Environmental Protection

Roberts Court faces major takings challenge with huge potential liability for governments

By Marcia Coyle  


Would a ban on assault weapons violate the Fifth Amendment’s takings clause? Some members of Congress would like to know, according to one legal scholar who has been asked. 


The gun-related question is not before the U.S. Supreme Court, at least not yet. But the scope of the takings clause is this term in three cases, the most potentially significant of which comes up for argument on January 15. 


In Koontz v. St. Johns River Water Management District, property rights advocates ask the justices to expand two landmark takings decisions from the Rehnquist Court era to the denial of land use permits when the landowner refuses to accept conditions for approval of the permit. 


“Unlike the other two cases, this one has application to every property owner in the country,” said Paul Beard of the Pacific Legal Foundation, counsel to Coy Koontz Jr. “Anyone who wants to pull a permit to do anything on their property can potentially be affected.” 


The Koontz case is “going away the most important takings case the Roberts Court will decide,” agreed Douglas Kendall, head of the Constitutional Accountability Center, which has drafted an amicus brief supporting the water district on behalf of the city of New York, the American Planning Association and the National Trust for Historic Preservation. 


The two sides’ agreement, not surprisingly, ends there. They disagree on the facts that led to the Supreme Court challenge as well as how the justices should resolve the case. And their disagreement has triggered traditional battle lines in property rights cases. Koontz has drawn support from a number of libertarian and conservative public interest legal organizations, and small business and home builder associations. The United States, the National Governors Association and local government organizations back the water district. 


The justices already have decided one of the three takings cases on the docket. In Arkansas Game and Fish Commission v. U.S., a unanimous Court held there was no automatic exemption from the takings clause when the government temporarily floods land as part of a federal flood control project. Although a victory for the state landowner, the case was not an unqualified win. The justices sent the case back to the lower courts to apply a series of factors drawn from a key 1978 takings precedent, Penn Central Transportation Co. v. New York City, to determine whether a taking had occurred. 


And the justices have not yet scheduled arguments in Horne v. U.S. Dept. of Agriculture, asking in which court a takings challenge to a federal raisin marketing program should be filed and whether the program itself is a violation of the takings clause. 


But all eyes are on Koontz for now. 


“It raises the largest general question about the scope of the takings clause and has the most significant practical implications for state and local governments,” said takings scholar John Echeverria of Vermont Law School. 


Seeking permits 


Coy Koontz Sr. bought a vacant, 14.9-acre lot in 1972, and all but 1.4 acres eventually became part of a riparian habitat protection zone overseen by the water district. In 1994, he sought permits to develop 3.7 acres within the zone. (He died in 2000, and his son succeeded him as the plaintiff in the case.) Given its location at the intersection of two highways, the project site had little, if any, habitat that needed protection, according to Koontz’s brief. Any wetlands on the property had been drained by a ditch that the state ran across Koontz’s land. However, the district’s regulations required Koontz to include mitigation proposals in his permit applications. 


Koontz offered to place 11 acres of his property into a conservation easement as his mitigation effort. But the water district, according to Beard, his counsel, said his permit applications would be denied unless, in addition to the 11-acre dedication, he agreed to finance the restoration and enhancement of at least 50 acres of wetlands on district-owned property located miles away, by replacing culverts or plugging ditches, and building a new road. 


The district denied his permits after he refused the conditions. He sued in state court, arguing that the off-site mitigation violated the Supreme Court’s decisions in Nollan v. California Coastal Commission (1987) and Dolan v.Tigard (1994) because the conditions bore no connection to his project’s alleged impacts on the habitat zone. The circuit court agreed and awarded $327,500 plus interest as just compensation for the taking, but the Florida Supreme Court reversed. 


The state high court held that Nollan and Dolan did not apply to monetary exactions, only to forced dedications of interests in real property. And the court also ruled that Nollan and Dolan did not apply because the district did not issue the permits and consequently nothing was ever taken from Koontz. 


The district counters that the land that Koontz proposed to develop “provided a diversity of habitat and food sources, and served as an important refuge for a variety of wildlife species.” The proposed project, the staff found, “would displace natural wildlife habitat,” “cause adverse impacts to the conservation of fish and wildlife,” and “adversely affect” the “condition and relative value of functions being performed by” the affected wetlands. 


The district offered multiple suggestions for ways that Koontz could change his proposal to reduce or offset the adverse impacts of his development. Some of the suggestions involved modifications of the design or scale of his construction and some were for alternatives for mitigation on other property within the basin in lieu of Koontz’s proposed on-site mitigation. But Koontz rejected all of the suggestions and was unwilling to consider any additional mitigation options other than what he originally proposed, according to the brief by the district’s counsel, Paul R.Q. Wolfson of Wilmer Cutler Pickering Hale and Dorr. 


“Indeed, when asked at a subsequent hearing whether he would ‘prefer that the permit be turned down’ or whether he would like to take ’30 days and try to work it out,’ his agent responded that petitioner’s ‘offer was as good as it can get,’ ” wrote Wolfson. 


Expanding takings 


Nollan and Dolan deal with situations where a government entity issues a permit with a condition requiring the landowner to dedicate some property to public use, for example, turn over some of the land for a public easement or a bike path, explained Vermont Law School’s Echeverria. 


In order to impose that kind of a condition, he said, the Supreme Court ruled that the government has to meet a fairly strict standard. “It has to show there’s an essential nexus between the condition and the regulatory purpose, a logical connection, and secondly, a rough proportionality: What is demanded of landowner through the condition should be roughly proportional to the projected impact of the development that the condition is supposed to address,” he explained. 


Koontz argues that those decisions should be expanded to cover permit denials. “It would be a major expansion of Nollan and Dolan,” said Echeverria. “Local governments impose a variety of exactions on development but for a larger universe of cases, they talk about a larger universe of conditions. If every time they talk about imposing conditions [they raise a takings issue], they would have far greater potential liability than now.” 


An “equally monumental question” posed by the case is whether Nollan and Dolan apply when the condition is that the landowner spend money, rather than give over property. 


“This is an important issue because the government demands payments in a whole variety of circumstances—user fees and other permitting contexts,” added Echeverria. “If that were swept up into the takings clause, it would have enormous implications for governments’ ability to operate. 


“The last time the Supreme Court addressed this was in Eastern Enterprises v. Apfel in 1998. It involved a federal mandate on companies engaged in coal mining to help pay for the health care of miners. Five justices said a government mandate to pay money is not within the scope of the takings clause, although it might raise due process questions. The Koontz case invites the Court to reexamine that issue.” 


Extortion or preservation 


Cities and other local government bodies throughout the country are using the permitting process “as a way of extorting money and favors from people who want to do anything with their property, from those doing large developments but also those who want just to put a driveway in their home,” said Dana Berliner of the Institute for Justice, an amicus supporting Koontz. “Anything that requires a permit can be an occasion for getting money or other benefit for the government without it having to pay for it.” 


If Nollan and Dolan apply, she said, many permit fees will survive. “It just means cities can no longer impose crazy, unrelated requirements in the way they have been, like contribute $25,000 to our art fund. Our brief focuses on some of those requirements. One person who wanted to make sandwiches in his small store was required to put in new windows in the store and there was no pretense it had anything to do with making sandwiches or anything.” 


The federal appellate courts are divided over whether there has to be a relationship between the proposed development and what is being demanded, she said, adding, “That split is not going to get resolved on its own.” 


Kendall of the Constitutional Accountability Center, said he has seen no empirical evidence of a national problem with local governments imposing unreasonable conditions on permit approvals. 


“The denial of a permit is certainly a triggering mechanism for a takings claim,” he said. “The question is just whether that claim is viable. It’s viable only if the denial is the functional equivalence of expropriation of property. It’s a difficult test to meet, but if [Koontz] can show he is left with no or limited property value then he has at least a claim under Penn Central or Lucas [v. South Carolina Coastal Council].” Kendall, however, doubts that Koontz can meet that particular test because the district was willing to approve some development of his property.” 


A decision for Koontz, he added, would be bad for everyone involved. “It would significantly hinder the negotiation process that most often results in agreement between developers and government officials. It would result in more denials of permits because government officials would be hindered in securing conditions on development that makes sense for the community. It would throw a monkey wrench in the entire process of negotiation of development permits.”

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