One of the lesser-noted decisions that the Supreme Court handed down in its June term was Koontz v. St. Johns River Water Management District. Koontz applied for a permit to develop a portion of a small parcel of land that he owned in Florida, and offered a remediation plan to offset the effect of the development on wetlands on his property. The Water Management District rejected Koontz’s plan and said it would approve his permit only if he either reduced the size of his development, or else paid contractors to make improvements to wetlands owned by the District some miles away from his property. Koontz thought that the conditions demanded by the state were excessive, and sued. The Court ruled in his favor, 5-4, with the majority opinion written by Justice Alito.
The case turned on the application of two Supreme Court cases, Nollan and Dolan:
Our decisions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994), provide important protection against the misuse of the power of land-use regulation. In those cases, we held that a unit of 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.
This is an application of the broader principle that the government cannot condition a benefit to which a person is otherwise entitled on that person’s agreement to give up a constitutional right.
Justice Alito explained the specific application of these cases to the issue of land use:
Our decisions in those cases reflect two realities of the permitting process. The first is that 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. … Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them.
In Koontz, the Court held:
Under Nollan and Dolan 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.
That is the case, the Court held, even if the government is “only” asking the applicant for money.
The Koontz decision won’t do much to slow down most of the regulatory juggernaut that the Obama administration has unleashed, since its application is limited to the context of land-use permitting. But within that context, Koontz may have significant repercussions. Last year, I wrote about the Obama administration’s “environmental justice” initiative, Plan EJ 2014, here and here. Those posts are worth reading in their entirety. Briefly, I noted that the environmental justice initiative is an effort by the EPA “[to] exercise powers it doesn’t legally possess by threatening companies that are subject to its regulations with reprisals if they don’t go along with the agency’s extra-legal agenda.” By the EPA’s admission, EJ 2014 is “not a rule or regulation.” Rather, in my view, it is a heavy-handed attempt to use the EPA’s permitting powers, which give it a broad range of control over countless businesses, to force those companies to carry out liberal projects that the EPA has no legal power or jurisdiction to mandate.
I cited the example of Corpus Christi, Texas, where a number of petroleum refineries are located. The EPA has concocted a plan to “persuade” the companies that own the refineries to buy new homes, somewhere else, for the people who live relatively close to the refineries. The EPA has acknowledged that it has no power to order refineries to buy Corpus Christi residents new homes:
Although EPA’s legal authority to require the creation of buffer zones or to order industries to relocate nearby residents is very limited, EPA will work to bring all parties together at a Summit where issues can be identified and workgroups can be formed to find constructive solutions.
“Very limited?” It is completely non-existent. But, as Justice Alito recognized in the Koontz decision, there is a real danger that the EPA can extort compliance with such illegal demands from parties like refinery owners, based on the explicit or implicit threat to take adverse action on permit applications. Under Koontz, that threat should be be neutralized, at least in theory. Making collateral demands on companies subject to EPA regulation that “lack an essential nexus and rough proportionality” to the companies’ environmental impacts is impermissible.
Of course, during the five years of the Obama administration, we have seen repeatedly that the raw exercise of power does not necessarily depend on legal right. But one hopes that next time the EPA tries to pressure a regulated company into incurring extra-legal expenses that have no nexus to the company’s own actions, the company will tell the EPA to pound sand, and cite Koontz as authority.