Supreme Court Holding Could Affect Government Ability to Condition Building Permits on Granting Conservation Easements

A June 25 Baltimore Business Journal article highlights a recent 5-4 United States Supreme Court decision that could have ramifications on how state and local governments  are able to regulate water pollution and other forms of environmental damage.  The case, Koontz v. Johns River Water Management District, centered on a dispute between Mr. Koontz, a property owner who wanted to develop land in central Florida that contained wetlands, and the District, which was the regulatory body charged with wetlands protection.  The ruling focused on the ability of a regulatory body to condition the issuance of a development permit on the property owner’s willingness to grant a conservation easement on the property.  The Court reiterated its holdings in prior cases that conditioning a development permit approval on the property owner’s willingness to grant a conservation easement must be proportional to the environment damage caused by the development.  Otherwise, it represents a taking of property without just compensation.

From the Court’s majority opinion, written by Justice Samuel Alito:

Our decisions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994), provide important protection against the misuse of the power of land-use regulation. In those cases, we held that a unit of government may not condition the approval of a land-use permit on the owner’s relinquishment of a portion of his property unless there is a “nexus” and “rough proportionality” between the government’s demand and the effects of the proposed land use. In this case, the St. Johns River Water Management District (District) believes that it circumvented Nollan and Dolan because of the way in which it structured its handling of a permit application….The District did not approve his application on the condition that he surrender an interest in his land. Instead, the District, after suggesting that he could obtain approval by signing over such an interest, denied his application because he refused to yield. The Florida Supreme Court blessed this maneuver and thus effectively interred those important decisions. Because we conclude that Nollan and Dolan cannot be evaded in this way, the Florida Supreme Court’s decision must be reversed.

The Business Journal article noted that the case was viewed as a victory for property rights advocates and noted that some of the justices expressed concern over the affect the case could have on state and local land use and environmental regulations.

The decision is “a significant victory for small business owners and their property rights,” said Karen Harned, executive director of the National Federation of Independent Business’ Small Business Legal Center, which filed an amicus brief in the case.

“The government should not be allowed to extort a landowner by holding his property rights hostage, yet this is an issue that comes up time and again for small business owners across the country,” Harned said.

Justice Elena Kagan, in her dissent, seemed to agree with Harned that this decision could have a major impact on property rights cases going forward. She contended the Supreme Court’s ruling “threatens to subject a vast array of land-use regulations, applied daily in states and localities throughout the country, to heightened constitutional scrutiny.”