Courthouse Steps Oral Argument: Sheetz v. County of El Dorado, CA

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On January 9, 2024, the U.S. Supreme Court will hear oral argument in Sheetz v. County of El Dorado, CA. This case is a property-rights challenge by a California landowner to nearly $24,000 in development fees levied by the county as a condition for receiving a permit to build a manufactured home. The court will determine whether a monetary exaction imposed by a local government as a condition for a building permit is exempt from the “essential nexus” and “rough proportionality” requirements established in Nollan v. Cal. Coastal Comm’n and Dolan v. City of Tigard, simply because the exaction is authorized by local legislation.

Please join us as we break down and analyze how oral argument went before the Court. 

Featuring: 

  • David P. Lanferman, Partner, Rutan & Tucker LLP
  • Nancie G. Marzulla, Partner, Marzullla Law

 

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As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript

[Music]

 

Jack Capizzi:  Well, hello, everyone, and welcome to today’s Federalist Society virtual event.  My name is Jack Capizzi, and I’m an Assistant Director of Practice Groups with The Federalist Society. Today, we are excited to host a “Courthouse Steps Oral Argument” program,      following argument in Sheetz v. County of El Dorado, California.

 

      We’re delighted to be joined today by Nancie Marzulla, partner at Marzulla Law and the author of an amicus brief in the case on behalf of the Atlantic Legal Foundation. We are also joined by Dave Lanferman, partner at Rutan and Tucker LLP. David also has a brief in the case on behalf of the California Building Industry Association and National Association of Home Builders. If you’d like to learn more about today’s speakers, their full bios can be accessed on our website, fedsoc.org.

 

      As always, please note that all expressions of opinion are those of the speakers on today’s call. After our speakers have given their remarks, we will turn to you, the audience, for any questions you might have. If you have a question at any point, please type it into the Q&A function at the bottom of your screen, and we will do our best to answer as many as we can. With that, thank you all very much for being with us today. Nancie, the floor is yours.

 

Nancie Marzulla:  All right. Well, thank you, Jack. I am delighted to be here and delighted to be      joined by my colleague, Dave Lanferman. And we are here today to talk about a very interesting case and an extremely lively and far-reaching argument today held by the Supreme Court in the case. Now, the facts that give rise to this case are surprisingly ordinary. They involve a gentleman, George Sheetz, who went about trying to get a permit or approval from the County of El Dorado to construct a very modest manufactured house on his property. Now, bear in mind that Mr. Sheetz’s proposed construction complied with all of the applicable zoning laws and requirements. The only hiccup in his approval process was the county’s demand that he pay to the county almost $24,000, and if he didn’t pay almost $24,000, they wouldn’t give him the permit.

 

      Well, why did the county want this money? It’s quite a bit of money     almost $24,000. They told him they needed the money for traffic -- it was a traffic impact mitigation fee. Well, Mr. Sheetz said, “Well, what traffic do you anticipate I’m going to be generating by putting this modest house on my property?” Well, the county responded by saying, “Well, that’s not the point. The point is we need this money because we have a fund that we need money for that we use to widen streets, repair streets, etc., and this is the way we fund it. When people come to us and want to get a building permit, we look and see where in the county the property is located;      that’s the first step. Then      we say, ‘Well, what are you going to build on the property? Is it a single-family residence, is it a multi-family residence, or is it commercial?’ So depending on the answers to those two questions, we impose a pre-fixed, established fee on every building permit applicant. And it’s our understanding as the county that that’s all we have to do to pass constitutional muster because this is a fee scheme set out by the legislature          the county legislative body, so to speak.

 

      And so, Mr. Sheetz said, “Well, that doesn’t seem right to me.” So he, in fact, challenged -- he brought a constitutional takings challenge to this permit exaction fee that was being imposed on him, and it turns out that the California courts did, in fact, agree with the county. They said, “Look. If this were a fee imposed by some other process—maybe an individual determination that had been made by the county—we’d really dig into it. And      we would require that the county show that there was a nexus between the fee and the traffic that his proposed use would cause      that’s the so-called nexus test announced in Nollan.      “And      we would also look to see that the fee was roughly proportional to the traffic burdens or the impact on the roads that Mr. Sheetz’s proposed development might create.” And that’s the so-called Dolan test. “So in other circumstances, those tests would apply: the Nollan/Dolan test. But in this case, because it’s the legislature, we get, essentially, a free pass. All we have to show is that, well, there’s traffic problems or street construction needs in the county, and we think this is a good idea to fund the construction by imposing these fees on permit applications.”

 

      The specific question the Supreme Court agreed to hear was whether there is, in fact, a legislative exception to what is referred to as the Unconstitutional Conditions Doctrine—that’s the Nollan/Dolan test I just described. Was the California appellate court and lower courts -- were they correct? This case has generated a lot of interest among -- various interest within the -- across the country.

 

      Seven amicus briefs were filed—really, eight. The American Planning Association filed a brief which purported to be on behalf of neither party, but it was really on behalf of the county. So there were eight      briefs filed in support of the county, including the solicitor general of the United States, a variety of states, including the state of California. And      their basic argument was, “Everything’s working fine. And, by the way, look at all those wonderful projects we can fund by requiring people who want to use their property to pay a fee. It’s great. It's wonderful.”  

 

      Well, on the support of Mr. Sheetz, he had almost twice as many -- really, well over twice as many groups jump in and say, “Wait a minute. It doesn't make any sense to carve out from this heightened review under the Unconstitutional Conditions Doctrine to say that, ‘Well     , if the legislature does the taking that they’re exempt from Nollan/Dolan.” We have groups such as the Southeastern Legal Foundation, the National Chamber of Commerce, National Association of Realtors.      Dave will talk about his brief for the National Association of Homebuilders and the California Building Industry Association. In my brief, on behalf of the Atlantic Legal Foundation, I talked about the fact that the constitutional injury is the same, regardless of who does the taking.

 

      Now, interestingly, this case gained so much public attention that the Wall Street Journal wrote an editorial that was published on Saturday, and it was their lead editorial, and they came out all -- full force on behalf of Mr. Sheetz, and they said, “Politicians increasingly trample property rights to promote what they deem to be the public good. Progressive states and cities warn that a ruling for Mr. Sheetz could imperil such schemes.” Perhaps. But the Constitution doesn’t let the government commit highway robbery.” So with that, Dave, why don’t I turn to you and get your take and the take from the building industry.

 

Dave Lanferman:  Well, the building industry, both the California Building Industry Association and the National Association of Homebuilders, were very concerned about this case back when it was still in the California state court system and had us join with the petitioner, Mr. Sheetz, asking the California Supreme Court to review and reverse the court of appeal because of the conflict in the jurisdictions and also—with the point you made—that there’s no principled constitutional reason why an exaction is legitimate if it’s made by the board of supervisors but not legitimate if it’s made by the planning commission. The impact is the same on the subjected property or developer.

 

      The California Supreme Court declined to review the case without comment. The case is really important to the building industry—the people that I briefed on behalf of—because, increasingly, development impact fees are a major factor, perhaps even the primary factor, in the cost of construction of residential housing, depending on what jurisdiction you’re in. In a jurisdiction like California, in which the courts have declined to apply Nollan/Dolan and Koontz across the board and in which the courts say, “If the county adopts a schedule of fees, that’s beyond our scrutiny,” -- California and other cases like -- other states like it find that their      impact fees continue to rise.

 

      Whereas a study that was conducted in 2019 by the California Department of Housing and Community Development reported that, on average, development fees continue to rise in California while nationally, fees have decreased. In the jurisdictions that do apply Dolan—which requires a showing of rough proportionality between the amount of the fee and the impact of new development—those cases have a constraint, not just on -- does their -- has the government shown a reasonable nexus or a connection between the impact of the project, but is the dollar amount of the fee or exaction roughly proportionate, at least, to the impact?

 

      So there is a constraint in those states, which has been missing in California, which is one of the reasons that the building industry was very optimistic that the Court would not just grant review in this case but reverse it and make it clear that the standards that it had developed in 1996 with Dolan and then later on in 2013 with Koontz -- that those standards, requiring both reasonable nexus and a rough proportionality -- that those standards should apply across the board, regardless which branch of government or which level of government establishes the impact fee. 

 

      So there was briefing by other amicus groups in addition to the Homebuilders, pointing out that a study conducted for the California Housing and Community Development Department in August of 2019 showed that the average regulatory costs of fees and exactions added $23,455 per single-family residence and added over $19,000 for multi-family residential unit. They reported that that was almost three times the national average as to the amount of fees. Those numbers actually seem low to me. I practice in California and have been dealing with development fees for 30-something years. $24,000 dollars would be a bargain in most parts -- certainly, in coastal California.

 

      A study by the Homebuilders of the Greater Central Valley found that, on average, fees average $50,000 per house. In Sacramento County—which is not one of the higher-priced residential areas in the state—they found that the average fees added $97,000 per house and other examples in the suburbs around Sacramento of up to $105,000. Going back to 2018, again, the [inaudible 14:08] own agency, The Housing and Community Development Agency, conducted a study that found several cities charging up to $157,000 per house 5 years ago. So it is a significant factor in the cost of housing.

 

      California is very visible and audible in terms of recognizing that we have a housing shortage, and the housing we do have is very expensive. The California legislature actually passed a bill in which they made a legislative finding—California government code 65589.5—which the legislature said that the excessive costs of California’s housing supply is partially caused by many local governments that require high fees and exactions be paid by producers of housing.

 

      In recent years, California state government has been enacting bills to try to improve the feasibility and reduce the cost of producing housing. Basically, it’s put the state government in conflict with local governments who are still, generally, resistant to having their discretion trimmed in terms of approval of housing, but the state has been pushing in favor of it. It was ironic, in this case, that the state would weigh in on the side of the county in favor of, basically, unconstrained fees because, in the last four years, there have been two significant bills passed to require some standards—legislative standards—for fees imposed on new housing development, regardless of what the Supreme Court does with the Sheetz case.

 

Nancie Marzulla:  So, Dave, how did you think the argument went today?

 

Dave Lanferman:  I [inaudible 16:08] -- I don’t get the opportunity or have the interest to listen to many of these. I thought it was fascinating. I thought that the advocate for the petitioner, Paul Beard, did an excellent job of arguing the issue raised in the Sheetz case and addressing the question presented on which the Supreme Court had granted cert. As you said, the question presented was, “Is a permit exaction exempt from the Unconstitutional Conditions Doctrine, as applied in Nollan and Dolan, simply because it’s authorized by legislation?” And he explained, both as a matter of constitutional doctrine, there’s no reason for carving out an exception in favor of fees imposed by a board of supervisors or a city council.

 

      The government attorneys for the County of El Dorado and then the solicitor general, which granted evidence to argue in support of the county -- they didn’t really seem to be arguing this case. They, basically, wanted to go back to cases coming up before this, like Dolan. They seemed to question, why would the Supreme Court require that there be a showing of rough proportionality as to any fee? And then, of course, they argued that this was not a taking, and so that neither Dolan or Nollan should apply, that they shouldn’t have to show either a nexus or rough proportionality. There were several justices from the Supreme Court—Justice Jackson, Justice Kagan—who seemed to refuse to see a difference between development impact fees and taxes or user fees.

 

Nancie Marzulla:  Dave, I, like you, was astonished at how far afield the argument seemed to go. At one point, Justice Kagan was talking about the fact that she’d have to give up her easy pass. So this really -- for such a very narrow laser-pointed issue, the Courts were -- the justices on the Court were saying, “Well, what about property taxes? What about user fees,” and on and on and on. It really got very far afield from the precise issue before the Court. And      a couple of the justices tried to bring the issue back -- bring the Court back to the narrow issue before it. I think Justice Alito and Justice Gorsuch both tried to refocus the argument.

 

      And did you hear what I heard, Dave, which was the county attorney agreeing --

 

Dave Lanferman:  Yes.

 

Nanci Marzulla:  -- with the petitioner, Mr. Sheetz, that there’s no blanket exception for legislative takings? And I believe it was Alito—it may have been Gorsuch—who seemed like they didn’t really hear that either. And they really wanted to button that     really, essentially, concession down     and they asked it squarely, and the county attorney said, “Yes. That’s correct. That is the county’s position.” And I think everybody then said, “Well, what are we doing here then?”

 

Dave Lanferman:  At least that was the implied consensus after he got that concession from the county’s attorney.

 

Nancie Marzulla:  Yeah.

 

Dave Lanferman:  The whole argument started -- Paul Beard, for the petitioner, Mr. Sheetz, went first and, of course, he was questioned critically by -- I thought, by Justice Jackson and Justice Kagan, with a little bit of questioning from Justice Sotomayor, again, not focusing on whether or not there should be a legislative exemption—whether there should be an exemption from Dolan for legislative fees. But      their questioning went back to try to reargue Koontz, whether there should be a distinction between development impact fees and other revenue-raising measures used by local governments. And the petitioner’s counsel was trying to point out—with some support from Justice Gorsuch and Justice Alito—that taxes are different than fees. They have different procedural and constitutional limitations. As an aside, in California, as a result of statewide voter initiatives like Proposition 13 and subsequent, pretty much any tax has to be voter approved. So these couldn’t be valid state taxes under California’s constitution. [inaudible 21:09] --

 

Nancie Marzulla:       Right. And I think that the -- Paul Beard, for Mr. Sheetz, made it clear in his briefs that this issue was very narrow, and yet, nevertheless, we wound up spending an enormous amount of time with all of the counsel addressing the issue, “Well, what’s a tax, what’s a user fee, what’s a this, what’s a that?” In fact, the argument even got so attenuated that, at one point, Justice Alito got into a disagreement with the attorney for the county, who argued -- tried to argue that the appellate court’s decision was ambiguous. And he said, “Ambiguous? What makes you say that?” And he actually got out the decision and read portions of it to her, and she said, “Well, I still think that’s ambiguous.”

 

Dave Lanferman:  [inaudible 22:14] The California Court of Appeal had explicitly stated that its      reason for upholding the county’s traffic impact fee schedule was based on the fact that it had been legislatively adopted and was broadly applicable to an undefined number of persons. That was the [inaudible 22:32] reason for the decision, and much of the argument from those who disagreed with the petitioner was far afield from that point.

 

      There was argument -- I think it was Justice Jackson or maybe Justice Kagan said something about, “Well, what if the county had just required me to put a toll booth in my driveway, and I pay a toll every time I went on to the public road?” There were some extreme examples put forth, again, far afield, and I think there were other Justices who pointed out that the question on which cert had been granted was the narrow issue of, “Is there an exception to the rule set forth in Nollan/Dolan and Koontz, depending on what branch of government adopted the fees?”

 

Nancie Marzulla:  I agree with you. I read the California Appellate decision as being crystal clear that we’re not even going to look at any arguments about whether this was a taking, whether it wasn’t a taking, anything along those lines, because the rational basis test applies because it’s a legislative taking. And      that test—which we all know is a very low bar -- that bar has been easily crossed, and so, therefore, that’s the end of the discussion.

 

      So the argument today was one in which all of the justices, including Justice Thomas, on several occasions, participated by asking questions, probing responses, and so forth. In fact, Justice Thomas kicked off the questions by stating at the outset that -- in his question, that his understanding of the issue was that it was, in fact, a very narrow issue. And you would have thought that that would have kept the counsel focused on that very specific issue     legislative conditions. But he failed to keep them focused on the issue at hand.

 

      I guess one other interesting thing, in my mind, was the fact that the SG’s office did, in fact, request argument time, and yet, I didn’t find the SG’s argument that compelling. I don’t think they made anything -- added much to the argument for why this legislative exaction should be exempt from the Nollan/Dolan heightened scrutiny. So      I think that was kind of a wasted opportunity they had. If they actually had anything helpful to say for their side, their view, they didn’t necessarily manage to get it across very well during the argument.

 

[CROSSTALK]

 

Dave Lanferman:  [inaudible 26:03] solicitor general’s position in the case was a bit odd. In their application to file their amicus brief or to ask for time for argument, the federal government made a point of saying that the federal government generally doesn’t impose development impact fees. We have some mitigation fees for wetlands and other federal programs, but we’re not really a player in this development impact fee arena. Nevertheless, we want to come in on the side of government, in general, to basically be given as much discretion as possible in raising revenue and that the standards should be not very stringent when it comes to development impact fees.

 

Nancie Marzulla:  Yeah.

 

Dave Lanferman:       Again, it was -- that argument, together with the county’s argument about what standard should apply here, made me wonder, okay, if they agree that there should be a nexus and a rough proportionality requirement for fees imposed on an -- on      ad hoc project-     specific basis, if they agree that that’s the law, why doesn’t that standard apply otherwise, or why don’t they want it to apply otherwise, or are they afraid that they can’t meet that standard if it’s applied across the board?

 

[CROSSTALK]

 

Nancie Marzulla:  That’s an excellent point.

 

Dave Lanferman:  What’s the reason      other than you want unfettered discretion imposing without any limitation? [inaudible 27:40] brought that up, and it’s kind of an elephant in the room, from my point of view. They’re      arguing that we want loose standards but not really telling the court why they want loose standards—the implication being because we want to be able to raise money without having to show rough proportionality. I thought it was odd.

 

Nancie Marzulla:  So I’m going to put you on the spot and ask you to call the case. How do you think it’s going to come in?

 

Dave Lanferman:  I think the majority of the Court seems inclined to focus on the narrow [inaudible 28:19]      presented, and I think there’s a majority of the justices that will reverse on that basis. There was a couple of them that suggested that if we just reverse the California Court of Appeal and say there is no blanket exemption, we remand the case, and the Court can decide whether or not the county has carried its burden to show that the fees are reasonable—they meet a reasonable nexus standard and they meet a rough proportionality standard. That issue can go back, and we don’t have to get into the weeds on the rest of it. I think that probably has      at least      five votes.

 

      I wasn’t sure where Justice Barrett came out of that. There were some questions she asked that indicated to me she had some confusion with varying distinguishing fees from assessments, which have entirely different constitutional and statutory requirements. But I think it would be reversed and remanded for proceedings applying the Nollan/Dolan standards.

 

Nancie Marzulla:  Yeah. I fully agree with you. I count      at least      five votes. I’m not sure who the five are—Thomas, Alito, I hope Roberts. I think we’ve got five. We’ve got enough for a reversal. I think that we might get a concurring opinion, and that concurrence would delve into this user fee, tolls, and so forth. So there might be a concurring opinion that would make it clear that their vote in favor of a reversal was very narrowly focused.

 

      To the extent that we get a dissent, I -- Kagan jumps out at me because she made such a big deal about the fact that she didn’t even think this was a taking at all. I think Jackson fell in that category, as well. She didn’t understand why the Fifth Amendment was even implicated here. And      I do have to say I think that issue -- the farther -- the longer the argument went along, the more this issue became diffused, and we lost track of the fact that this was an application to use property that was being conditioned.

 

Dave Lanferman:  I think, as their argument went on, both the county and the solicitor general seemed to be relying [inaudible 31:01] on practicality and workability type arguments, basically, saying, “Well, if a local agency cannot legislatively adopt a schedule of fees, how is the government supposed to comply with the language in Dolan that says there should be at least a good faith effort to make an individual determination that the fee amount is roughly proportional?” Does that mean that each parcel has to go through a separate analysis? And I thought petitioners counsel, Mr. Beard, did a good job of responding to that, pointing out that there can still be categories of fees that [inaudible 31:44] be adopted legislatively.

 

      So the thing that was missing in the Sheetz case is Mr. Sheetz paid a fee based on the category the county put his house -- his single-family house in, and there was neither an opportunity at the administrative level or in the court level for him to question the applicability of that category. The county attorney argued at length about the studies that they’d put together and how they had carefully selected the fee amounts. And that may all be true, but if there’s a fee payer who questions that, under the California court decision, that fee payer doesn’t get a day in court to question the government agency as to how they put the fee together or how it should apply to him.

 

      It’s doubtful—and I think also petitioner’s counsel pointed out—that in the states that don’t follow California      but which do require some effort to show proportionality, there has not been -- floodgates haven’t opened with litigation by property owners and developers questioning fees. It’ll be probably more the exception than the rule when there’s a really anomalous or an exorbitant fee that somebody wants to spend the time and money in court fighting.

 

Nancie Marzulla:  That’s an excellent point. Dave, I think we may want to start taking some questions because I see we’ve got a bunch of them here awaiting a response.

 

Jack Capizzi:  Well, thanks, Nancie     . I’d be happy to read out some of the questions that we’ve gotten so far. So let’s see. Let’s start from -- one of our earlier questions was asking, “What is the taking? Is it more than money? Does it have to be more than money?”

 

Nancie Marzulla:  Well, I can jump in and answer that. And Dave, chime in, please, but the taking here is the right to use one’s property. And that’s really what distinguishes this case from a toll or a user fee or any of those other kinds of monetary payments that the government can require. The pivotal issue—the fundamental issue—is the right to make use -- beneficial and productive use of your property. That is a Constitutional right, and the government can’t come in and say, “Yes. We’ll let you use your property. We’ll give you permission to do so, so long as you give us      fill in the blank: a new boat, cash, part of your property, part of property somewhere else, money to buy property somewhere else.” Whatever it is, the government can’t do that without saying there is a good reason, a nexus between your proposed use, and your proposed use would create burdens on the public that your payment of whatever it is would proportionally address.

 

Dave Lanferman:  I can’t improve on that. I think the Koontz opinion itself had [inaudible 35:10] has the right to condition approvals of land use on things that are necessary to mitigate adverse public impacts, but it must do so by means that are reasonably related to and roughly proportional in amount to the impact imposed. It’s the difference, probably, between saying, “I can charge you a one-dollar traffic impact fee versus a million-dollar traffic impact fee. If there’s no standard, the vulnerability to extortionate demands as a condition of being able to use your property is there.

 

Jack Capizzi:  Thank you both for those answers. I’ll move on to another question from earlier on in the program when we were just going through the facts of the case. This questioner asks, “What is an unconstitutional condition or what an example of such a condition might be?”

 

Nancie Marzulla:  Well, I think this case is a prime example: the government coming in, as we just said, and saying, “You have a lawful right, you have a constitutional right, to put this manufactured home on your property, but we’re not going to let you do so until you give us          in this case, it was money.

 

Dave Lanferman:  I think there’s also a really good explanation of the Unconstitutional Conditions Doctrine in a case earlier this year     —or earlier in 2023—from the Sixth Appellate -- from the Sixth District, Knight v. Nashville Metropolitan, in which they explain that the Doctrine of Unconstitutional Conditions didn’t necessarily originate in property or land use cases. It originated in free speech cases, where the government may not have an obligation to give you a permit to use the school auditorium for an assembly, but if they are going to give you a permit to use that public facility, they can’t impose a condition like requiring you to say the Pledge of Allegiance or drop out of the Communist Party. The condition has to be reasonably related to a legitimate government purpose.

 

      And so, this -- in Koontz -- well, actually, going back to Dolan, the Court pointed out that this whole doctrine of illegal exactions grows out of unconstitutional conditions. The government can impose reasonable conditions. Even if it doesn’t have a duty to give you something, if it does impose conditions, those have to be -- they can’t require you to surrender your constitutional rights.

 

Jack Capizzi:  Well, thank you both for your answers there. Another guest asks, “In light of the county’s concession, might the Court decide that cert was improvidently granted?”

 

Nancie Marzulla:  They could. That did pop in my mind during the argument, but I don’t think they will in this case. There was just too much interest by all of the justices in the issue before it. So I think we’re going to get a ruling, and, hopefully, Dave and I are both correct—we’ve read the tea leaves correctly—and it’s going to be a ruling in favor of Mr. Sheetz.

 

Dave Lanferman:  Nothing to add to that.

 

Jack Capizzi:  Sure. Sure. Well, thank you. Another similar question, following on from that. Assuming the Supreme Court reverses, would the ruling apply immediately to existing legislative impact fees      so as to require nexus in rough proportionality findings?

 

Dave Lanferman:  Well, I think in California the Sheetz case would be remanded if there’s a reversal, and the Court would be directed to apply Nollan/Dolan standards consistent with the Supreme Court’s prior decisions. I assume that that would only apply to cases that haven’t yet gone through the judicial process. If somebody’s coming up to pay a fee, I suppose they can timely      raise the requirement that the fee be shown to be compliant with Nollan and Dolan. If they haven’t raised that issue in their administrative payment under protest or in their trial briefing, that ship may have sailed.

 

Nancie Marzulla:  Yes. I would say -- I agree with that, and I would also say that it will have an immediate effect on government decision-     makers. Let’s face it. Everyone involved in this issue is going to be fully aware of the ruling. And so, I think any governmental entity that is going to then move forward with this kind of program, they’re going to realize that they’re going to face an immediate challenge, and, of course, the lower courts are bound by the Supreme Court’s ruling. So I think this will have a very direct and immediate impact on how these fee exactions are imposed and the scrutiny that courts will give to them.

 

Jack Capizzi:  We have another related question to that same situation. This person is asking about how far back people might be able to go to seek refunds of earlier takings not compensated if the decision does go that way.    

 

Dave Lanferman:  I think that’s going to be a matter of state procedural law. In California, for example, we have a mitigation fee act, which by statute requires that somebody who wants to dispute a development impact fee must pay it under protest and must do so within fairly short time limits. Litigation must be filed within 180 days of when the fee is imposed, and if you miss those time limits, then I think you will have -- be deemed to have waived the argument.

 

Nancie Marzulla:  Yeah. I think, generally, Supreme Court rulings or changes in the law are not retroactive. So I think we should be thinking on a go-     forward basis—what are the changes we can anticipate that would result from a ruling such as this. But      I don’t think you’re going to go -- you aren’t going to be able to turn back the clock and undo years or months or weeks of permit exactions.

 

Jack Capizzi:  Thank you both for your answers to that one, as well. Going back to the questions that we’ve received, Sebastian Ray (sp) asks, “Do you agree with those who argued that requiring local governments to comply with the Nollan/Dolan test would make normal land-use planning virtually impossible?”

 

Nancie Marzulla:  Dave, this question has your name on it. Before you give a really full sum, thoughtful answer, I’ll just say that this kind of argument always brings a smile to my face because I can’t think of a single takings case—particularly those brought before the Supreme Court—in which the regulating or governmental entity responsible for the governmental action throws up their hands in dismay and says, “You know what, we      won’t be able to go on. We won’t be able to carry out -- government will stop functioning. The world will -- the planet will stop spinning if government has to pay for the property it takes.” So I think that is a pretty hollow threat.

 

Dave Lanferman:  I fully agree. I think, again, we see the parade of horribles arguments. They were raised when Nollan was decided. They were raised when Dolan was decided. When the California Supreme Court followed Dolan in Ehrlich v. Culver City and said, “These standards apply to monetary fees,” even well before Koontz got to that point, there was doom and gloom predictions, and they haven’t happened.

 

      Basically, all they’ve done is require government -- local government agencies and their consultants to do a better job of explaining to the public and to the fee payers why they’re being charged a certain amount for certain facilities. Again, there’s been a California Mitigation Fee Act on the books since 1988, which spells out, in some detail, how fees are supposed to be calculated and justified. It does not include the roughly proportionate element, but it requires a showing of a reasonable relationship, and California cities have been complying or attempting to comply with that for 20 years without things grinding to a halt.

 

      Also, many states already have statutory provisions that incorporate the Dolan rough proportionality standards. I think Utah is an example. There’s many others, which, by local statute, require more detailed showing than the federal constitutional cases have required. This will provide a national uniform standard if the Supreme Court reverses and says there’s no exception for legislatively adopted fees. All it will say is show your work, be transparent to the public and to the fee payer as to why this is an appropriate amount for them to pay for their fair share of infrastructure.

 

      And as I said, I thought Mr. Beard did a good job of saying that this won’t require partial, specific analysis by local governments. I think local governments will continue to make fact-based classifications, articulating what type of developments are expected to cause certain amounts of impacts, and they’ll have a default fee that will be applied. And only if the fee payer is disgruntled or questions it will there be administrative or legal proceedings to see if the government has met its burden in showing that.

 

      So I don’t think it will grind to a halt. Even the brief filed by the American Planning Association—the so-called neutral brief—basically said, “If the Court were to reverse this, we would ask that you try to provide some clarity as to how much precision is required in rough proportionality and how this might work in practice. I suspect the Court may well pass on those issues and leave it to the states or to lower courts or state legislators to answer that. But no, I don’t think it’s the end of land use planning. I think it’ll be the beginning of more careful and thoughtful land use planning.

 

Jack Capizzi:  That’s great to hear. Thank you for that answer. It looks like we only have a couple of questions left. This one is for both of you, directly. In your view, are user fees unconstitutional under the Fifth Amendment?

 

Nancie Marzulla:  Well, I’ll jump in and take a stab at this answer -- or at this question and say quite candidly that I don’t know the answer to that question, and I certainly know less than I knew before I heard the argument today. And that is because the issue that was carefully examined in all the briefing and the issue that was examined by the lower courts was this narrow-focused issue of whether a condition that was imposed on the proposed use of property via the legislative process -- must that be tested under the Nollan/Dolan standard? And nobody talked about the issue of whether toll fees or user fees or property taxes or any of these other kinds of fees that government imposes on its citizens trigger the Fifth Amendment -- whether -- what the standard might be for testing these fees. So that went so far afield, and I certainly wouldn’t begin to try to hazard a guess.

 

Dave Lanferman:  I’ve had a few run-ins with user fees, and I don’t think there’s much question that user fees, in general, are constitutional. They have a similar but slightly different test for constitutionality. The Supreme Court has, in several cases, upheld user fees so long as they’re shown to be -- they don’t use nexus in rough proportionality, but the amount of the fee has to be related to the benefit or burden that the user gains from having access to the public facility or public service. It’s pay to play. Again, it’s a matter of -- the concept is okay, but you have to be fair in allocating the costs of the governmental services.

 

      This is an aside, but in the development impact fee realm, several of the briefs pointed out that there’s always a temptation for the local government to ask for new residents who don’t yet live in or vote in the community to pay for new infrastructure rather than raising taxes on the existing residents. And I think there was some evidence in the record of the Sheetz case where the county board of supervisors actually said out loud that they wanted to shift a portion of the cost of new roads and highways to the new residents rather than have the existing residents pay for it. So that political temptation is a danger in the impact fee situation unless there are some constitutional and statutory standards.

 

Jack Capizzi:  All right. Well, it looks like we’ve got time for one final question to really wrap things up. We have two questions in the Q&A right now that are related to Kelo. So thinking of Justice O’     Connor, what efforts are there now to have Kelo revised or refuted and if you have any general comments about where that might stand now?

 

Dave Lanferman:  I’m sorry. I missed that question, Jack.

 

Jack Capizzi:  Certainly. So what efforts are there now to have Kelo revised or refuted—Kelo v. City of New London?

 

Nancie Marzulla:  I don’t know of any cases percolating. Dave, your -- in California, that’s --

 

 

Dave Lanferman:  Well, in California --

 

[CROSSTALK]

 

Dave Lanferman:  Shortly after Kelo v. New London came out, California, by statute, made it very difficult to use the eminent domain power for private redevelopment efforts. I don’t know of any cases pending, but there was a reaction.

 

Jack Capizzi:  All right. Well, thank you both for that. Unless either of you have any final comments you’d like to make, I think we’re in a good spot to wrap things up. Nancie     , Dave, is there anything else you’d like to add?

 

Nancie Marzulla:  I just want to thank The Federalist Society for hosting this and for inviting me to participate.

 

Dave Lanferman:  And again, thank you very much. I agree with Nancie. It was great to have this opportunity.

 

Jack Capizzi:  Well, on behalf of The Federalist Society, I want to thank both of you, Nancy and Dave, for your valuable time today. I also want to thank our audience for joining us and participating with all of their questions. As always, we do welcome listener feedback by email at info@fed-soc.org, and please do keep an eye on our website and your emails for announcements about upcoming programs. With that, thank you all very much for being with us today. We are adjourned.