United States: Quick Counsel - Regulatory Takings

Last Updated: November 15 2013
Article by John M. Lain


Governmental agencies often take action during permit approvals processes or land use deliberations that restrict a landowner's property rights. When taken too far, these government exactions constitute a governmental taking.

In June 2013, the U.S. Supreme Court issued an opinion in the case of Koontz v. St. Johns River Water Management District that could have far reaching implications for the ability of local governments and agencies to obtain permit conditions requiring land dedication or restrictions or that require monetary payments in order to obtain a permit when they issue permits and approvals. This Quick Counsel discusses the concept behind regulatory takings relating to permit conditions, summarizes two key prior cases on regulatory takings and permit conditions and discusses how they were expanded by Koontz.


The Fifth Amendment to the U.S. Constitution prohibits governmental takings of property without compensation. The physical taking of property for public uses, such as road building, are readily identifiable as takings for which compensation is required. It is more problematic to determine if a taking has occurred when a governmental agency takes an action that somehow denies or restricts a property owner particular uses of its property. The question the Courts have had to answer is when does a legitimate exercise of police powers cross the line and become an unconstitutional taking? Courts have found four general types of regulatory takings:

  • Actual physical invasion. In the case of Loretto v. Teleprompter Manhattan CATV Corp., an apartment building owner was required by local law to allow a cable company to install equipment on his building. The Court found that if an owner could show that a law allowed another party to physically occupy a landowner's property, then a taking occurred.
  • Complete denial of economically beneficial use. The Supreme Court found that a governmental action that denies the owner of all economically viable use of the land through a permit denial or other governmental restriction is a taking.
  • Penn Central Test. In Penn Central Transportation Co. v. New York City, the Supreme Court used a three factor test to determine that New York's refusal to allow an expansion of Penn Station for historic resource reasons did not constitute a taking. The Court looked at:

    • the economic impact of the regulation on the landowner
    • the degree to which the regulation interferes with the owner's reasonable investment backed expectations; and
    • the character of the government's action, i.e. what interests are they protecting?
  • Governmental Exactions. The Supreme Court has developed a substantial nexus and rough proportionality test involving government required permit conditions. These tests were set forth in the Supreme Court cases of Nollan/Dolan and are discussed in more detail below.



In Nollan v. California Coastal Commission, the U.S. Supreme Court ruled in favor of a landowner who was being required to grant a permanent beach front access easement as a condition to obtaining a permit to demolish an existing structure and replace it with a new structure. The Court agreed that the conditioning of the government permit on the granting of the easement could be constitutional if it substantially furthered governmental purposes. However, the Court held that, in this instance, the condition requiring the permanent public easement was not sufficiently related to the public purpose that the Coastal Commission was trying to protect – which was to protect the views of the ocean. The effects of the Nollan's rebuilding project would have no impact on the public access to the beach and the Nollan's objected to the permit condition designed to enhance public access at the Nollan's expense. The Coastal Commission issued the permit with the offending condition over the Nollan's objection.

After the permit decision was upheld in the California Supreme Court, the Nollan's took the matter to the U.S. Supreme Court which reversed the California decision. The Court, in a 5-4 decision, determined that there was not a significant nexus where the condition substituted for the prohibition utterly fails to further the end advanced as the justification for the prohibition [p. 848].


Dolan v. City of Tigard involved a request by Mrs. Dolan to expand her store and pave her parking lot at the property she owned in the City of Tigard. The Planning Commission conditioned its approval of her application upon her dedicating land for a public greenway along a nearby creek and for a pedestrian/bicycle pathway. The stated purpose of these requirements were to minimize flooding (in the case of greenway dedication) and to alleviate traffic congestion (in the case of the pathway dedication). The Oregon State Supreme Court upheld the permit decision and Mrs. Dolan appealed to the Supreme Court, which reversed the decision upholding the permit. The Court referenced the concept of "unconstitutional conditions" whereby the government may not require a person to surrender constitutional rights in exchange for a discretionary benefit given by the government when the property sought has little relation to the benefit. In other words, as confirmed in Nollan, there must be a nexus between the condition and the benefit. Dolan answered the question left open by Nollan – what is the required degree of connection between the governmental exactions and the impacts of the related project?

The Supreme Court rejected several tests that had been used by various state courts, determining that a generalized statement of the connection between the required condition and the proposed impact was too lax, that "specific and uniquely attributable" was too specific and that the simple "reasonable relationship" test was confusingly similar to the Courts existing "rational relationship" test, which applies to the Equal Protection Clause of the Fourteenth Amendment. Instead, the Court created the "rough proportionality" standard. Under this standard no precise mathematical calculation is required, but an agency must make an "individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development."


In Koontz v. St. John River Water Management District, the Supreme Court ruled in favor of a property owner who had sued the St. John River Water Management District (the "District") claiming that its actions in denying a permit were unconstitutional takings of his property.

Mr. Koontz applied for a permit from the District to impact wetlands located on his property. The District denied Koontz's permit after he would not agree to (i) either reduce his project size and grant a perpetual conservation easement over the remainder of property or; (ii) provide funds to support wetlands restoration work on nearby District owned wetlands site. Koontz challenged the denial under a Florida takings statute leading the Florida Supreme Court to rule that there was no taking because (i) there was a permit denial versus coerced permit acceptance with concessions, and (ii) the demand was for money rather than a demand for a property interest. The Supreme Court reversed holding that permit denials and monetary exactions were subject to the substantial nexus and rough proportionality of Nollan/Dolan.


The decision in Koontz expands the established jurisprudence from Nollan/Dolan to include both: (i) permit denials for failure to agree to a requested condition and (ii) monetary requests as reviewable under a takings analysis. Many local governments make requests for property and monetary payments as part of the permitting process. This can occur when companies apply for everything from building permits to wetlands permits. From cash proffers from homebuilders to wetlands mitigation payments and property restrictions placed on developers, what was complained of in Nollan, Dolan and Koontz is a common government practice. It is important to note that the Supreme Court did not address the underlying substance of the case (i.e. did a taking occur and what is the remedy). The Court expressly stated that these questions would have to be determined on remand to the Florida courts. Koontz did not make these actions unconstitutional per se, but it did make them reviewable. There are two important effects from this. First, it could cause governments to be very careful what they ask for (which in many cases will mean asking for less) and how they document the connection between the requirement and the impact it is alleviating. Second, it may cause local governments and agencies to more quickly deny permits without ever engaging in discussions about what conditions might have possibly been issued that would allow a permit to go forward.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions