In a complex case, the Supreme Court has ruled that state and local governments may not impose a demand that a land developer restore or create wetlands in a separate, unrelated piece of property as a condition for permission to destroy wetlands on a parcel under development.

The case, Koontz v. St. Johns River Water Management District, pits developer Coy Koontz against a Florida environmental agency. Koontz' Petition for a Writ of Certiorari, asking the Supreme Court to accept the case in 2012, explains the background:

"For over eleven years, a Florida land use agency refused to issue any of the permits necessary for Coy A. Koontz, Sr., to develop his commercial property. The reason was because Koontz would not accede to a permit condition requiring him to dedicate his money and labor to make improvements to 50 acres of government-owned property located miles away from the project—a condition that was determined to be wholly unrelated to any impacts caused by Koontz's proposed development. A Florida trial court ruled that the agency's refusal to issue the permits was invalid and effected a temporary taking of Koontz's property, and awarded just compensation. After the appellate court affirmed, the Florida Supreme Court reversed, holding that, as a matter of federal takings law, a landowner can never state a claim for a taking where (1) permit approval is withheld based on a landowner's objection to an excessive exaction, and (2) the exaction demands dedication of personal property to the public."

The court has previously limited state and local power to impose conditions on permits, explains Tejander Singh at ("Details: Koontz v. St. Johns River Water Management District"): "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."

What's new in the latest decision is that the same tests are now applicable to cases where the government denies a permit, not just where the the government approves a permit but demands some compensatory action from the landowner. Koontz sued Florida claiming that the state had in essence taken away the value of his property by the permit denial, and demanding that the state pay restitution. Now his case will get kicked back to the Florida court system for a reconsideration.

But the outcome is still murky: Koontz has won this battle, but not his war. Notes Scotusblog: "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."