Koontz v. St. Johns River Water Management District, No. 11-1447; U.S. Supreme Court; opinion by Alito, J.; dissent by Kagan, J.; decided June 25, 2013. On certiorari to the Supreme Court of Florida.

Coy Koontz Sr., whose estate is represented here by petitioner, sought permits to develop a section of his property from respondent St. Johns River Water Management District, which, consistent with Florida law, requires permit applicants wishing to build on wetlands to offset the resulting environmental damage. Koontz offered to mitigate the environmental effects of his development proposal by deeding to the district a conservation easement on nearly three-quarters of his property. The district rejected Koontz's proposal and informed him that it would approve construction only if he (1) reduced the size of his development and, inter alia, deeded to the district a conservation easement on the resulting larger remainder of his property or (2) hired contractors to make improvements to district-owned wetlands several miles away. Believing the district's demands to be excessive in light of the environmental effects his proposal would have caused, Koontz filed suit under a state law that provides money damages for agency action that is an "unreasonable exercise of the state's police power constituting a taking without just compensation."

The trial court found the district's actions unlawful because they failed the requirements of Nollan v. California Coastal Comm'n, 483 U.S. 825, and Dolan v. City of Tigard, 512 U.S. 374. Those cases held that the 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. The district court of appeal affirmed, but the state supreme court reversed on two grounds. First, it held that petitioner's claim failed because, unlike in Nollan or Dolan, the district denied the application. Second, the state supreme court held that a demand for money cannot give rise to a claim under Nollan and Dolan.

Held: 1. The government's demand for property from a land-use permit applicant must satisfy the Nollan/Dolan requirements even when it denies the permit. Pp. 6-14.

(a) The unconstitutional conditions doctrine vindicates the Constitution's enumerated rights by preventing the government from coercing people into giving them up, and Nollan and Dolan represent a special application of this doctrine that protects the Fifth Amendment right to just compensation for property the government takes when owners apply for land-use permits. The standard set out in Nollan and Dolan reflects the danger of governmental coercion in this context while accommodating the government's legitimate need to offset the public costs of development through land-use exactions. Dolan, 512 U.S. at 391; Nollan, 483 U.S. at 837. Pp. 6-8.

(b) The principles that undergird Nollan and Dolan do not change depending on whether the government approves a permit on the condition that the applicant turn over property or denies a permit because the applicant refuses to do so. Recognizing such a distinction would enable the government to evade the Nollan/Dolan limitations simply by phrasing its demands for property as conditions precedent to permit approval. This court's unconstitutional conditions cases have long refused to attach significance to the distinction between conditions precedent and conditions subsequent. See, e.g., Frost & Frost Trucking Co. v. Railroad Comm'n of Cal., 271 U.S. 583, 592-93. It makes no difference that no property was actually taken in this case. 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. Nor does it matter that the district might have been able to deny Koontz's application outright without giving him the option of securing a permit by agreeing to spend money improving public lands. It is settled that the unconstitutional conditions doctrine applies even when the government threatens to withhold a gratuitous benefit. See e.g., United States v. American Library Assn. Inc., 539 U.S. 194, 210. Pp. 8-11.

(c) The district concedes that the denial of a permit could give rise to a valid Nollan/Dolan claim, but urges that this court should not review this particular denial because Koontz sued in the wrong court, for the wrong remedy, and at the wrong time. Most of its arguments raise questions of state law. But to the extent that respondent alleges a federal obstacle to adjudication of petitioner's claim, the Florida courts can consider respondent's arguments in the first instance on remand. Finally, the district errs in arguing that because it gave Koontz another avenue to obtain permit approval, this court need not decide whether its demand for offsite improvements satisfied Nollan and Dolan. Had Koontz been offered at least one alternative that satisfied Nollan and Dolan, he would not have been subjected to an unconstitutional condition. But the district's offer to approve a less ambitious project does not obviate the need to apply Nollan and Dolan to the conditions it imposed on its approval of the project Koontz actually proposed. Pp. 12-14.

2. The government's demand for property from a land-use permit applicant must satisfy the Nollan/Dolan requirements even when its demand is for money. Pp. 14-22.

(a) Contrary to respondent's argument, Eastern Enterprises v. Apfel, 524 U.S. 498, where five justices concluded that the Takings Clause does not apply to government-imposed financial obligations that "d[o] not operate upon or alter an identified property interest," id. at 540 (Kennedy, J., concurring in judgment and dissenting in part), does not control here, where the demand for money did burden the ownership of a specific parcel of land. Because of the direct link between the government's demand and a specific parcel of real property, this case implicates the central concern of Nollan and Dolan: the risk that the government may deploy its substantial power and discretion in land-use permitting to pursue governmental ends that lack an essential nexus and rough proportionality to the effects of the proposed use of the property at issue. Pp. 15-18.

(b) The district argues that if monetary exactions are subject to Nollan/Dolan scrutiny, then there will be no principled way of distinguishing impermissible land-use exactions from property taxes. But the district exaggerates both the extent to which that problem is unique to the land-use permitting context and the practical difficulty of distinguishing between the power to tax and the power to take by eminent domain. It is beyond dispute that "[t]axes and user fees … are not 'takings,'" Brown v. Legal Foundation of Wash., 538 U.S. 216, 243, n. 2, yet this court has repeatedly found takings where the government, by confiscating financial obligations, achieved a result that could have been obtained through taxation, e.g., id. at 232. Pp. 18-21.

(c) The court's holding that monetary exactions are subject to scrutiny under Nollan and Dolan will not work a revolution in land-use law or unduly limit the discretion of local authorities to implement sensible land-use regulations. The rule that Nollan and Dolan apply to monetary exactions has been the settled law in some of our nation's most populous states for many years, and the protections of those cases are often redundant with the requirements of state law. Pp. 21-22.

77 So. 3d 1220, reversed and remanded.