Supreme Court Ruling in Florida Wetlands Case Not Quite the Win Developers Claim

Decision might lead state agencies to just say “no” to wetland development rather than risk a lawsuit, say experts

Earlier this summer, the Supreme Court ruled on a 16-year-old Florida case that didn’t make too many headlines but is bound to have long-term implications for how state land-use agencies decide to hand out development permits on environmentally critical lands.

wetlands in Orlando, FLPhoto by Rickymar PhotographyAs many Florida land buyers discovered in the 1950s and 1960s, wetlands are not always under water. At certain times of the year or during drought periods, these lands can look enticingly buildable.

In a 5 to 4 decision the court sided with a Florida landowner who challenged terms for a state-issued permit for developing wetlands. The ruling set a much stricter standard for conditions regulators can place on permit applications.

The case, Koontz v. St. Johns River Water Management District, pertained to a Florida resident, Coy A Koontz Sr’s request for a permit in 1994 to dredge and fill more than three acres of a 14.9-acre property he owned near Orlando that included protected wetlands.

Under Florida law, Koontz was required to offset any harm to the wetlands by including provisions in his commercial development plan to reduce its overall environmental impact or by mitigating any harm through restoring, enhancing, or preserving other wetlands within the river basin instead. 

Koontz offered to mitigate the environmental impact of the development by deeding the St. Johns River Water Management District a conservation easement on nearly three-quarters of his property. The district instead asked Koontz either to reduce the size of his development further to  less than one acre or to make improvements to district-owned wetlands several miles away. The district in its response to the applicant indicated that such an approach would sufficiently mitigate impacts posed by the development.

Koontz thought the district’s demand was excessive and cut off any further negotiations, leading the water district to deny his permit application. Koontz then sued the water district in 1997 under a state law that provides damages for agency action that is an “unreasonable exercise of the state’s police power constituting a taking without just compensation.”

The case went through several appeals over the years, including a decision by the Florida Supreme Court in favor of the district. Koontz Sr died in 2000 and his son, Koontz Jr, took the case to the US Supreme Court in 2011. On June 25, 2013 the US Supreme Court ruled in favor of Koontz, saying that a more stringent takings standard (established by two previous Supreme Court decisions, Nollan v. California Coastal Commission [1987] and Dolan v. City of Tigard [1994]) should apply to permit terms that require a landowner to spend money.

There is a good deal of confusion about the ruling, but at first glance, it does seem like a boon for developers, especially those with properties that may require special permitting due to the presence of wetlands or other protected lands. 

Shortly after the court decision, the blogosphere was abuzz with pundits and experts touting it as beneficial for business interests. The Heartland Institute’s Steve Stanek noted that “property owners who need permits to develop vacant land or improve existing structures now have important protections from abusive federal, state, and local governments, thanks to a recent ruling of the US Supreme Court.”

Brian T. Hodges, of the Pacific Legal Foundation, the organization that filed the Supreme Court petition on behalf of the Koontz family, wrote that he felt “like a kid trapped in a candy store” when he read the Supreme Court decision. Hodges, Stanek, and others in favor of property rights and limited government, look at this case as vindication of property “takings” that irk developers who are confounded by state and local regulations governing land use.

However, some environmental activists and lawyers say the ruling is only going to make it harder for landowners to get permits. The decision may encourage permit-granting agencies and governments “to stop being nice,” as one Florida environmental attorney phrased it. 

Though some environmentalists have been “lamenting about how ‘this is the end,’” the lesson of this case for permitting agencies may end up being problematic for property rights advocates and less of an issue for environmental mitigation, says environmental lawyer Thomas Ruppert, the coastal planning specialist for Florida Sea Grant. Ruppert said the ruling may increase the frequency with which permitting authorities deny permits, rather than risk a lawsuit if they try to negotiate with developers.

Ruppert is not alone in this theory. In a New York Times op-ed piece, John Echeverria, a Vermont Law School professor, wrote that the ruling may create a “perverse incentive for municipal governments to reject applications from developers rather than attempt to negotiate project designs that might advance both public and private goals.”

And as Jan Goldman-Carter of the National Wildlife Foundation, pointed out in a post on Wildlife Promise, the ruling does not negatively impact the proper use of “scientifically sound assessments” of wetland mitigation. The five-justice majority did not seem intent on stripping away wetland regulations, she said, rather they wanted to adjust the way in which the regulations are applied.  

Earthjustice managing attorney David Guest concurs. “While the decision may make the courts more accessible to disgruntled landowners, it also makes clear that environmental mitigation is fully appropriate,” he said.

Many property rights advocates may have missed the point that the Koontz decision centered mainly on the way in which the water district went about its efforts to mitigate wetlands destruction and not on the regulations limiting wetlands development per se.

That point, that the court’s decision may inadvertently put a damper on negotiations between property owners and permitting agencies, was also made in the dissenting opinion by Justice Kagan. “If a local government risked a lawsuit every time it made a suggestion to an applicant about how to meet permitting criteria, it would cease to do so; indeed, the government might desist altogether from communicating with applicants,” Kagan wrote.

For its part, the St. Johns River Water Management District is taking the result in stride. It put out an official statement saying that the court’s decision has “clarified the constitutional protections that must be afforded to landowners when governmental entities issue permits affecting protected property interests.”

Wetlands are some of the most productive ecosystems on Earth. These habitats that exist between land and water provide important environmental services for humans as well as animals and plants. Wetlands provide breeding grounds for birds and fish; support abundant mammal species; filter pollutants; stabilize local climate; protect against storm surge; and provide people with recreational areas and aesthetic vistas.

As many Florida land buyers discovered in the 1950s and 1960s, wetlands are not always under water. At certain times of the year or during drought periods, these lands can look enticingly buildable. The Florida real estate boom was a direct result of unsuspecting “snowbirds” buying up wetlands during the dry season from unscrupulous land sales companies.

Despite what is known about wetlands, landowners in Florida want a return on land investments, even though development of wetlands in the state has for decades been highly regulated—particularly after extensive degradation and destruction of wetlands in South Florida, including large portions of the Everglades.

Yet as Florida’s population increases, so does the need for land development, which, as the Koontz case underscores, inevitably leads to a clash of interest between conservation and development.

Perhaps the real loss in the Koontz ruling is the promise of sustainable development: the ability of permitting agencies to offer incentives and trade-offs to property owners, thus providing opportunities for “win-win” solutions to land use issues.

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