The National Association of Home Builders (NAHB) has released the following statement from Chairman Rick Judson, a home builder and developer from Charlotte, N.C.
“NAHB is pleased by the U.S. Supreme Court’s decision to hear American Chemistry Council, et al. v. U.S. Environmental Protection Agency (EPA) to challenge EPA’s plan to regulate greenhouse gas emissions under the Clean Air Act.
“Because of the way EPA has interpreted the statute, many NAHB members might be forced to obtain an expensive pre-construction permit for greenhouse gas emissions, which would bring most multifamily and mixed-use development to a halt. Some single-family and potentially even master-planned community development would also be affected.”
NAHB is part of a coalition that includes the American Chemistry Council, the American Petroleum Institute, the National Association of Manufacturers, the American Fuel and Petrochemical Manufacturers and the National Oilseed Processors Association. Briefing in this case will take place during the fall and winter of 2013. Oral argument will be held in February 2014 and a decision is expected in late spring 2014.
The U.S. Supreme Court on October 15 agreed to hear a petition brought by NAHB and other organizations that would determine whether the Environmental Protection Agency (EPA) has the authority under the Clean Air Act to regulate greenhouse gas emissions from stationary sources that could include everything from factories, refineries and power plants to apartment and commercial buildings.
“Because of the way EPA has interpreted the statute, many NAHB members could be forced to obtain an expensive pre-construction permit for greenhouse gas emissions, which would bring most multifamily and mixed use development to a standstill,” NAHB Chairman Rick Judson said in a press statement. “Some single-family and potentially even master-planned community development could also be affected,” he said.
Based largely on EPA’s own estimates, the cost of the permit alone could be about $60,000 per multifamily property, with costs due to delays averaging about $40,000 across all building sizes. For a property with 50 or more apartments, costs due to delays could reach up to $200,000.
The permit cost is fixed, while the delay costs vary depending on the building size, measured by number of units.
NAHB is part of a coalition that includes the American Chemistry Council, American Petroleum Institute, National Association of Manufacturers, American Fuel and Petrochemical Manufacturers and National Oilseed Processors Association. Briefing in this case, American Chemistry Council (ACC), et al. v. U.S. Environmental Protection Agency, will take place during the fall and winter. The oral arguments will be held in February 2014, and a decision is expected in late spring 2014.
June 25, 2013—Supreme Court Decision in KOONTZ v. ST. JOHNS RIVER WATER MANAGEMENT DISTRICT
For years, local governments have pursued arrangements with developers to extract certain concessions in exchange for the opportunity to develop. For example, a locality may ask a developer to improve the street in anticipation of the increased traffic that a development may bring. In some cases, this is a fair request. However, some local governments seem all too willing to stretch the boundaries to the limit.
In a victory for HBA members and property rights advocates, the U.S. Supreme Court on June 25 issued an opinion that directly affects the law that applies to such conditions, called “exactions”. The case is Koontz v. St. James River Water Management District, and the opinion is available at http://www.supremecourt.gov/opinions/12pdf/11-1447_6j37.pdf. NAHB led a coalition of 16 associations which together filed an amicus brief that among other things explained to the Court that governments will not collapse if they cannot extort money from property owners who wish to use their land.
Koontz Case Facts
Mr. Coy A. Koontz owned 14.2 acres of vacant land and sought to improve 3.7 acres of the property. Koontz applied to the St. John’s River Water Management District (District) for permits to dredge and fill 3.25 acres of wetlands. In exchange, Koontz offered to dedicate the remainder of his property (approx. 11 acres) to the State for conservation, but the District rejected the proposal and pressed Koontz for more. The District demanded that Koontz pay to enhance 50 off-site acres of wetlands on the District’s propertylocated between four and 7.5 miles away, by replacing culverts and plugging some ditches. Koontz refused the District’s unreasonable demand. The District then denied outright his permit applications, and would not issue permits unless and until Koontz submitted to its conditions. Koontz brought a lawsuit against the District.
The Legal Background
Since the late 1980s, the Supreme Court has held that a permit condition (also called an “exaction”) is not constitutional unless it has a “nexus” to a governmental purpose and it is “roughly proportion” to the impacts of the project. This is known as the Nollan/Dolan test, named after two Supreme Court cases. The test protects property owners from over-zealous land use permitting officials. Until today, there were two unanswered questions:
- Is there a difference between scenarios when the government simply denies a permit because the land owner would not accede to an onerous condition, as opposed to when it grants a permit with conditions attached?
- Is the Nollan/Dolan test limited to exactions of land (e.g., government asks for 10% of land to be set aside for park), or does it also apply to monetary actions (e.g., government asks for $10,000 to go towards building an off-site park).
These two questions are quite important—if the Court had decided that Nollan/Dolan did not apply in either scenario described above, then it would give the government expanded power to force unreasonable exactions upon developers by providing an easy work around to the Nollan/Dolan test.
Today’s Decision in Koontz
The Supreme Court decided in favor of Mr. Koontz. Specifically, it ruled that Nollan/Dolan applies equally to situations where the government denies a permit and where the government grants a permit with conditions. In other words, if a property owner refuses to agree to outrageous conditions in a permit, and the government denies that permit, the government cannot later argue that there was no constitutional violation because the permit was never granted. In its analysis, the Court used a form of the word “extortion” five times to describe the manner in which governments demand property from developers before granting approvals. Thus, the Court may be starting to understand the realities of the land use permitting process. The Court also ruled that monetary exactions are subject to the same Nollan/Dolananalysis as land exactions. Thus, it makes no difference if the government demands that the land owner give up real property or money as a condition to obtaining a permit. This is a huge victory. The decision gives land owners ammunition to fight permitting officials that attempt to hold up approvals until the land owner surrenders to their extortion.
Builder Review Daily is exploring the Top 12 actions your HBA has taken on behalf of Home Builders during the Spring of 2012.
Number 4, a victory in court in a case of overreach by the Environmental Protection Agency:
A unanimous decision handed down by the U.S. Supreme Court on March 21 is a huge victory for property rights advocates and very good news for NAHB’s members.
In Sackett v. U.S. Environmental Protection Agency, the Court agreed with NAHB arguments (submitted in the form of two amicus briefs) that a property owner who receives a Compliance Order from the EPA should be able to obtain judicial review in court. This decision is extremely important to our industry because home builders are often subject to Administrative Compliance Orders with no means to challenge them, unless the government decides to file an enforcement action or the builder applies for and is denied a Clean Water Act (CWA) Section 404 permit. As of now, this is no longer the case. Instead, any builder who receives a CWA Compliance Order can challenge that order in federal court. In addition, whereas builders have previously had no place to turn when the EPA or Army Corps determines that a wetland or water body on their property falls under the agency’s jurisdiction, they may now be able to seek relief in court.
In an official NAHB reaction statement, Chairman Barry Rutenberg summed it up in saying, “This ruling provides a check on EPA’s capricious expansion of its regulatory authority. Finally, home owners and home builders have a way of challenging EPA Compliance Orders before they face big fines.” For more information on this outstanding legal victory, contact Tom Ward (800-368-5242 x8230).