Has the Forest Service read Koontz?

Earlier this week, the United States Forest Service published for public comment proposed changes to the agency’s manual governing special use permits for ski resorts on National Forest land.  The proposal comes a few years after the ski industry successfully sued the Forest Service for trying to implement similar proposals without first making the proposals available for public comment.  This week’s proposal would require ski resort operators to accept a variety of onerous conditions on renewal of their permits, including conditions that would (1) preclude the operators from selling their water rights separately from their ski businesses and equipment, and (2) require that the operators remove all diversion equipment from National Forest land if they stop ski operations, or forfeit their water right.

The Constitution imposes important constraints on the discretion of agencies to condition land-use permits.  That principle was most recently articulated by the U.S. Supreme Court in PLF’s landmark victory, Koontz v. St. Johns River Water Management District.  In Koontz, the Court explained that “the government may choose whether and how a permit applicant is required to mitigate the impacts of a proposed development, but it may not leverage its legitimate interest in mitigation to pursue governmental ends that lack an essential nexus and rough proportionality to those impacts.”

These limitations on government permitting power derive ultimately from the Fifth Amendment’s prohibition on the taking of private property for public use without just compensation.  Koontz underscores that the government can violate this prohibition in the permitting context, even if a landowner is technically free to decline to accept the offending condition.  “Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation.”

Hence, one might think that the Forest Service would be particularly attuned to what Koontz teaches, given that the agency’s ski permit conditions indirectly impose a substantial burden on ski operators’ water rights.  Yet remarkably, the Forest Service’s takings analysis accompanying its proposal perfunctorily concludes that the agency’s proposal raises no takings concerns, “because constitutional rights, including those protected by the Fifth Amendment, can be waived. . . .  A ski area permit is a voluntary transaction, and a holder can decline the permit and retain ownership interest in water rights or accept the permit subject to its new conditions.”

The Forest Service is correct that a ski operator can decline the permit, but Koontz makes crystal clear that such a power does not necessarily absolve an agency from takings liability.  Let’s hope that the Forest Service actually reads Koontz before finalizing its proposal.