A recent US Supreme Court opinion will have a big impact on those applying for land-use permits. In Koontz v. St. Johns River Water Management Dist., 570 U.S. __ (2013), the US Supreme Court extended the unconstitutional conditions doctrine (set forth in Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994)) holding that if approval of a permit is conditioned on the loss of some property right, the lost right must be proportional to the harm caused by the activity authorized under the permit and there must be a relationship between the lost right and the harm, otherwise the permit condition is unconstitutional. For example, if a land-use permit would increase the traffic on a public road, it is reasonable for the permit to require that the permittee provide land for a wider road.

In Koontz, the petitioner applied for a permit to develop 3.7 acres of a 14.9 acre parcel. The petitioner offered to mitigate the environmental impacts of the project on wetlands by deeding a conservation easement to the Water Management District (District) on the remaining 11.2 acres. The District countered with two options: a reduction in the size of the development from 3.7 acres to 1 acre and a conservation easement deeded to the District on the remaining 13.9 acres; or the Petitioner could develop the 3.7 acres if he also agreed to pay for improvements to approximately 50 acres of District-owned land several miles away.

Petitioner refused to accept the District’s proposals on the grounds that the mitigation was excessive in light of the environmental impacts that would be caused by the proposed project. The District denied the land-use permit.

The US Supreme Court held that even though the petitioner voluntarily rejected the conditions and the District denied the land-use permit, the conditions amounted to demands for property and must meet the requirements of Nollan and Dolan. The Court made no distinction between granting and denying a permit, arguing that doing so would allow the government to evade the Nollan and Dolan limitations on unconstitutional conditions by rephrasing its demands.  Instead, if  the government demands money—such as requesting that petitioner provide funds to remediate unrelated government lands—that demand is subject to the nexus and proportionality requirements in Nolan and Dolan.

The US Supreme Court was careful to state that there is a difference between an extortionate demand and a taking. Where the government denies a permit and the condition is never imposed, there is no taking. Under Nollan and Dolan, the unconstitutional conditions doctrine recognizes that an extortionate demand burdens a constitutional right, but the Fifth Amendment requires just compensation only for takings. Koontz leaves open the question of remedy when there are unconstitutional conditions but no taking. Money damages may or may not be available depending on the cause of action. However, the Court ultimately did not address the issue of remedy because the petitioner brought Koontzunder Florida law.

Even with the unresolved remedy issue, Koontz presents a useful new tool for land owners to challenge permit conditions that may be disproportionate to the harm caused or that bear no relationship the permitted project. In the past, anyone wishing to challenge permit conditions had to accept the conditions and then file a challenge in court seeking  just compensation under the Fifth Amendment for a taking. Under Koontz, parties can choose to reject unconstitutional conditions and file a challenge immediately upon denial of a permit.

You can read the Koontz opinion here.