Oddball State Takings Measures

Now that the state legislatures have mostly wrapped up for the year, it is worthwhile to comment on two of this year’s oddball state takings measures, one from Florida and the other from Arkansas.  Both measures are more interesting for what they don’t do than for what they do.

The Florida measure is a follow up to the U.S. Supreme Court’s decision in Koontz v. St. Johns River Water Management District.  The Supreme Court ruled, among other things, that the so-called Nollan/Dolan standards govern a legal challenge to a permit denial resulting from a land owner’s refusal to accede to a government demand for a development exaction.  Recognizing how weird it would be to apply a takings test to a taking that never happened, the Supreme Court explained:

“Where the permit is denied and the condition is never imposed, nothing has been taken.       While the un-constitutional conditions doctrine recognizes that this burdens a  constitutional right, the Fifth Amendment mandates a particular remedy—just compensation—only for takings. In cases where there is an excessive demand but no taking, whether money damages are available is not a question of federal constitutional law but of the cause of action—whether state or federal—on which the landowner relies.”

Accordingly, the Supreme Court remanded the case to the Florida courts to decide whether the statute under which Koontz brought the case (Fla. Stat. § 373.617 (2010)) supports some form of monetary relief.  The Florida statute, on its face, quite clearly authorizes monetary relief only for actual takings, suggesting that plaintiff Koontz will ultimately end up empty handed.  Nevertheless, a panel of the Florida Court of Appeals sided with Koontz on remand and said he was entitled to monetary damages under the statute even though he had suffered no taking; an articulate dissent argued that the statute should be read according to its plain terms and that Koontz should be denied relief.   The St. Johns District filed a petition for review in the Florida Supreme Court and, now, more than a year later, the Court has still not decided whether it will address the issue on the merits.

Enter the Florida legislature.  In an apparent attempt to ensure that future litigants in the position of Koontz can obtain monetary relief (even though they have suffered no taking), this year the Florida legislature added a new section 70.45 to the Chapter of Florida laws dealing with “Relief from Burdens on Real Property Rights.”  Florida’s governor signed the measure on June 11^th.   The legislation states, in pertinent part:  “In addition to other remedies available in law or equity, a property owner may bring an action in a court of competent jurisdiction under this section to recover damages caused by a prohibited exaction. Such action may not be brought until a prohibited exaction is actually imposed or required in writing as a final condition of approval for the requested use of real property.”   Thus, on a going forward basis in Florida, if a community lays out in writing that it is denying a permit for lack of agreement on some proposed exaction, the property owner apparently will be able to seek not only an injunction but also damages as well.

But what of Mr. Koontz?   The new measure does not help him because it left the specific measure upon which Koontz relied (Fla. Stat. § 373.617) unaltered.  Moreover, the new measure only applies to exactions imposed after October 1, 2015, plainly excluding Koontz’s older case.  If anything, the new Florida measure seems likely to help sink Koontz’s chances of a financial recovery; the Florida legislature’s adoption of this measure demonstrates the legislature’s own recognition that the Koontz decision, standing by itself, does not support a compensatory remedy.

Meanwhile in Arkansas, the legislature adopted a new Private Property Protection Act (Act 1002) that appears to elevate symbolism over substance to a truly extraordinary degree.   The legislation includes the following sweeping finding:  “When state and local regulatory programs reduce the market value of private property and do not abate through their implementation a public nuisance affecting the public health, safety, morals, or general welfare, it is fair and appropriate that the state or the locality compensate the property owner for the loss in market value of the property caused by the implementation of the regulatory program.”  To implement this policy the Act creates a new takings cause of action based on regulatory programs that “permanently reduce[] by at least twenty percent (20%) the fair market value of the real property.”  In the event of a finding of a violation of the Act, the government has the option or either paying compensation for the reduction in property value or rescinding the regulation.

Following this bold language the act enumerates a series of exceptions that seems to render the Act essentially meaningless.  For example, the Act says that the new statutory definition of a taking does not apply to, among many other things, (1) laws or rules administered by various state agencies including the Arkansas Pollution Control and Ecology Commission  and the Arkansas Department of Environmental Quality, (2) any action that is taken in response to a threat to public health and safety, or (3) any action taken by any “governmental unit” pursuant to its “police power to makes laws and regulations for the benefit of its communities.”

Given the Act’s anemic character, is hardly surprising that some private property rights advocates opposed the bill, while local government organizations adopted a “neutral” stance.

The real target of the Arkansas bill appears to be a proposed new major electric transmission line that would send power from wind generation facilities in Oklahoma to Tennessee, traversing Arkansas along the way.  A separate provision tacked onto the bill including the Private Property Protection Act states that independent transmission line operators (who do not generate or distribute electricity) must compensate property owners in eminent domain  proceedings at three times fair market value.   In sum, the Arkansas’s new private property rights bill actually seems to be a vehicle for promoting parochial nimbyism!  Who knew the takings issue could be put to such imaginative uses?