Yesterday's Supreme Court decision significantly expanding the rights of property owners to challenge the terms of land-use permits has puzzled environmental law experts and has liberal groups accusing the conservative justices of judicial activism.
The 5-4 decision along ideological lines in Koontz v. St. Johns River Water Management District held that government conditions on a land-use permit are subject to a strict test to protect the landowner from a "taking," a violation of the Fifth Amendment's clause that states no private property may be taken for public use "without just compensation" -- even if the permit is never issued.
Further, Justice Samuel Alito wrote for the majority that any monetary requirement -- such as hiring contractors to mitigate wetlands -- must also clear the "Nollan-Dolan test," a product of two Supreme Court cases that said the government may not require a landowner to relinquish some of his property for a permit unless there is a "nexus" and "rough proportionality" between the demand and the effects of the proposed project.
The goal of the test is to protect property owners from "coercion" and even "extortion" because the government has a much stronger bargaining position in the permitting process, Alito said (Greenwire, June 25).
The extension of the Nollan-Dolan standard to money is significant because it opens up permit-granting agencies to a host of new lawsuits, legal experts said. Alito placed very few limits on when Nollan-Dolan applies.
Additionally, it will have a chilling effect on permit negotiations, because regulators will be worried that anything they put on the table could later be challenged in court as violating the standard, the experts said.
John Echeverria of Vermont Law School, who closely follows takings cases, said the new monetary requirement is "devastating."
"Governments impose fee requirements on permits in all sorts of contexts," he said, noting general roads funds, education funds and others are often filled by fees collected when the government grants development permits.
Moreover, several legal analysts -- as well as liberal Justice Elena Kagan in her dissent -- said the opinion was surprising for several reasons, considering the tone of the arguments in January and the facts presented in the case.
"If you were looking for a case to really deal with whether or not Nollan-Dolan should be extended, there are a lot better cases out there than this one," said Barton "Buzz" Thompson, a Stanford Law School professor who specializes in environmental law.
"My guess is that in part the court looked out at what has been happening in state courts and seeing that the question of whether or not Nollan-Dolan applies to monetary extractions was something courts were split on and that was something they wanted to resolve."
The case centers on Coy Koontz Sr., who owned nearly 15 acres near Orlando, Fla. In the early 1990s, he applied for permits to develop about 4 acres that the St. Johns River Water Management District classified as a habitat protection zone.
In return for the permit, Koontz offered the rest of his land for a conservation easement. The district sought different terms, giving Koontz the options of either limiting his development to 1 acre or hiring contractors to mitigate district wetlands miles away.
Koontz rejected both options and withdrew his permit application. Later, he challenged the proposed terms in state court, saying they were excessive, pointing to a state statute that allowed landowners to recover "monetary damages" if a state action is "an unreasonable exercise of the state's police power constituting a taking without just compensation," a reference to the Fifth Amendment.
After Koontz died in 2000, state courts awarded his son, Coy Koontz Jr., $327,500 for a temporary regulatory taking. The Florida Supreme Court later reversed that decision, holding that the water district didn't violate the law because nothing was ever forfeited to the government.
That issue -- whether anything was actually taken -- was a major point of contention during oral arguments in January. Justice Antonin Scalia, a conservative who eventually joined the majority, strenuously rejected Koontz's arguments, stating, "I can't see where there's a taking here" (Greenwire, Jan. 15).
Scalia wrote the opinion in the court's 1987 decision in Nollan v. California Coastal Commission and was part of the majority in 1994's Dolan v. City of Tigard, which established the standard. His comments during arguments led most court watchers to conclude Koontz had very little chance of winning.
"Given the tenor of the arguments, I would have expected the case to go the other way," Thompson, of Stanford, said.
Paul Beard of the Pacific Legal Foundation, who argued the case on Koontz's behalf, said yesterday that he was "somewhat surprised" by Scalia's questioning but wasn't surprised that he eventually joined the majority.
Scalia, Beard said, had erred in recalling his Nollan opinion. In that case, no taking had occurred either, but the landowner had claimed that the government had attempted an unconstitutional taking.
When he was reminded of that after arguments, Beard said, it makes sense that Scalia changed course.
"These rules are prophylactic," he said. "They are designed to prevent a taking from occurring."
But Kagan, in her dissent, pointed out several problems in the majority's reasoning. The water district, she concluded, "never demanded anything (including money)," and no taking happened because "Koontz never acceded to a demand (even had there been one)."
Kagan also contended that the Supreme Court had held in other cases that money itself can't be a taking and noted that the majority's vague boundaries leave all sorts of permits open for challenges under the Nollan-Dolan test.
"Cities and towns across the nation impose many kinds of permitting fees every day. Some enable a government to mitigate a new development's impact on the community, like increased traffic or pollution -- or destruction of wetlands," she wrote. "Others cover the direct costs of providing services like sewage or water to the development. ... Still others are meant to limit the number of landowners who engage in a certain activity, as fees for liquor licenses do."
Because of the majority's opinion, she went on, "the Federal Constitution thus will decide whether one town is overcharging for sewage, or another is setting the price to sell liquor too high. And the flexibility of state and local governments to take the most routine actions to enhance their communities will diminish accordingly."
Doug Kendall of the liberal Constitutional Accountability Center said Kagan's dissent exemplifies just how far the court's conservatives went to defend and extend Nollan-Dolan even though this case didn't call for it.
The "ruling is judicial activism at its worst," Kendall said. "It will harm both property owners and state and local officials by injecting judges into the land-use planning process, making it more difficult for state and local officials to strike an appropriate balance between protecting the environment and promoting development."
Kagan predicted that Koontz will probably lose again when the Florida Supreme Court reconsiders the case -- as the majority directed it to.
Echeverria, of the Vermont Law School, said the decision shifts the burden of proof in these cases to the government. Instead of a property owner having to show that government terms were excessive, the agency will now have to show it meets the Nollan-Dolan standard.
"That's enormously important," Echeverria said.
It is worth noting, others said, that businesses and landowners may be reluctant to take these cases -- which may last more than a decade -- to court in the first place to avoid what could be costly legal fees. Also, local regulators may find simple ways to make sure they comply with Nollan-Dolan in the permitting process.
But whether he wins at the Florida Supreme Court or not, Koontz Jr. said he was ecstatic about the Supreme Court ruling because of what it means for property owners across the country.
"For the folks in this country and Florida," he said, "it will give them a bigger stick to take into court in the future to fight these types of cases."
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