Landowner Coy Koontz Sr. owned several acres of protected wetlands, and applied for a permit to develop them. Florida law requires him to offset any harm to wetlands, and in this particular case, the government asked that he do so in part by paying for contractors to make improvements to District-owned land several miles away. Because Koontz did not agree to any of the government’s proposed concessions, the government denied Koontz’s permit application.
In his lawsuit challenging the permit denial, Koontz alleged that the government had imposed an unconstitutional condition on his development, by requiring that he spend money. The U.S. Supreme Court has long recognized that the Fifth Amendment’s “Takings Clause” prohibits the government from taking control of an individual’s property without “just compensation,” and has set limits over the years on such takings. But these standards have historically applied to various types of government occupation of real property, leaving room for a wide swath of local land use regulation that protects public health, the environment, and local economies.
On Tuesday, the U.S. Supreme Court extended that principle to apply federal scrutiny even when the government asks a property owner to spend money in exchange for a permit – without imposing directly on any property. Writing for the court’s five more conservative justices, Justice Samuel Alito analogized the condition that Koontz spend money to “extortion” and held that it must be analyzed under legal standards developed for constitutional “takings” under the Fifth Amendment – that there be a “nexus” and “rough proportionality” between the government’s demand and the effects of the proposed land use. The holding is in seeming direct contradiction to an earlier ruling that held the government may impose financial obligations without triggering the Constitution’s takings clause. And although the majority claims that its ruling has limits, it does not articulate any, except for a vague and unexplained distinction between “monetary exactions” and taxes.
This holding has the potential to dramatically curb government power to implement land use laws. Local permits are often accompanied by requirements to spend money in various forms, from requiring improvements, to mitigating environmental harms. And the dissenters suggest that this ruling could even be applied to all sorts of permitting fees, from liquor licenses, to sewage fees. In the wake of this decision, courts are likely to at least question whether all of these conditions are subject to constitutional review – potentially deterring governments from imposing these conditions for fear of an avalanche of litigation. Justice Elena Kagan writes for a four-justice dissent:
The majority’s errors here are consequential. The majority turns a broad array of local land-use regulations into federal constitutional questions. It deprives state and local governments of the flexibility they need to enhance their communities—to ensure environmentally sound and economically productive development. It places courts smack in the middle of the most everyday local government activity. As those consequences play out across the country, I believe the Court will rue today’s decision.
Koontz was represented by the Pacific Legal Foundation, whose mission includes challenging environmental regulation in the name of property rights, and its win today may undermine the environmental progress President Obama and others envision.
Today’s ruling was also the final win of the term for the nation’s top corporate lobby, making the Chamber of Commerce’s success rate this term before the remarkably business-friendly Robert Court an astounding 14-3.