Koontz—a banner day for property rights

For a property rights advocates, reading today’s decision in Koontz v. St. John’s River Water Management District is like being a kid trapped in a candy store. There is just so much good stuff in the opinion—I almost feel guilty. Mind you, I don’t.  This decision was the result of decades of fighting the good fight.

A few points jump out of the decision as major wins for property rights.

Unconstitutional Conditions Doctrine:  As I previously noted with regard to Horne (the raisin takings case), the Court seems to have heartily embraced the unconstitutional conditions doctrine as a limitation on government authority. The Koontz opinion hammers that point home:

[Our] cases reflect an overarching principle, known as the unconstitutional conditions doctrine, that vindicates the Constitution’s enumerated rights by preventing the government from coercing people into giving them up. [p.7]

As we know, Nollan and Dolan “involve a special application” of the unconstitutional conditions doctrine designed to protect the Fifth Amendment right to just compensation when government tries to use the land-use permitting process to exact property as a condition for developing one’s land.

[L]land-use permit applicants are especially vulnerable to the type of coercion that the unconstitutional conditions doctrine prohibits because the government often has broad discretion to deny a permit that is worth far more than property it would like to take. By conditioning a building permit on the owner’s deeding over a public right-of- way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation. [p.7]

Today’s opinion turned on the difference between a violation of the unconstitutional conditions doctrine and a direct violation of the Takings Clause. After oral argument, many focused on Justice Scalia’s insistence that “nothing was taken” in this case, so where’s the taking?  Court watchers saw that as a portent of doom for the property owner.  It wasn’t.  That question actually sets up the key distinction that won the case for Mr. Koontz.

Under the unconstitutional conditions doctrine, it does not matter whether the government ultimately succeeds in pressuring someone into forfeiting a constitutional right (e.g., real property, money, etc.), the “doctrine forbids burdening the Constitution’s enumerated rights by coercively withholding benefits from those who exercise them.”  p.9.

Thus, although some questioned how the government’s demand could violate the Takings Clause where no property changed hands, the Court explained that the answer lies in the unconstitutional conditions doctrine:

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. As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury. [p.10]

So, hindsight being 20/20, it appears that Mr. Koontz’s answer to Justice Scalia was spot on: Nollan and Dolan do not require property to actually transfer hands.  It is the unconstitutional demand that violates the doctrine:

[W]e have recognized that regardless of whether the government ultimately succeeds in pressuring someone into forfeiting a constitutional right, the unconstitutional conditions doctrine forbids burdening the Constitution’s enumerated rights by coercively withholding benefits from those who exercise them. [p.9]

Remedies:  The opinion also answers the question, if nothing is actually taken, is the landowner injured?  Can he recover damages?  The short answer is yes.  But when a permit is denied because the landowner objects to unlawful conditions, the remedy is not just compensation.  Instead, the landowner can seek damages under state or federal statutes:

In cases where there is an excessive demand but no taking, whether money damages are available is not a question of federal constitutional law but of the cause of action—whether state or federal—on which the landowner relies.  [p.11]

Is Money Property?:  The opinion also resolves the rather contentious question, whether government demands for money can violate the takings clause.  This question seems like it should be simple: of course money is property, and the Takings Clause protects all property—doesn’t it?   But there are many decisions confusing when money should be treated like property and when it is something else.  The Koontz opinion clarifies some of that confusion (largely arising from the plurality decision, Eastern Enterprises v. Apfel), holding that fees that are imposed “in lieu of” a land dedication are the functional equivalent of land and should be protected like land.