Two Supreme Court cases, Nollan v. California Coastal Commission, and Dolan v. City of Tigard, set limits on governments’ ability to impair property interests with land use regulations. Under those decisions, there must be a “nexus” and “rough proportionality” between the government’s demand and the effects of the proposed land use. That test has historically applied when, for example, the government approves a land use permit, but the permit includes a condition that the property owner relinquish some property, like an easement. In this case, Koontz sought to develop a portion of his Florida wetlands property. The Water Management District, however, refused to approve his project unless he made certain concessions, including spending money to improve public lands elsewhere. Koontz thought these conditions excessive, so he sued under a state law permitting him to seek damages. The Florida Supreme Court held that he did not have a claim for two reasons: first, because the Nollan-Dolan standard does not apply to the denial of a permit (as opposed to the approval); and second, because the standard does not apply to a demand for the payment of money, as opposed to a specific burden on a property interest.
Today, the Supreme Court, in a five-to-four decision by Justice Alito, reversed the state court on both questions. In essence, the Court reasoned that limiting the applicability of the Nollan-Dolan standard to exclude either the denial of permits or the exaction of fees would create a path to circumvention. The decision has the potential to significantly expand property-owners’ ability to challenge local land use regulations and fees, though it is not clear that this expansion will result in a significant number of successful challenges. Here, the Court expressly reserved judgment on whether Koontz’s claim is actually meritorious.
Justice Kagan, joined by Justices Ginsburg, Breyer, and Sotomayor, dissented. The dissenters agree with the majority on the first question: that the Nollan-Dolan standard applies to the denial of permits. But they disagree that it applies to monetary exactions, and argue that this part of the decision is likely to result in a substantial amount of additional litigation that would undermine local efforts to regulate land use.