Supreme Court Decides to Hear Important Regulatory Takings Case

The Supreme Court has just decided to hear an important regulatory takings case, St. Johns River Waste Management District v. Koontz. Paul Beard of the Pacific Legal Foundation, which is representing the property owner, has a helpful summary of the case:

Coy A. Koontz wants to develop commercial land, most of which lies within a riparian habitat protection zone in Orange County, Florida. He applied for a dredge and fill permit with the St. Johns Water Management District. St. Johns agreed to grant the permit, but only on the condition that he place a conservation easement over his land, and perform mitigation off-site by replacing culverts and plugging certain drainage canals on other properties not owned by Koontz and miles away from the property. When Koontz refused to perform the off-site mitigation, St. Johns denied the permit.

Koontz filed an inverse condemnation suit in circuit court. Koontz argued that the off-site mitigation requirement violated Nollan v. California Coastal Commission and Dolan v. Tigard. The circuit court applied Nollan and Dolan, holding that the requirement bore no connection to the project’s alleged impacts on the riparian habitat protection zone. The court awarded Koontz compensation for a temporary taking.

The court of appeals affirmed, but the Florida Supreme Court reversed. The Supreme Court held that no taking under Nollan and Dolan had occurred, because (1) Nollan and Dolan apply only to forced dedications of interests in real property (not to mitigation work); and (2) Nollan and Dolan apply only when government approves and issues a permit with conditions (not when it denies a permit, and therefore nothing has been demanded of or taken from the landowner).

Nollan and Dolan held that there must be an “essential nexus” and “rough proportionality” between the purpose behind a government-imposed physical invasion of property and the objectives of any permit scheme where development permits are conditioned on allowing the physical invasion. If such a connection is lacking, then the required physical invasion counts as a taking for which the government must pay “just compensation” under the Fifth Amendment. In other words, the government can’t use its permit power as leverage to force property owners to allow other people to use their land for fear of losing the right to develop it. If you own beachfront property, for example, the government can’t force you to let people sunbathe there by threatening to forbid you the right to build a house on the land if you don’t.

This case is similar. Koontz is forbidden to develop his land unless he does maintenance work on completely separate government land that has no connection to his own. There is the difference that, unlike the owners in Dolan and Nollan, he isn’t being forced to allow a physical invasion of his land, but is instead denied the right to use the land himself unless he undertakes to make improvements on a different property. But given the severity of the latter deprivation, the government has still “taken” his land for reasons that have no connection to any harm that he or his land is actually causing.

There are some additional, more technical issues here, which I may write about in future posts. But the big one is whether a taking occurs if the government denies a property owner the right to develop his land in order to use it as leverage to force him to provide some form of public service elsewhere.

Much more can be said about this potentially important case, and I hope to do so in future posts. For now, congratulations to the Pacific Legal Foundation for getting yet another important property rights case to the Supreme Court, following on their unanimous victory in Sackett v. EPA.