Supreme Court Docket Report - October 8, 2012

Keywords: zoning, environmental law, telecommunications act, patents, exhaustion doctrine, malpractice claims, patent disputes, access, state records, privileges, immunities clause, commerce clause

Last Friday, the Supreme Court granted certiorari in five cases of interest to the business community:

Takings Whether Government May Deny Permits Based on Property Owner's Refusal to Pay for Unrelated Improvements Chevron Deference to Agencies' Jurisdictional Determinations Telecommunications Act Patents Exhaustion Doctrine Self-Replicating Technologies Federal Jurisdiction Legal-Malpractice Claims Involving Patent Disputes Access to State Records Privileges and Immunities Clause Commerce Clause Takings Whether Government May Deny Permits Based on Property Owner's Refusal to Pay for Unrelated Improvements

A key issue in zoning and environmental law is the ability of state and local land-use authorities to condition the issuance of building permits, zoning variances, and the like on a landowner's provision of a public benefit, such as turning part of the property into a public park or giving a portion of it to the local conservation agency. In Nollan v. California Coastal Commission, 483 U.S. 825 (1987), the Supreme Court held that such "exactions" violate the Fifth Amendment's Takings Clause unless there is an "essential nexus" between the exaction and the development project itself. Then in Dolan v. City of Tigard, 512 U.S. 374 (1994), the Court held that there must also be "rough proportionality. between the exactions and the projected impact of the proposed development." Id. at 386. Thus, a local zoning authority could, for example, condition the issuance of a building permit on, for example, the developer's giving sufficient land to the local conservation authority to offset any environmental effects of the new development, but it could not hold the would-be developer hostage for exactions well beyond the expected consequences of the development.

On Friday, the Supreme Court granted certiorari in Koontz v. St. Johns River Water Management District, No. 11-1447, to clarify two issues that Nollan and Dolan did not resolve. Koontz wanted to develop a piece of property that is subject to oversight by the St. Johns Water Management District, a Florida agency that oversees the state's wetlands. In return for approval of the project, the District required him to mitigate the effects of the development on the local watershed. The District sought to have him not only reserve the unimproved parts of his property for conservation, but also pay to replace culverts and fill ditches on 50 other acres owned by the District. Koontz refused, so the District denied him a permit to develop his land. He then sued in Florida state court, arguing that the exaction was an impermissible "regulatory taking."

The state trial court and intermediate appellate court both ruled for Koontz, holding that the exaction lacked the "essential nexus" and "rough proportionality" required by Nollan and Dolan, and Kootz was awarded his building permit and damages for the "temporary taking" that occurred during the eleven years when he was unable to begin the project. But the Florida Supreme Court reversed, on two grounds. First the court held that Nollan and Dolan forbid only the taking of real property, and do not apply when what is at issue is the payment of money. Second, the court held that Nollan and Dolan apply only when the government grants a permit with an unconstitutional condition, not when it denies a permiteven if the reason for the denial is that the landowner refused to agree to an unconstitutional condition.

The Supreme Court's decision in Koontz could resolve splits in authority on both those issues. A ruling for the District could create huge loopholes under Nollan and Dolan, allowing land-use authorities to avoid running afoul of the Takings Clause by the simple expedients of demanding cash exactions (rather than seeking interests in real property), and by denying permits to anyone who refuses to pay (rather than granting permits with conditions written into them). On the other hand, a ruling by the Court that a...