U.S. Supreme Court to Determine What Governments Can Request in Exchange for Permits

In a case with big implications for landowners and governments of all levels and sizes, the U.S. Supreme Court has just agreed to hear Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). As readers of my blog know, this is an important property rights case dealing with exactions.

In St. Johns River Water Management District v. Koontz, 77 So. 3d 1220 (Fla. 2011), the Florida Supreme Court declined to recognize an exaction under U.S. Supreme Court precedent. Koontz had been trying to develop his property since 1994, when he had applied to the District for a permit. The District agreed to grant the permit on two conditions. First, the District required that Koontz deed part of his property into a conservation area, which he agreed to do. Second, the District required that Koontz perform offsite mitigation several miles by replacing culverts and plugging drainage canals on District-owned properties seven miles from his property, which Koontz refused. When the District then denied the permit, Koontz sued in state court, arguing that the District’s offsite mitigation condition was an unconstitutional exaction because it violated the Nollan-Dolan test. The trial court found that the District had taken Koontz’s property through an unconstitutional exaction because the condition was not related to the impacts of his project. The intermediate appellate court affirmed.

The Florida Supreme Court reversed, holding there was no taking. The court explained that the Nollan-Dolan test only applied to exactions of real property, where a permit was actually issued imposing the onerous exaction. The court acknowledged a line of cases applying the Nollan-Dolan test beyond real property exactions, but it held that these cases went beyond the U.S. Supreme Court’s holdings. The court also explained that, as a matter of public policy, land use regulation would become prohibitively expensive if agencies were subject to inverse condemnation claims anytime they denied a permit. Consequently, the court held there was no taking because no permit was ever issued.

Before the U.S. Supreme Court, Koontz has asked the Court to establish that:

1. The Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work; and 
2. The Nollan-Dolan exactions test applies where a permit is denied because an applicant rejects an exaction.

This is excellent news for landowners. The Pacific Legal Organization, which is representing the landowner in this case, has an excellent track record before the Supreme Court: it has won six out of the seven cases it has argued there. It won the seminal case in this area of the law before the Supreme Court, Nollan v. California Coastal Commission, 483 U.S. 825, 837 (1987). And in March of this year, it won Sackett v. EPA, 566 U.S. __ (2012), which gave property owners the right to take EPA to court over a compliance order dealing with wetlands.

This case just may go down in history as the only time my hometown Palatka, Florida is relevant before the Supreme Court. The District is housed there. For those interested in researching further, the Supreme Court's docket for the case is here. I'll have an article in the American Planning Association's Planning & Law Newsletter soon with more analysis.