Can Government Revoke Your Right to Run an Existing Business?

What would you say if your city told you that it was revoking your right to continue a long-standing business on your own property? That is exactly what happened to the White family. They had run a commercial campground on their land in Elk River since the 1970s. But the City tried taking away their right to continue that business.

The White family had to fight all the way to the Minnesota Supreme Court to secure their right to continue campground operations. On December 4, 2013, the Supreme Court handed the family a victory—holding that the City of Elk River lacked the power to “revoke” their property rights. The Court rebuffed Elk River’s attempt to unilaterally eliminate the White family’s business.

The case raised a question of fundamental importance in Minnesota—one that might impact any business or property owner in the state. At issue was the very right to continue operating an existing business without the threat of a zoning board imposing new and draconian permitting requirements. As such, the National Federation of Independent Business (NFIB), which represents small business interests across the country, and the Minnesota Vacation Rental Association (MVRA) joined in filing an amicus brief in the case, arguing that local zoning boards should not be able to eliminate private property rights.

So why did Elk River want to revoke the family’s right to run this business anyway? Well, the City claimed that some folks were living in the campground year-round. But even if that somehow constitutes a nuisance to the community, or if it were in violation of some regulation, the proper course would have been for the City to simply address the problem—not to take away the White family’s right to make an honest living.

Municipalities commonly issue citations and fines when a landowner violates established law. That is usually sufficient to resolve the situation. But that is not what Elk River did. Instead, the City decided to “revoke” a permit that it had issued to the White family years ago—way back in 1984.

To put this in context, the City adopted its first zoning code in 1980. At the time, the family was already running its campground on the land and they continued operations just the same after the code came into effect. Then—in 1983—the City decided to amend the zoning code to require a special permit to continue lawful business operations on the family’s property. Accordingly, the City then required the White family to apply for a permit to continue business operations.

Now, of course, government can impose many legitimate conditions on the issuance of a new building permit. Likewise a municipality could legitimately impose conditions on a license for a new business enterprise. But why should a long-standing business, which has been operating in compliance with preexisting zoning restrictions, have to obtain a special permit to continue lawfully operating?

As NFIB and MVRA argued to the Supreme Court, the Constitution protects a business owners’ right to continue lawfully established operations without need of new permits. The only time the government may legitimately require an existing business to seek a permit would be if the business seeks to build something new, or to use the property in a more intensive manner. But if a business simply wants to enjoy the right to continue with business as usual, there is no legitimate reason to require them to continually ask the government for permission

Had the Minnesota Supreme Court allowed Elk River to revoke the White family’s right to continue operating their campground, it would have opened the door for municipalities throughout the state to force long-standing businesses to apply for new permits. This would be highly problematic for the small business community, and other property owners, because these permits would likely impose new—and potentially costly—regulatory burdens. It would have allowed the government to hold a threat over the head of every business and property owner—a threat that, on a whim, it could require a new permit with more stringent conditions. And of course, there would always be the threat that government might simply revoke your right to run your business altogether.

For these reasons, NFIB and MVRA applaud the Minnesota Supreme Court for making clear that local governments are powerless to take away grandfathered property rights. This constitutes an important victory for property rights in Minnesota, and a win for the small business community. With this precedent, landowners may rest assured that they will be allowed to continue with lawfully established land uses—notwithstanding our perpetually evolving regulatory climate.

 

Related: http://www.nfib.com/press-media/press-media-item?cmsid=63185

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About Luke Wake

Luke A. Wake is a senior 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. He is also working to advance small business interests in law review articles, including publications in the Berkeley Journal of Law & Ecology, the Texas Journal of Law and Politics, and Competition Magazine. See R.S. Radford & Luke A. Wake, Deciphering and Extrapolating: Searching for Sense in Penn Central, 38 Ecology L.Q. 731, 746-747 (2011); Damien M. Schiff, Luke A. Wake, Leveling the Playing Field in David v. Goliath: Remedies to Agency Overreach, 17 Tex. L. Rev. & Pol. 97 (2012); Jarod M. Bona and Luke A. Wake, The Market-Participant Exception to State-Action Immunity From Antitrust Liability, J. of Antitrust and Unfair Competition of the State Bar of Ca., Vol. 23, No. 1, 156 (Spring 2014); James S. Burling and Luke A. Wake, Takings and Torts: The Role of Intention and Foreseeability in Assessing Takings Damages, in Condemnation 101: Making the Complex Simple in Eminent Domain 449-51 (ALI-ABA Committee on Continuing Professional Education eds. 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. He is a member of the California Bar, the District of Columbia Bar, and the U.S. Supreme Court 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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One Response to Can Government Revoke Your Right to Run an Existing Business?

  1. In Ohio they started a new license that they included wineries in for licensing and inspections as “Food Processing Facilities” , this was only effective if you wholesale your wine. I had been in business since 1997 and this came about in 2010 and I had never heard of or from the Food Safety people regulating my winery. I gave up my wholesale business to keep them out as I see it as detrimental to my style and creativity in winemaking as well as unnecessary, duplicitous (with Liquor regulation), and discriminitive as pertains ot out of state wineries, etc. I have lost a lot of business income because of it and am operating at a subsistence level. It’s not a property issue as this situation is, but it sure seems similar in concept. For information on this you can see: http://www.FreeTheWineries.com

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