually hold the government to what it agrees to has a reckoning coming if the government chooses not to honor its agreement.  As Chief Justice Roberts noted in a different context: what chumps!

We're not suggesting that the developer here was in fact a chump. We feel for you -- you should be able to trust the government. But alas, no, the courts are just fine with treating those who rely on the government's promises like suckers for believing it.

Anyway, this one can't be too much of a surprise.

Discovery Builders, Inc. v. City of Oakland, No. A164315 (Cal. Ct. App. June 22, 2023)

California Supreme Court Reviewing The Murderer's Creek Inverse Case

Check out this now-under-consideration Petition for Review, which asks the California Supreme Court to take up a case involving Murderers Creek, in Pleasant Hill, California. (Now there's a jarring juxtaposition for you.)

The case started off as a "routine inverse condemnation case." Pet. at 2. When Murderers Creek flooded, it damaged the plaintiffs' land. The County, the plaintiffs allege, didn't maintain a 40-year old concrete spillway which is part of a drainage system the County required a private developer to install in the 1970s as a condition of subdivision. The County never actually took over the drainage system, but it did accept the dedication "for recording only."

The plaintiffs said this should have been enough to establish a claim for inverse against the County: it has been a longstanding rule in California that drainage infrastructure that diverts surface waters onto private property triggers inverse liability even if privately constructed, when the infrastructure was approved or accepted by the government. Relying on a 1963 inverse condemnation case that has been a pillar of California inverse doctrine, the plaintiffs argued that public entities are liable for inverse when public drainage improvements collect and divert surface water out of its natural drainage channels onto private property. And the government can't avoid liability by using the subdivision approval power to force private property owners to construct the public drainage improvements that cause the diversion.

But in this opinion, the Court of Appeal concluded that this leading case - and presumably about a dozen other case that had followed it over the years had been "implicitly overruled" 30 years ago in another case. Which means that unless the County had unequivocally and unconditionally accepted the dedication of the infrastructure back in the 1970s, flooding it caused wasn't the County's problem.

Hang on. You mean the County could require a developer build and dedicate the flood control infrastructure to serve public drainage needs as a condition of securing subdivision approval, but the County also has the choice of ambiguously accepting the dedication and thereby avoids any obligation for inverse? That sounds a lot like that old law maxim against having your cake and eating it too, doesn't it?

Well, that's what the plaintiffs thought too. So they submitted the petition asking the California Supreme Court to take a look. Here are the Issues Presented:

1. Did this Court, in Locklin v. City of Lafayette (1994) 7 Cal.4th 327 (Locklin), “implicitly overrule” Frustuck v. City of Fairfax (1963) 212 Cal.App.2d 345 (Frustuck), one of California’s leading inverse condemnation cases, without citing Frustuck and without addressing either of the two legal issues that Frustuck decided?

2. Does Locklin and/or the Subdivision Map Act (Gov. Code, § 66410 et seq.) establish a procedure whereby respondent County of Contra Costa (the “County”) could compel a private property owner/developer to install drainage improvements on his property to receive surface water diverted from its natural drainage channels and convey that water across his property to Murderer’s Creek (a “natural watercourse”), and also compel him to dedicate irrevocable public drainage easements over those improvements “to the County for public use,” but then allow the County to avoid any obligation to maintain either the improvements or the public drainage easements by accepting the easement dedications “for recording only”?

3. Did the Court of Appeal improperly adjudicate that the County did not enter into a contract to maintain the storm drainage improvements that it required a developer to install on private property to serve two of the County’s off-subdivision storm drainage needs, despite Petitioners’ evidence that the County did enter into such a contract?

4. Did the Court of Appeal misapply the Locklin/Van Alstyne “reasonableness analysis” by adjudicating, as matters of law, that Respondents’ joint management of the Murderer’s Creek watershed (a) did not incorporate the Creek into the public drainage system, and (b) is not placing an “unreasonable” (disproportionate) burden on the downstream riparian property owners?

Pet. at 1-2.

If left unreviewed, the court of appeal decision seems like a pretty dramatic expansion of government power and reduction of private property rights. It alone is review-worthy in our thinking for its rationale that a case can be "implicitly overruled" merely by silence (the 1994 decision which the court of appeal points to never mentions the case it is overruling, and doesn't even address the same issues). Overrule a rule, sure. But overrule it by silence? Come on.

Stay tuned. The California Supreme Court's docket shows that there's been no response from the County, which means it is now in the court's hands. Look for a decision in the next month or two.

Petition for Review, Shenson v. County of Contra Costa, No. S279857 (Cal. May 5, 2023)

New Cert Petition: The Supreme Court Should Resolve The Legislatively-vs-Administratively Imposed Exactions Issue

When we last visited Sheetz v. El Dorado County, we finished with "stay tuned" because we suspected that the California Court of Appeal's opinion concluding that the County's traffic mitigation fee is immune from Nollan/Dolan nexus-and-rough-proportionality review because the legislature imposed the fee on everyone (and Sheetz was not subject to paying it because of an ad hoc agency decision) was not going to be the last word, either in the case or on the legislative exactions issue.

Well, now the predicted other shoe drop: the property owner has filed this cert petition, with this Question Presented:

George Sheetz applied to the County of El Dorado, California, for a permit to build a modest manufactured house on his property. Pursuant to legislation enacted by the County, and as the condition of obtaining the permit, Mr. Sheetz was required to pay a monetary exaction of $23,420 to help finance unrelated road improvements. The County demanded payment in spite of the fact that it made no individualized determination that the exaction—a substantial sum for Mr. Sheetz—bore an “essential nexus” and “rough proportionality” to the purported impacts associated with his modest project as required in Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 837 (1987) and Dolan v. City of Tigard, 512 U.S. 374, 391 (1994).

Mr. Sheetz challenged the exaction as an unconstitutional condition under Nollan and Dolan. A California trial court upheld the exaction, holding that, because it was authorized by legislation, the exaction was immune from Nollan/Dolan review. In a published decision, the California Court of Appeal affirmed, and the California Supreme Court denied review. California’s judicially-created exemption from Nollan/Dolan scrutiny for legislative exactions conflicts with the decisions of other federal and state courts across the country, and is in strong tension with this Court’s more recent precedents.

The question presented is whether a permit exaction is exempt from the unconstitutional conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.

The Sixth Circuit just last week held that these type of demands are subject to the nexus and rough-proportionality standards, and not rational basis review, deepening the lower court conflict.

So we shall say again: we don't think the California court's Sheetz opinion is the last word, so stay tuned.

Follow along here, or on the Court's docket.

Petition for Writ of Certiorari, Sheets v. County of El Dorado, No. 22-1074...

 

CA6: Legislative Conditions Are Subject To Nexus-And-Proportionality Requirements

A good opinion from the U.S. Court of Appeals for the Sixth Circuit in Knight v. Metro. Gov't of Nashville, No. 21-6179 (May 10, 2023), holding that conditions imposed on every development -- and not just ad hoc administratively-imposed conditions -- must conform to the Nollan-Dolan-Koontz close nexus and rough proportionality standards.

You takings and land use mavens can stop right there, because you know what this means: the Sixth Circuit has added to the growing split in the lower courts about whether legislatively-imposed conditions on development which cover everyone are, as some courts characterize them, mere land use regulations subject only to Euclid's rational basis review, or are constrained by N-D-K 's requirements (see here, and here for examples). The Supreme Court has been presented with the lower court disagreement, but so far has not stepped in and resolved the issue.

The Sixth Circuit experienced no such qualms when considering a Nashville ordinance that conditions the grant of building permits on the owners agreeing to either grant an easement across their land and build a sidewalk on that easement, or give the city cash instead:

In particular, the parties here disagree over the “test” that we should use to judge whether the sidewalk ordinance commits a taking. The landowner plaintiffs ask us to apply the “unconstitutional-conditions” test that the Supreme Court adopted to assess conditions on building permits in Nollan v. California Coastal Commission, 483 U.S. 825 (1987). Nashville responds that the Court has applied Nollan’s test only to ad hoc administrative conditions that zoning officials impose on specific permit applicants—not generally applicable legislative conditions that city councils impose on all permit applicants. For legislative conditions, Nashville says, we should turn to the deferential “balancing” test that the Court adopted to assess zoning restrictions in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).

We side with the landowner plaintiffs. Nothing in the relevant constitutional text, history, or precedent supports Nashville’s distinction between administrative and legislative conditions. Nollan’s test thus should apply to both types, including those imposed by the sidewalk ordinance. Because the district court reached a contrary conclusion, we reverse its grant of summary judgment to Nashville and remand for proceedings consistent with this opinion.

Slip op. at 2.

We suggest you read the entire opinion -- it isn't long (29 pages) and it has pictures! -- because it really sets out the arguments, and there's even some takings history for you history buffs. The court concluded that the Takings Clause is a limit on legislative authority, not just executive power. See slip op. at 20.

And there's a whole lot of takings and property rights goodness in the opinion, including these:

• "The government does not always directly interfere with constitutional rights. It sometimes indirectly interferes with them by offering a benefit that it has no duty to provide on the condition that a party waive a right." Slip op. at 10.
• "But what rules divide constitutional from unconstitutional conditions on these otherwise discretionary benefits? One generic rule is clear: If the Constitution allows the government to directly compel a private party to undertake conduct on threat of criminal punishment, the government may indirectly compel that conduct as a condition on a benefit." Id.
• "Courts instead must look to a specific constitutional right to identify the specific rules. Id. at 913. This fact brings Nollan to the fore. It created a 'special unconstitutional-conditions framework for an “exaction” in the takings context. Slip op. at 10-11.
• "At first blush, Nashville’s enforcement of its sidewalk ordinance looks like a clear case for Nollan’s unconstitutional-conditions test." Slip op. at 14.
• "Does it matter that the sidewalk ordinance allowed Knight and Mayes to pay fees rather than build sidewalks? No again. Because these “commonplace” in-lieu fees resemble “other types of land use exactions,” Koontz held that they trigger Nollan’s test all the same." Slip op. at 16.
• See page 17 for the opinion's run-down of the different ways different courts go on this issue.
• "This case requires us to answer that question. We now hold that Nollan’s unconstitutional-conditions test applies just as much to legislatively compelled permit conditions as it does to administratively imposed ones. Nothing in the text or original understanding of the Takings Clause justifies Nashville’s requested distinction. Its requested distinction also conflicts both with the Supreme Court’s unconstitutional-conditions precedent and with its takings precedent." Slip op. at 18.

The court held that the "text and history" of the takings clause compelled the outcome, slip op. at 18- 22, as does "Supreme Court precedent." Slip op. at 22-72.

Having determined that Nashville's ordinance is subject to the nexus and proportionality requirements, the court concluded that the city waived the argument that the ordinance met the test: "Nashville has waived any argument that it can satisfy this unconstitutional-conditions test. Knight and Mayes spent pages of their brief arguing that the city could not meet Nollan’s and Dolan’s elements. ... But Nashville did not even try to respond, opting to rely exclusively on its claim that Penn Central’s test applied." Slip op. at 28.

Finally, the court thought about the remedy, and whether it is just compensation (here's your in-lieu fee back, property owner), or equitable relief in the form of a declaratory judgment or an injunction? See slip op. at 28. But the court didn't resolve that question and left it for the district court on remand.

Here are the briefs, including the amicus brief our own firm filed:

• Property Owners' Opening Brief
• Nashville's Answering Brief
• Owners' Reply Brief
• Pacific Legal Foundation's amicus brief in support of property owners

Is this decision the last word on the issue? Most certainly not, and this question won't be definitively resolved until the Supreme Court decides to decide. But in the interim, this one is good in the Sixth Circuit. 

Knight v. Metro. Gov't of Nashville, No. 21-6179 (6th Cir. May 10, 2023)

Links And Materials From The 22d Annual Texas Eminent Domain Conference

Good crowd.

Here are the cases and other materials we spoke about on Friday at the 22d Annual Texas Eminent Domain Conference, in Austin. A big thank you to the Planning Chairs and to our friends at CLE International for the speaking invite.

• Sackett v. EPA (SCOTUS and WOTUS)
• Wilkins v. United States (Federal Quiet Title statute of limitations)
• Tyler v. Hennepin County (Takings, Excessive Fines - Home Equity Theft)
• Eychaner - the near-miss on revisiting Kelo
• Louisiana's successful (!) necessity challenge
• Self-executing Just Compensation: First Circuit (it is self-executing) vs Ninth Circuit (it isn't); see also Devillier v. Texas (pending)
• Property in the non-takings context: K-9 putting his paws on car is a "search" because...trespass to chattels

The other cases discussed are in your materials!

The nearby Caldwell County Courthouse. A classic.

Why did no one tell me that Jabba's Palace is in Austin?

April 27, 2023, 5-7pm, Honolulu: Join Us To Celebrate The Work And Career Of Professor David Callies

Come join us on Thursday, April 27, 2023, from 5-7pm, downtown Honolulu, to celebrate the retirement of Professor David L. Callies from the University of Hawaii Law School.

Join U.H. Law School Dean Camille Nelson, Professor Callies' colleagues, his students (present and former), the Hawaii legal community, and family and friends as we honor 43 years of scholarship, teaching, service, and practice.

Professor Callies is a prolific scholar and author, and has mentored generations of lawyers. Known especially for his work in property, land use, takings, administrative law, and state and local government law, he has also been presented with numerous awards including William and Mary's Brigham-Kanner Property Rights Prize, and the Owner's Counsel of America's Crystal Eagle. 

Invitation and how to RSVP (or click below). Space is limited, so please let us know you are attending as soon as you can.

Details:

Thursday, April 27, 2023
5:00-7:00 p.m.

Second Floor Gallery
Pauahi Tower
1003 Bishop Street
Honolulu, Hawaii 96813

Validated parking: Bishop Square garage (entrance on Alakea Street)

RSVP: [email protected]

See you there!

Professor David Callies - Retirement Celebration Invitation Apr. 27, 2023

CA4: Exactions Takings Claim Accrues When Owner Knows Of The Demand, Not When It Paid

As most of you probably already know, there's a demon lurking out there in takings claims. Not of the Levon Helm-narrated The Right Stuff variety, but maybe just as deadly in litigation.

That's right, the too-early-or-too-late thing (or in some cases, the too-early-and-too-late argument). Getting caught between arguments that a takings claim isn't ripe, and arguments that it is too late (statutes of limitation).

The U.S. Court of Appeals for the Fourth Circuit was dealing with the latter (a statute of limitations) in Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (Mar. 20, 2023), but there are lessons in the case for the other side of the issue, ripeness.

The facts are pretty straightforward. If you are going to build at least five single-family units, the town's zoning ordinance contains a requirement of "inclusionary zoning" (aka affordable housing; aka below-market units. Or if you don't want to build such housing, you can pony up some cash if the town agrees.

The owner of the property wanted to build 63 units so was subject to this requirement. It didn't want to build affordable units, so opted to pay cash (approximately $800k). The town agreed, and conditioned its issuance of a special use permit which would allow the project to proceed on the developer paying this in-lieu fee: no certificates of occupancy would issue until the fee was paid.

Then Epcon bought the property. It built the 63 homes, and sold them. It made the first installment payment for the in-lieu fee, and two years later paid the final payment. Voila, certificates of occupancy. 

Next stop, state court where Epcon asserted the in-lieu fee was illegal under a variety of theories, including a section 1983 claim that the fee was an unconstitutional taking and violated Epcon's due process rights. The town removed the case to federal court and moved to dismiss the federal claims because the lawsuit was filed more than three years after the in-lieu condition was imposed (it had been four years).

As we all know, section 1983 does not have a built-in SOL, so the courts have held that the SOL of the closest state-law analogy applies. In North Carolina, that's three years. The District Court agreed with the town and dismissed. You snoozed, so you lose Epcon.

The Fourth Circuit agreed. We suggest you go read pages 9-11 of the opinion for the reasons why. The bottom line is that "there is no 'distinctive rule' in the Takings Clause context to apply for determining when the limitations period for a § 1983 claim begins to run[,]" and the usual ("standard") rule applies: a 1983 claim is ready when the plaintiffs knows or has reason to know that it is injured. Slip op. at 9. But when did the injury here occur?

Epcon argued it wasn't really injured until it finished paying. Not so, held the Fourth Circuit, it was injured when it learned of the special use permit condition after it purchased the property.

Here, Epcon alleges that it suffered an injury under § 1983 stemming from the application of an unlawful special use permit condition. As the district court concluded, Epcon first had reason to know of this injury no later than 2015, when it began purchasing the land subject to the special use permit. Thus, its claim that the permit condition violated its rights to just compensation and due process accrued at that point and extinguished three years later. By the time Epcon filed suit in October 2019, the sun had set on its federal claims.

Slip op. at 9 (footnote omitted).

The court rejected Epcon's argument that the injury occurred when it was compelled to actually pay the fees, and that happened when it went to the town for the certificates of occupancy. And this isn't a regulatory takings claim, Epson asserted. If it were, the SOL clock might have started earlier. No, this is an unconstitutional conditions claim, and that's different. Slip op. at 10. We didn't lose our property right until we paid, it argued.

We disagree, the court held. "The distinction Epcon attempts to draw between exactions and regulatory takings proves little more than that the government need not physically appropriate property to enact a taking." Slip op. at 10. [Barista's note: "enact" a taking?]

And here's your money quote: "Once the government conditions the grant of a land-use permit on the surrender of a landowner’s right to just compensation, a Takings Clause claim becomes cognizable." Slip op. at 10. In other words, once that happens, the lawsuit window is open and the SOL clock is ticking. In other words, the claim is ripe.

Remember that one the next time the government argues an exaction case isn't ripe because the action being challenged as unconstitutional (the government's demand, and the subsequent owner payment) isn't complete.

Epcon Homestead, LLC v. Town of Chapel Hill, No. 21-1713 (4th Cir. Mar. 20, 2023)

Exactions, Takings, And Ripeness...Oh My! When Planning Officials Say "No," That's Enough (Even If They Might Have Said "Yes" Some Other Way)

There's a lot to digest in the 36-page Order of the U.S. District Court for the Southern District of Florida in case that mostly concerns the validity of an exaction a small property owner was required to pony up in order to tear down and replace an old home on its land.

Megladon bought the residentially-zoned property in 2016 to tear down the existing building and build a new one. Simple enough, right? It demolished the old house, and applied to the Village to build a new one. But the Village also needed a road, and began making noise about a "possible road dedication." And sure enough, eventually the Village notified Megladon that "a certificate of occupancy will not be issued until dedication of the right-of-way is complete." Slip op. at 4. There's a dispute over exactly whose law requires such a dedication -- Village or County? -- but that's not terribly important for our purposes. 

Megladon balked, as dedicating a road would require it to reformulate its plans. There's apparently a procedure by which a property owner can request and exemption or waiver, but "Megladon refused because of the 'legal inconsistency of doing so[.]'" Slip op. at 4. Instead, it sued in a Florida state court. The Village then removed the action to federal court. After removal, Megladon amended its complaint to add an unconstitutional conditions claim.

The inevitable motion to dismiss under 12(b)(1) and 12(b)(6) followed.

Many pages of the court's order (mostly) denying the motion to dismiss are devoted to whether the plaintiff sued the right defendant. Important to the case and the parties, but not really of interest to us. If you might be, check out pages 9-23. 

Page 24 is where the interesting stuff heats up. The court concluded the claims are ripe over the Village's objection that -- you guessed it -- it has not yet reached a "final decision." Slip op. at 24. The court concluded "[t]his argument strains credulity[,]" because the Planning Director send Megladon an email that indeed "a certificate of occupancy will not be issued until dedication of the right-of-way is complete." To the court, this looked like a final decision:

Especially when we view this communication (from the Village’s Planning Director no less) in the light most favorable to the Plaintiff, we don’t think we’re going out on a limb by saying that it sounds a lot like a final decision. Director Olmsted made clear that the Village would issue the permit provided the Plaintiff acceded to the dedication. See ibid. “Provided” in this context means “with the provision or condition (that); it being provided, stipulated, or arranged (that).” Provided, Oxford English Dictionary Online, https://www.oed.com/view/Entry/153449 (last visited Mar. 1, 2023); accord Provided, Merriam-Webster's (defining “provided” as “on condition that, with the understanding, if only”). And, in case there was any doubt, Olmsted clarified that Megladon would “need” to consent (in writing) to the dedication “prior to” the issuance of any permit, and he was pellucid that the permit “will not be issued until dedication of the right-of-way is complete.” SAC ¶ 64 (emphases added). The word “will”—like the word “shall”—indicates the imposition of a mandatory condition. See Hewitt v. Helms, 459 U.S. 460, 471 (1983) (“[T]he Commonwealth has gone beyond simple procedural guidelines. It has used language of an unmistakably mandatory character, requiring that certain procedures ‘shall,’ ‘will,’ or ‘must’ be employed[.]”); Will, Oxford English Dictionary Online (“An utterance of the auxiliary verb ‘will’; (also) a command, promise, or determination expressed by such an utterance.”); Will, Merriam-Webster's (defining “will” as “used to express a command, exhortation, or injunction”); Scalia & Garner 112 (“Mandatory words impose a duty; permission words grant discretion.”).

And Olmsted’s unequivocal use of the phrase “will need” in relation to the dedication requirement puts to bed the Defendants’ bordering-on-frivolity contention that “the response to [the architect’s] email was not a refusal to continue processing the application absent a showing of dedication.”

Slip op. at 25 (footnote omitted).

This all in the context of an exaction or unconstitutional condition claim, where the bad act (according to the court) isn't that the government actually denied the permit asked for, but only that the government imposed the condition. Slip op. at 26.

The order noted that yes, the property owner could have gone further in the administrative process under the Village's procedures. But that's what we call "exhaustion." Id. ("But the Supreme Court has made clear that the unconstitutional-conditions doctrine isn’t subject to an exhaustion requirement." (citing See Pakdel v. City & Cnty. of San Francisco, 141 S. Ct. 2226, 2231 (2021)). And you don't need to exhaust in order to ripen a federal takings claim.

And here's the kicker: the ripeness requirement isn't some hard-and-fast "one application" rule, but rather "[t]o assert a plausible unconstitutional-conditions claim, therefore, a plaintiff need only allege that there’s 'no question . . . about how the ‘regulations at issue [apply] to the particular land in question.''" Slip op. at 27 (citing Suitum v. Tahoe Reg’l Plan. Agency, 520 U.S. 725, 739 (1997); Williamson Cnty. Reg’l Plan. Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 191 (1985)). And the availability of a variance isn't important, because "[i]n Williamson County, after all, the Court was concerned only with whether the plaintiff could seek a variance from the initial decisionmaker." Slip op. at 28.

Thus, the takings claim was not filed too early.

But, you know that -- as the court noted -- "the Plaintiff isn't out of the woods just yet[,]' because the Village also asserted the claim was filed too late. Slip op. at 31. Yeah, this happens a lot in takings-land, where you can be accused with a straight face of being both too early and too late. Check out pages 32-34 for why (it turns on the construction of the sovereign immunity waiver statute, if you are interested). 

Nothing resolved except the plaintiff is allowed to proceed. But as you all know, in takings law sometimes just surviving to continue the fight is a victory.

Order, Megladon, Inc. v. Village of Pinecrest, No. 1:21-cv-22819-ALTMAN (S.D. Fla. Mar. 2, 2023)