Sheetz v. County of El Dorado, California - Post-Decision SCOTUScast

On April 12, 2024, the Supreme Court issued its ruling in Sheetz v. County of El Dorado, California. At issue was whether a building-permit exaction is exempt from the unconstitutional-conditions doctrine as applied in Nollan v. California Coastal Commission and Dolan v. City of Tigard, Oregon simply because it is authorized by legislation.

Join us to hear Nancie Marzulla and Jayson Parsons break down the decision and discuss its potential ramifications.

Featuring:
Ms. Nancie Marzulla, Partner, Marzulla Law
Mr. Jayson Parsons, Associate, Rutan & Tucker LLP

Episode Transcript

(00:02):
Welcome to SCO Discast, a projectof the Federalist Society for Law and Public
Policy Studies. Our contributors join usfrom around the country to bring you expert
commentary on US Supreme Court cases asthey are argued and the decisions are issued.
The Federalist Society takes no position onparticular legal or public policy issues.
All expressions are those of the speaker. Hello, and welcome to SCO Discast.

(00:29):
I'm your host, Kyle hammernes On, behalf of the Faculty division of
the Federalist Society. We are heretoday to discuss Sheets versus County of El
Dorado, California, in which theSupreme Court issued a nine zero decision on
April twelfth, twenty twenty four.Is my honor to introduce our guests today,
Nancy Marzoula and Jason Parsons. Nancyis a partner at Marzoula Law and

(00:55):
authored an amicus brief in this caseon behalf of the Atlantic Legal Foundation.
Joining Nancy discussed the decision is JasonParsons. Jason is an associate at Ruton
and Tucker, LLP and joined abrief in this case on behalf of the
California Building Industry Association and the NationalAssociation of Home Builders. And with that,

(01:15):
I'd like to turn things over toNancy to get a start with the
overview of the case and the majorityopinion. Well, thank you, Kyle,
and thank you to the Federalist Societyfor inviting Jason and me to talk
about this important property rights case.The Sheets case, George Sheets versus County
of El Dorado, California, involvesthe unconstitutional conditions doctrine under the Fifth Amendments

(01:44):
just Compensation Clause. In a nutshell, what this doctrine involves is a government
imposing or conditioning approval of a permitapplication on the landowners agreeing to give something
in exchange for that permit to thepermitting authority. So, for example,

(02:07):
in this case, George Sheets wantedto build a modest pre manufactured home on
his property in the county, andhe complied with all the building permit applications
and requirements and zoning requirements, butfor the fee requirement would have been granted

(02:38):
the building permit. So the countycomes in and says, here's your permit,
mister Sheets. We'll hand it overto you just as soon as you
give us close to twenty four thousanddollars. And this is the real kicker
here. Regardless of what mister Sheetswould do you plan to do or not

(03:00):
do with this property, unless hepaid this fee, he could not use
his property. So the county triedto dress up or disguise its fee as
some kind of legitimate public program bycalling it a traffic impact mitigation fee,
but in point of fact, therewas no showing in the record that mister

(03:25):
Sheets's development would in any way negativelyaffect traffic. In fact, the facts
clearly showed that the plan came first, long before mister Sheets ever thought about
developing his property. The way thatthe program worked is that the county had

(03:46):
mapped out and created zones for allthe property in the county, and so
when a building permit applicant applicant wouldcome to the county, after determining that
all the other requirements had been met, the county would then look to see

(04:06):
where the property was located and thendetermine if the development proposed development was commercial
or residential, and if so,whether its single family residential or commercial,
and then based on that it wouldgo to a chart and see how much
the fee would be plain and simple. In other words, there was absolutely

(04:30):
no connection at all between the proposeddevelopment and the amount of the fee.
But however, when Sheets challenged thispermit fee or exaction, the California courts
held that it could not be challengedunder the Fifth Amendment because the fee was

(04:55):
imposed through legislation. It was acounty wide, legislatively imposed condition on building
applications. Had it been imposed administratively, i e. Just on mister Sheets
after reviewing his permit application, thecourts would have had to undertake a constitutional

(05:21):
review. It would had it wouldhave had to look to the Nolan Dolan
test to determine whether the fee surviveconstitutional scrutiny. The Nolan Dolan standards have
been established by the Supreme Court overthe years. The Nolan test came first,

(05:46):
and in that case, the Courtheld there has to be an essential
nexus between the legitimate state interest andthe permit condition. Obviously, there doesn't
appear to be that, at leaston the facts as we know them.
And under Dolan, there must bea rough proportionality between the exaction and any

(06:06):
burden created by the proposed development.So then that is the issue that the
Supreme Court agreed to take whether alegislatively imposed permit exaction should be subject to
the same constitutional scrutiny as administratively imposedpermit exactions. And what we got as

(06:32):
a result of the briefing and argumentis a unanimous decision authored by Justice Barrett
with three concurrences, and the decisionthat Barrett authors emphatically holds that regardless of

(06:53):
how imposed permit conditions must be subjectedto the same Fifth Amendment scrutiny. In
fact, by the time this casereached oral argument at the Supreme Court,
there appeared to be such agreement onthis issue that the County actually, during

(07:15):
argument agreed that there was no constitutionaldistinction between legislatively and administratively imposed conditions on
a permit application. Which I thinkthis caught everyone off guard because this view
was not expressed in the county's brief. Nevertheless, Barrett writes a thoughtful and

(07:45):
a thorough analysis of the decision beforethe court and includes in it a vigorous
endorsement of strong property rights protection.I think this is one of the most
important things to come out of thiscase, is the fact that you've got

(08:05):
all justices, all nine justices,embracing this notion of vigorous property rights protection.
So just briefly, then to gointo how Barrett analyzed the case,
she first of all, spends asignificant amount of time kind of unpacking Nolan

(08:28):
and Dolan again for the decision andthe context of the decision. And I
think that it's very helpful to lookat how she her views on the cases,
because these are very important cases thatwill be used and applied by lower
courts and administrative agencies following this decision. But her case and her decision in

(08:58):
chief undertakes analyses and they're very scholarly. They're very detailed, rigorous, which
one might expect from Justice Barrett.First of all, she does a textual
analysis, and she writes that asfar as the Constitution's text is concerned,

(09:20):
permit conditions imposed by the legislature andother branches of government stand on equal footing.
Once again, the Fifth Amendments justcompensation clause is no poor relation to
other constitutional amendments. Then she turnsto the history of the Fifth Amendment and

(09:43):
she again goes through a careful reviewof the pre constitution and post constitutional application
of imminent domain in its exercise,and she finds that the history supports a
conclusion that legislation was a prime targetfor scrutiny under the Fifth Amendment. And

(10:11):
then lastly she turns to constitutional presidentand there she notes that both physical takings
and regulatory takings are analyzed with utterdisregard to which agency or which branch of

(10:33):
government imposed or the restriction or confiscatoryaction on the property owners. So she
finds no support for the for thedistinction being imposed in this context. And
then she finally goes to other theother constitutional amendments and finds that likewise with

(10:58):
respect to it, for example,she refers to free speech protections, she
finds no distinctions in other context forapplying any kind of legislation legislative exemption.
So with that she she issues herdecision, and that I think now brings

(11:22):
us to the concurring decisions. Jason, do you want to jump into that
discussion. Yeah, thank you,Nancy, And yeah, this is a
really interesting opinion because, as oneof the justices noted, you know,
there's this radical agreement among the partiesand apparently among the court too, as
to the outcome of the first question. But in answering the first question,

(11:46):
you know whether or not Nolan andDolan applies to legislative access. In his
administrative ad hoc fees it doesn't themajority opinion, I guess we're really answers
the question it was it was presented, but it doesn't reach the the obvious
second question, which is what sowhat next? And that is where the

(12:11):
concurrences get I think quite interesting.We see Gorsicch and then they're all very
short, by the way, they'revery short concurrences, and they all basically
say, we all agree as tothe as the question presented, and then
go on to explain maybe what's what'snext when this gets remanded down and future
courts have to to take this opinionand deal with it. You know,

(12:35):
we see Gorsicch with perhaps the mostyou know, supportive of of a broad
application of Nolan Nolan principles. Hebasically says he agrees with the majority,
says, look, you know,the taking's clause is not in correlation.
And if that's true, then whyare we uh or you know, why

(12:56):
would it be considered any different thanother constitutional rights, which in which we
don't make distinctions upon the size ofthe class that the regulation or the restriction
is applying to. And so hebasically says, look, you know nothing
in Nolan Dolan, and I thinkimportantly he includes the words or today's decision
supports this distinction. That's an interesting, interesting line for reasons I'll explain in

(13:22):
a second. Moving on to Kavanaugh'sconcurrence, he he pretty much comes out
and says, you know, here'swhat the decision doesn't address, and that
is the common, you know,practice of imposing permit conditions such as impact

(13:43):
fees a new development through and Ithink the troubling language here is reasonable formulas
or schedules that to me seems toindicate a something of a test. And
you know, if you sort offall the breadcrumbs, you know, when
this goes down in reman and courtshave to figure out what this opinion means

(14:05):
in practice, you know, somelower courts might look to that as offering
a solution that the majority didn't reallyprovide, and make no mistake, Corsage
does too, So that's sort ofthe the the other side. And finally
Soda Mayor had a concurrence as well. It seems to advance some sort of
notion that this almost almost a twostep test for Nolan and Nolan that there's

(14:28):
a threshold question of whether or notthe permit condition, you know, would
be a taking outside of the permitcontext. You know. I think this
is really addressed towards towards more broadissues with challenging maybe taxes. I think
that came up during oral argument,that she seemed concerned about that, So
I guess I'm not too surprised thatthat came out in her concurrence. And

(14:54):
and I think Nancy you may havesome additional thoughts about Sodamaya's concurrence, but
I I did find it interesting incontinuing with the theme of radical agreement among
apparently everybody here, uh, thethe the party's response to this opinion was
really fascinating to me. Paul Beard, the lawyer for George Sheets, at

(15:20):
least one New News article reported himas using the words thrilled with the result.
And the county again seems to thinkthat this opinion casts no doubt on
local government's authority to impose reasonable permittingconditions. So it's a rare day when
when both the you know, purportedwinners and losers of a decision come away

(15:43):
happy. So this is this isa very interesting case, and I think
when it goes back down. We'regoing to see lower courts grapple with you
know, do you go with theGorstach pass, you go with the Kavanaugh
pass, you go some other way? And I think that's going to be
where this case ultimately leads in thelong run. Jason, I agree with

(16:07):
you this is this is quite aninteresting decision in terms of the what appears
to be everyone now so thrilled withthe ruling. But I also agree with
you that these concurring decisions are worthtaking a good look at because I think,

(16:30):
as we all know, concurring decisionsand dissenting decisions have a way of
morphing into majority decisions over time.In fact, I note that in this
case, the majority decision is basicallyJustice Thomas's earlier dissenting decision. In another

(16:56):
case, it's basically taking whole clothwhat Justice Thomas wrote in that case in
dissent. But here we've got andI think you've done an excellent job,
Jason. And talking about the concurrences, I'll just footnote Justice soda my R's

(17:18):
concurrence which jumped out at me,where the concurrence explicitly says there is an
important threshold question to any application ofNolan Dolan's scrutiny, and I'm scratching my
head and saying, oh, really, there's a threshold question we have to

(17:40):
satisfy. And according to Soda Maramy R and Justice Jackson, you have
to show a point. I hasto show that the permit condition would be
a compensable taking if imposed outside thepermitting context. I can tell you that
as an attorney who represents plaintiffs inthe US Court of Federal Claims and in

(18:07):
which DJ is always the defendant,DJ will take this provision and run with
it because they're constantly looking for proceduralhurdles to affix to any aspect of the
takings analysis they can, they cando so. I think we can see

(18:30):
this threshold question arise in in thesecases in future litigation. I think we've
got litigation ahead that is going tocome from these from these concurring decisions.

(18:52):
Yeah, I absolutely agree with that, Nancy. And that's interesting. You
know, I hadn't considered that before, but it really does. Even though
they are you know, you know, simple concurrences and gorses Gorsa's case just
himself, they do again seem topresent at least something for lower courts to

(19:17):
flatch onto for that second question,and almost as an all a cart option,
you know, to choose which concurrence, Uh, the court seems to
seem fit. Well. Thank youso much Nancy and Jason for giving a
great analysis of the decision and theramifications. Do you have any closing thoughts
that you want to give? So? Lastly, I would just like to

(19:37):
note sort of some conclusions I've drawnfrom this case. I think the more
more I've thought about it, Ithink this case kind of represents Nick two
point zero, you know, Nickb Township of Scott. It really opens
the door to challenge fees and exactionsin a way that wasn't available before.
So I would just say, youknow, the where the naysayer is,

(20:00):
this case is in fact a bigdeal. I've seen a lot of rumblings
that this is, oh, it'skind of this you know, obvious result
and not really going to go anywhere. I don't think that's true. I
think in practice, you know,many public agencies have been sort of insulated
from much, if any scrutiny,and they may have an egregious sort of

(20:23):
fee schedules that you know, nobodyhas really had a chance to dig into
and so the more more wary jurisdictionsmight address this on their own, but
I think the opinion, no doubt, at the end of the day,
is going to require local agencies toreally sit up straighter and sharpen their pencils.

(20:44):
And quite frankly, there's now litigationand avenue litigation available for those who
don't do that. And I wouldjust say that, you know, with
this kind of open question on thesecond part of what's next, and these
these concurrences out there, you know, there's a real good opportunity for litigans
to be first movers in the spaceto really establish precedent and answer this secondary

(21:08):
question, which I think will nodoubt happen over the next few years.
So I think there's a good opportunitythere for litigans to really have an impact
in this space. You know,I fully agree with you, Jason.
That is such a superb point becausenow we are kind of hearing like,
well, what's the big deal?This was such an obvious result, and

(21:29):
particularly since the county confessed error.But we have to recall that this case
was hard fought in the trial court, hard fought in the California Court of
Appeals, and then fought hardest ofall in the Supreme Court. We had
a huge number of amigas on bothsides of the issue. I authored a

(21:52):
brief for the Atlantic Legal Foundation,but there were many, many briefs on
both sides of the issue, andthe county had a lot of briefs arguing
that this distinction was crucially important andWestern civilization as we know it would disappear

(22:15):
if they lost this distinction and protection. Thank you for listening to this episode
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