Can Government Hold Your Permit Application Hostage?

Florence Dolan ran a plumbing and electric supply store in Tigard, Oregon—a suburb of Portland. Like many other small business owners, she had plans to expand her store. But, she hit a brick wall when seeking the necessary approvals.

This should have been a relatively simple process; however, the local authorities stonewalled her. They told her that if she wanted to build on her land, she would have to give up something in return. The authorities granted her permit on the condition that she give up a portion of her land for a public bike-path. But, can the government really hold a permit hostage until you give in to these sorts of demands?

To use Justice Scalia’s words, Ms. Dolan was the victim of “an out-and-out plan of extortion.” While government can impose reasonable conditions on a building permit, the Constitution prevents the authorities from insisting upon conditions that have no connection to any impact that a proposed project might have on the public. For this reason, the Supreme Court said that Ms. Dolan’s rights were violated. And the Court sent a clear message: Government cannot impose conditions on a permit that are not reasonably related to preventing adverse harms to the public.

Though Ms. Dolan’s case was decided almost two decades ago, it appears that most bureaucratic regulators missed the memo. Since then, small business owners and ordinary individuals have encountered these same problems—time and again—when seeking necessary government approvals. All too often regulators get away with abusing their powers by making extortionate demands like those Ms. Dolan faced. And what is more, many state and federal courts have allowed government to get away with these schemes by creating loopholes to the constitutional rules that the Supreme Court recognized in Dolan v. City of Tigard.

This has been an ongoing frustration for landowners all across the country. But, finally the Supreme Court has agreed to hear a follow up case—as case that will decide whether sly regulators can subvert the Constitution by denying permits when an applicant refuses to give in to extortionate government demands up-front. And the NFIB Legal Center—recognizing the importance of this issue for small business—is participating to defend your property rights.

We filed in support of Coy A. Koontz. He was told that in order to receive a permit to build a commercial development on his property in a suburb of Orlando, Florida, he would have to dedicate 75 percent of his property to environmental conservation and would further be required to spend his own money to improve almost 50 acres of government property. When he refused—on constitutional grounds—the authorities denied his permit application. Yet, these conditions were unrelated to any impact his project would have on the public. Nonetheless, despite the fact that the Florida courts determined that his application was denied solely because he refused to submit to these unrelated conditions, the Supreme Court of Florida saw no constitutional problem here.

We are hopeful that the U.S. Supreme Court will set things straight. And we argue that the authorities should not be allowed to evade constitutional rules with clever tricks. Our constitutional system cannot tolerate such an abuse of power. Indeed, government exists to serve the people. Accordingly, regulators simply have no business holding our rights hostage.

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About Luke Wake

Luke A. Wake is a staff attorney at the NFIB Small Business Legal Center. Wake has particular expertise on environmental and land use issues, and has worked on numerous other constitutional issues and matters of importance to small business owners. He is an ardent defender of private property rights, which he believes are essential to the free enterprise system and the foundation of American liberty. As a strong advocate of individual rights and economic liberties, he has built his career defending small business interests. Since joining the NFIB Legal Center, Wake has focused on a whole host of issues, from employment law matters to regulatory compliance. In addition to serving as a resource for small business owners, Wake remains committed to the Legal Center’s pledge to ensure that the voice of small business is heard in the nation’s courts. As an appellate practitioner, Wake has focused particularly on informing the courts on matters of administrative law and on issues under the Fifth Amendment’s Takings Clause. He is also working to advance small business interests in law review articles, and was recently published in the Berkeley Journal of Law & Ecology. See R.S. Radford & Luke A. Wake, Deciphering and Extrapolating: Searching for Sense in Penn Central, 38 Ecology L.Q. 731, 746-747 (2011). Before joining the Legal Center’s team, Wake completed a prestigious two-year fellowship as an attorney in the Pacific Legal Foundation’s (PLF) College of Public Interest Law. Wake is a graduate of Case Western Reserve University School of Law in Cleveland Ohio, and is a member of the California Bar. He completed his undergraduate studies at Elon University in North Carolina in 2006 where he focused on political theory and corporate communications.
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