Koontz oral argument: what was taken in Nollan and Dolan?

January 16, 2013 | By PAUL BEARD

Yesterday, the U.S. Supreme Court heard argument in our case, Koontz v. St. Johns River Water Management District. In this case, the District denied Coy Koontz permits to use 3.7 acres of a 15-acre lot, after he refused to acquiesce to its demand that he perform off-site improvements to 50-acres of publicly owned wetlands (in addition to dedicating over 11 acres of his property into a conservation easement). While the District claimed (without proof) that the impact of his project on wetlands justified its demands, there actually are not viable wetlands on the project site.  He sued to invalidate the demand, on the grounds that it bore no connection or proportionality to the impact of his modest project. Mr. Koontz relied on two of this Court’s precedents—Nollan v. California Coastal Commission and Dolan v. City of Tigardin which the Supreme Court invalidated exactions requiring the dedication of real property that were attached to permit approvals.  The decisions provide the “essential nexus” and “proportionality” standards that are necessary to determine if an exaction results in an unconstitutional condition under the Takings Clause.

After he prevailed in the Florida trial and appellate courts, the Florida Supreme Court reversed. It created two broad exceptions to Nollan and Dolan.  First, it said that those precedents apply only where the permit has issued, and the demanded property is taken.  Second, the Florida Supreme Court said that the precedents apply only to exactions of real-property interests. Here, permits were denied, no property was actually taken, and the exaction was for money, not real property. Therefore, in the Florida Supreme Court’s view, Mr. Koontz was not entitled to Nollan and Dolan review of the exaction.

The U.S. Supreme Court granted our petition to review the Florida Supreme Court’s decision on these two questions.  After the case was fully briefed, and even at the argument yesterday, it became apparent that the District and the Solicitor General both agreed that Nollan and Dolan do not require a permit to have issued and the exacted property to have been taken. That’s not surprising. The very purpose of Nollan and Dolan is to prevent the consummation of an unconstitutional permit condition—not to force the applicant to swallow an unlawful exaction, comply with it, then sue for compensation.  What’s more, the procedural posture of both cases is the same as ours. In Nollan and Dolan, the applicant sued after the agency imposed the permit exaction; no permit had issued and no property had changed hands.

It became apparent after the District submitted its brief on the merits, that it was no longer contesting this point. But, at oral argument, Justice Scalia seemed to rely on the Florida Supreme Court’s reasoning. Here is one of the exchanges between Justice Scalia and me:

JUSTICE SCALIA: No, it would be subject to Nollan and Dolan analysis if they took the $10,000. If they issued the permit, the developer went ahead with the development and the State then attached the bank account in the amount of $10,000 or whatever, that would be Nollan — and Nollan and Dolan — in Nollan, there was a taking.

He had gone ahead with the [ ] development of his house under the permit which said if he did that, he gave away the easement. So [ ] there was a [ ] taking there. The easement would have been taken automatically.

In [ ] Dolan, [ ] the individual had not gone ahead with the development, but it was clear that any development the person undertook would be subject to the [ ] exaction that the municipality required. So there was a [ ] taking there, we said.

Here, there’s nothing that happens. The permit was denied, unlike in [ ] Dolan where the permit was granted and it was understood that if she went ahead with it, she was going to lose — lose some land rights. Here, the permit’s been denied.

I can’t see where there’s a taking here. Nothing’s been taken.

MR. BEARD: In Nollan and Dolan, Your Honor, nothing was taken, either. In Nollan you had a permit approval with conditions. It’s true that development had not gone forward, but here as well development had not gone forward.

Presumably — theoretically if the development had gone forward he might have been subject to conditions that he would have had to satisfy. But I would submit to the Court –

JUSTICE SCALIA: The permit had issued. The permit had issued in both of those cases, and therefore the person was saying: To go ahead with this permit I give up this land.

MR. BEARD: The permits in Nollan and Dolan actually did not issue. There was only approval with conditions and there is a difference. And that is no different from what happened here. The threat is the same. You don’t get a permit issued to you until you –

JUSTICE SCALIA: There was no approval with conditions.

Again, it is indisputable that, in both Nollan and Dolan, no permits had issued, and no property had changed hands before the applicant sued.  Here’s the language from the permit approval in Nollan:

Prior to the issuance of the Coastal Development Permit, the applicants shall record, in a form and manner approved by the Executive Director, a deed restriction acknowledging the right of the public to pass and repass across the subject propert[y] . . . .

And in Dolan, the permit approval said:

[Prior to the issuance of buiding permits t]he applicant shall dedicate to the City as greenway all portions of the site that fall within the 100-year floodplain . . . and all property 15 feet above . . . the 150.0 foot floodplain boundary.

Like in our case, the Nollan and Dolan applicants were challenging the unlawful conditioning of their right to use their properties, and they sought prospective relief—i.e., the invalidation of the exactions, precisely so that no property would be taken.

It is true that, in Nollan and Dolan, the agencies’ threat was couched in different language. There, the agencies effectively said, “We approve your permit, so long as you comply with our permit exaction.”  Here, the District said, “We deny your permits, unless you comply with our permit exaction.” But there is no constitutional difference in the two threats: Both refused to issue permits unless and until the applicant acquiesced. It is that kind of conditioning on one’s right to use property that Nollan and Dolan were created to address.