The Post-koontz Landscape: Koontz's Shortcomings and How to Move Forward

• Publication year: 2014

The Post-Koontz Landscape: Koontz's Shortcomings and How to Move Forward

Kristin N. Ward

THE POST-KOONTZ LANDSCAPE: KOONTZ'S SHORTCOMINGS AND HOW TO MOVE FORWARD

ABSTRACT

This Comment analyzes the Supreme Court's opinion in Koontz v. St. Johns River Water Management District, and critiques the Court's language regarding environmental protection and local government regulation. In sum, the Koontz opinion reveals that the Court is unsympathetic to environmental protection at the local level, and is suspicious of local government's ability to make reasoned land-use decisions without extorting unfair value from property owners. The Court's doubtful attitude regarding the validity of wetlands protection and local government regulation are unsupported by the relevant scholarship.

Next, this Comment argues that applying the formulaic takings test prescribed in Koontz has the negative effect of reducing procedural flexibility for local land-use decision-makers. Acknowledging Koontz as the new reality for local governments, local officials will need to adapt to the changes imposed by expanding the Nollan-Dolan test to permit denials, and address the confusion caused by issues the Court left open in the opinion. This Comment recommends a new "negotiated permitting" procedure as a strategy to limit potentially expanded takings liability under Koontz. Under "negotiated permitting," a local government will always approve a permit subject to one acceptable condition, even if negotiations break down as they did in Koontz. Approving one condition reduces confusion about which mitigation options offered in negotiation will be subject to the "nexus" and "rough proportionality" requirements in the event that a permit applicant brings a takings claim against the permitting authority.

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Introduction.............................................................................................131

I. The History of Exactions Law....................................................133
II. Understanding the Koontz Case in Context............................138

A. Koontz's Facts and Procedural History.................................. 138
B. What Was at Stake in Koontz?................................................. 139
C. Koontz Majority opinion ......................................................... 141
D. Koontz Dissenting opinion ...................................................... 143
E. Public Reaction to the Koontz outcome .................................. 144

III. Mischaracterizations of Environmental Science and Local Government in the Koontz Opinion................................ 147

A. Basic Wetlands Protection Science and Policy........................ 147
B. The Koontz opinion Conflicts with the Policy Realities of Environmental Protection and Local Government................... 150

1. Environmental Protection .................................................. 150
2. Local Government.............................................................. 152

IV. Recommendations to Local Governments For Achieving Flexibility and Reducing Confusion Within the Koontz Framework.....................................................................................156

A. Flexibility Leads to Better Land-Use Decision-Making........... 156
B. Possible Local Government Reactions to Koontz .................... 159
C. A "Negotiated Permitting" Procedure Will Allow Local Governments to Reclaim Flexibility in Exactions Settings ....... 163

Conclusion.................................................................................................167

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Introduction

On June 25, 2013, the Supreme Court issued an opinion for a case titled Koontz v. St. Johns River Water Management District.¹ While the opinion received much less popular attention than other high-profile opinions issued that summer,² it has generated debate amongst property rights advocates, urban planners, state and local governments, and environmental advocates about the current reach of local government power and regulatory takings generally.³

It is important to note here that, while less glamorous than large federal environmental laws such as the Endangered Species Act,⁴ local land-use regulation has perhaps the greatest impact of any environmental law or regulation on the daily lives of residents within a certain community. The majority of federal successes regulating pollution and environmental quality were achieved through "right to pollute" schemes monitoring "point sources" such as smoke stacks.⁵ Achieving adequate regulation of "nonpoint source" pollution remains a major challenge in environmental law, and federal legislation has not been successful.⁶ The reality is that land-use decisions, which generally fall within a local government's police power, make up a substantial portion of environmental law, including managing urban sprawl, protecting wetlands, and preventing pollution hotspots, even though they may not trigger popular understanding as such.⁷ Therefore, Koontz is relevant not

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just as an exactions decision, but as an important indication of the Court's attitude toward local government as an environmental regulator and protector.

Koontz expanded a previous legal test to determine whether a government has effectuated a regulatory taking via an excessive exaction.⁸ "Exactions" are a regulatory tool used by local governments in land-use planning.⁹ Generally, a local government will require that a property owner meet a certain condition in order to grant a permit or other entitlement allowing "the intensified use of real property."¹⁰ Exactions have traditionally been considered a valuable tool for local governments in promoting economic development in a community while requiring builders to internalize some of the external costs.¹¹ This point is key to the rest of this Comment, which asserts that the Koontz opinion restricts local governments' flexibility in land-use decision-making, thus negatively impacting a very significant environmental protection tool.

Over the past several decades, courts have begun to view the exaction as an inherently suspect way for local governments to extort unfair benefits from landowners.¹² While exactions must certainly meet a threshold of constitutionality,¹³ this Comment argues that the Court mischaracterized several aspects of the Koontz scenario, resulting in the unwieldy extension of the "nexus" and "rough proportionality" test to conditions suggested by state and local governments to land developers prior to permit denials. However, flexibility is not necessarily precluded by the Koontz holding. Recognizing Koontz as the new legal reality for local governments, this Comment argues in favor of regulatory flexibility regarding exactions, and prescribes a record-generating "negotiated permitting" scheme as a way for local governments to limit confusion regarding their potentially expanded liability under Koontz and effectively return to a pre-Koontz regulatory world.

Part I of this Comment provides a history of the exactions cases leading up to Koontz. Part II describes how Koontz arose, and what was at stake. It also provides an overview of the majority and dissenting opinions, and discusses

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public reaction to the outcome. The first section of Part III includes general background information about wetlands protection to facilitate understanding of the policy issues in Koontz, and the second section identifies several of the Court's mischaracterizations of environmental protection policy and local government function in the opinion. Part IV discusses the benefits of regulatory flexibility in exactions decisions, elaborating on why local governments should adapt to maximize flexibility in spite of Koontz. Part IV then assesses possible ways that local governments could react to the Koontz opinion, and proposes, by analogy to federal negotiated rulemaking, that local governments implement "negotiated permitting" procedures to limit uncertainty about increased takings challenges under Koontz.

I. The History of Exactions Law

The Fifth Amendment to the United States Constitution provides that private property shall not "be taken for public use, without just compensation."¹⁴ This prohibition applies both to federal and state government takings, but still allows local governments to restrict land in certain ways via regulation such as permitting and zoning schemes.¹⁵ The Supreme Court has addressed several times whether requiring something from a landowner "as a condition for issuing a land-use permit" violates the landowner's constitutional rights, and "ha[s] long recognized that land-use regulation does not effect a taking if it 'substantially advances legitimate state interests' and does not 'deny an over economically viable use of his land.'"¹⁶

Historically, the Court has assessed Fifth Amendment takings claims against regulatory restrictions on private property under a more flexible legal standard than claims concerning physical occupations or seizures of land.¹⁷ For example, in Penn Central Transportation Co. v. New York City, the Court considered whether a city effectuated a taking by restricting the development

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of Grand Central Terminal.¹⁸ The Court discussed the nationwide movement to preserve historic landmarks, noting several aspects of public policy that have parallels to environmental conservation concerns.¹⁹ First, the Court noted that many historic landmarks have been lost in the years leading up to the case "without adequate consideration of either the values represented therein or the possibility of preserving the destroyed properties for use in economically productive ways."²⁰ Second, the Court acknowledged the "widely shared belief that structures with special historic, cultural, or architectural significance enhance the quality of life for all."²¹ The Court's favorable presentation of these public policy considerations is in stark contrast to language used in...