SUBLIMATING MUNICIPAL HOME RULE AND SEPARATION OF POWERS IN KNICK V. TOWNSHIP OF SCOTT.

• Author: Thomas, Robert H.

Introduction I. Takings, Exhaustion, Preclusion, and Removal A. Mahon: An Old Idea Renewed B. Williamson County. The Supreme Court Makes Up the State Procedures Requirement C. The San Remo Preclusion Trap D. International College: The State Procedures Requirement Hits Rock Bottom E. Takings Litigation Devolves into Dickensian Dystopia II. Knick Reopened the Federal Courthouse Doors A. Rose Mary Knick: Ghostbuster B. The Knick Majority: "That's Some Catch, That Catch-22 C. The Knick Dissent: Chicken Little and Let Sleeping Dogs Lie D. Stare Decisis and Reverse Percolation III. Discovering Knick's Home Rule Rationale Conclusion INTRODUCTION

It may be bordering on apostasy in certain circles to suggest that Knick v. Township of Scott (1)--in which a sharply divided Supreme Court held that municipal and local governments may be sued in federal court to recover just compensation for Fifth Amendment regulatory takings (2)--is a ruling that municipalities could celebrate. After all, how could a decision that overruled a case that for more than three decades had effectively shut federal takings claimants out of federal court by relegating them to (presumably) more local government-friendly state courts be a good thing for local governments?

The Knick majority concluded that a federal regulatory takings claim is ripe for federal court review from the moment a municipality adopts an allegedly confiscatory regulation without providing compensation, even if a state court would also entertain a state law takings or inverse condemnation claim. (3) The reason why local governments should look for a silver lining in the majority ruling is the unstated premise which all the justices confronted: Are local governments merely conveniences of the state, or are they separate from the state and its judiciary? This Article suggests that the answer to that question is the latter--state courts resolving state law inverse condemnation and state takings claims are not part of a local government's taking and compensation mechanism.

First, Part I of this Article summarizes the nature of a regulatory takings claim and explains the rationale which the Supreme Court crafted in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City to conclude that federal regulatory takings claims were not ripe for federal court review until a state court rejected a property owner's pursuit of compensation through state procedures. (4) Part I also describes how the state procedures requirement and preclusion rules were employed to catch property owners in a trap in which their federal takings claims were deemed to be either too early or too late. Second, Part II analyzes the Knick decision and the majority and dissent's rationales, and focuses on the critical--but unstated--rationale at the center of the Court's debate. Finally, the Article concludes by arguing that reopening the federal courthouse doors to federal takings claims without the need to first pursue state remedies is supported by a strong view of municipal home rule and autonomy.

1. TAKINGS, EXHAUSTION, PRECLUSION, AND REMOVAL

   This Part of the Article summarizes the nature of a federal takings claim, how the Court in Williamson County adopted the state procedures requirement with little briefing (and none of the usual percolation of issues), and how two subsequent decisions magnified Williamson Countys inherent unfairness.

   1. Mahon. An Old Idea Renewed

      This section briefly explains the nature of a regulatory takings claim and the rationale the Court created in Williamson County to justify the state procedures requirement, purportedly based on the text of the Fifth Amendment, but in reality, manufactured from whole cloth by the Court.

      A federal regulatory takings claim (5) is the idea, first articulated in the modern era in Pennsylvania Coal Co. v. Mahon, (6) that if a regulation goes "too far" in restricting the owner's use of property, it is the functional equivalent of an exercise of eminent domain and will be recognized as a taking, for which the Fifth and Fourteenth Amendments mandate the payment of compensation. While Mahon is often cited as the first takings case, (7) the idea that an exercise of governmental power other than the eminent domain power could trigger an obligation to provide an affected property owner compensation was a long-standing principle of the common law. (8) In short, if a local government's regulation restricts an owner's use severely, it is, from the owner's viewpoint, no different than a seizure of property by eminent domain. (9) Since 1897, state and local governments have been--by virtue of incorporation of the Fifth Amendment under the Fourteenth Amendment's Due Process Clause --subject to the just compensation imperative. (10) For more than 60 years after Mahon, there was not a serious question that a federal claim for compensation could be asserted against local governments by property owners in federal court. As a result, federal courts routinely resolved these cases.

   2. Williamson County. The Supreme Court Makes Up the State Procedures Requirement

      In 1985, in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, (11) the Court--mostly out of nowhere, as neither the court below nor the parties had argued for it--adopted two procedural prerequisites owners had to show before a federal takings claim was considered ripe for federal court. First, the regulating agency had to make the final decision on what uses are allowed under the regulation. (12) If the agency's process is ongoing, there is no way for a reviewing court to tell what uses of the property remain. This is known as the "final decision" requirement. (13) Second, the owner must not only have been denied compensation by the local government, but she must also have sued the local government in state court for inverse condemnation to try and force it to pay compensation for the regulatory taking under state law. (14)

      In what became known as the "state-litigation" or "state procedures" requirement, the Williamson County Court reasoned that the Fifth Amendment only makes a taking of property "without just compensation" unconstitutional. (15) The majority based its conclusion on the text of the Just Compensation Clause: "[N]or shall private property be taken for public use, without just compensation." (16) The Court also referenced a touchstone of eminent domain law, that "the Fifth Amendment [does not] require that just compensation be paid in advance of, or contemporaneously with, the taking: all that is required is that a 'reasonable, certain and adequate provision for obtaining compensation' exist at the time of the taking." (17) This principle, which allows the federal government to "take now, pay later," would become a key point of debate between the Knickmajority and dissenters. (18) The Williamson County Court ultimately held that Tennessee courts would entertain an inverse condemnation lawsuit under a state statute, and, conflating local governments with "the State," held that a state-law inverse condemnation lawsuit, prosecuted in state court, was a reasonable, certain, and adequate process to secure compensation. (19) The owner must both pursue a lawsuit--and lose it--before the federal takings claims ripened. (20) The Court reasoned that because the local government had not yet actually "denied" compensation until it lost the owner's state court lawsuit to recover compensation, the constitutional wrong had not occurred until the state supreme court ruled in the government's favor that no compensation was owed. (21) Only then was a taking "without just compensation," and a federal takings claim substantively ripe for federal court consideration. (22)

      To characterize this rationale as facile and recursive would be an understatement. In nearly every circumstance, the local government had, almost by definition, already "denied" owing compensation, either by not affirmatively providing for compensation in the allegedly offending regulation itself or by disclaiming Fifth Amendment liability in response to an owner's pre-lawsuit demand. The government's position in nearly every regulatory takings case, after all, is that it is merely regulating property under its police or other regulatory power --not taking it by eminent domain. Thus, it should have surprised no one that these regulations rarely if ever acknowledged the obligation to provide compensation. This convoluted logic resulted in commentators beginning to take apart Williamson Countys rationale and its stretching of the constitutional text almost immediately after the Court issued the opinion. (23)

      The Court's analysis in Williamson County was easily subject to attack because the Court based its holding on ripeness even though none of the parties raised or briefed it. The parties disputed whether a restriction on the use of property that is eventually lifted could be a temporary taking requiring compensation (an issue later resolved by the Court positively in First English Evangelical Lutheran Church v. Los Angeles County). (24) The U.S. Solicitor General, however, as amicus curiae argued that federal courts could not even hear a federal claim for compensation (permanent, temporary, or otherwise) until the owner either lost a state law inverse claim in her state's highest court or could show that the remedy was not available under state law. (25) The Court latched on to that argument and adopted it as a virtual wall around the federal courts for federal takings claims.

      The Court ventured into unchartered waters when it relied on two Tennessee Court of Appeals decisions to support the conclusion that a property owner could seek--and presumably in the right circumstances recover--just compensation for a regulatory taking in an inverse condemnation lawsuit. (26) The problem was that the only Tennessee court that mattered--the Tennessee Supreme Court--had actually not interpreted...