Today, the Supreme Court takes a new look at a decades-old idea: private individuals may not be forced to give up constitutional rights in order to get a government benefit. That kind of quid-pro-quo has been outlawed since the late 1900s. The Justices will hold a second hearing today, to examine a technical dispute about fees charged for bankruptcy court services.
First hearing Tuesday: Sheetz v. El Dorado County Starting at 10 a.m., the hearing is scheduled for one hour.
Background: Over the history of the U.S. Constitution, the Supreme Court has adopted various doctrines that guide courts on how to interpret the nation’s founding document. This case involves the “unconstitutional conditions doctrine.” The Library of Congress defines it this way: “The basic principle is that the government normally may not require a person, as a condition of receiving a public benefit, to relinquish constitutional rights.”
While a person has no constitutional right to obtain a public benefit, the government can’t make a condition for access that the individual or company forfeit a right. The doctrine is tied to no particular right specified in the Constitution, but seems to be both a guarantee of fair procedures and a limitation on government power to “seize” private property for a public use.
It is better illustrated by a couple of real-world examples. Consider modern precedents of the Court that figure in the background and in the legal arguments in today’s case.
In 1987, the Court’s decision in Nollan v. California Coastal Commission involved James and Marilyn Nollan, owners of a beachfront lot in Ventura County. They wanted to build a house on it. The state Coastal Commission offered a permit, but on condition that they allow any beachgoers who wanted to cross the property to do so at any time. The Court ruled for the Nollans.
In 1994, the Court’s ruling in Dolan v. City of Tigard involved a complaint by Florence Dolan that the Oregon city restricted her right to expand a plumbing store that she operated and its parking lot; a creek flowed past one side of the property. In return for a permit, the city required her to give up part of her property for use as a “greenway” and a bicycle path. Again, the Court ruled for the property owner.
In those two opinions, the Court laid down two legal principles: first, the condition put on the property owner must have a clear link to the benefit the property owner seeks, and, second, there must be a “rough proportionality” between the two. If the condition fails either test, it is unconstitutional.
Applying those principles in those two cases, the Court ruled that the California Commission’s demand for public access to a beach failed the test because that was not enough to justify the Nollans’ giving up some of their right to use their property, and that the Oregon city’s desire for regulating the creek and its banks failed because it forced Ms Dolan to hand over part of what she owned.
After those two decisions, lower courts began narrowing them as precedents. Lower courts interpreted them as only involving government demands for forfeiture of land, and had no impact on government demands for money as a condition for a permit – say, for example, an assessment to pay for the impact of new private building on area traffic or on the local school system.
In a 2012 decision, in Koontz v. St. Johns River Water Management District, the Supreme Court closed that loophole. In that case, Coy Koontz, Sr., wanted to develop some land he owned east of Orlando, Fla. The land was classified as wetlands, and the state of Florida wanted to protect those natural resources. The legislature passed a law requiring any property owner seeking to build in a way that affected wetlands to put up funds to alleviate the potential environmental harm.
In Koontz’s case, a building permit would require him to pay for wetlands-protection several miles away from his property. The Supreme Court struck that down, concluding that “monetary exactions” must satisfy the same tests as in the Nollan and Dolan cases.
Today’s case tests the Court’s reaction to another loophole created by some lower courts: allowing money assessments from property owners under a general growth-control law, to support traffic management within the community.
The facts of this case: George Sheetz owned a lot measuring 1,854 square feet in Placerville, Calif. He planned to build a manufactured home on the site, and filed for a permit with El Dorado County – a rapidly expanding community in the Sacramento area. The County in 2006 had adopted a growth-management law, with provisions to ease the impact of new development projects on traffic in the area’s streets and roads.
In 2017, the County agreed to issue Sheetz a permit, if he put up $23,420 to pay for highway and road improvements under the plan. He sued in state court, claiming that this assessment violated the principles laid down in the Nollan and Dolan precedents. He lost in state court, which ruled that the Court’s two precedents “do not extend to development fees that are generally applicable to a broad class of property owners through legislative action,” and do not single out an individual property owner.
Sheetz appealed to the Supreme Court, and the Justices voted to review the issue. The Biden Administration’s Justice Department has entered the case to support the County’s position and, in general, expressing the view that legislative action involving fees assessed more generally do not fail the “unconstitutional conditions” test.
The questions before the Court: Does a government fee imposed on private property owners as a group to pay for public projects, as a condition for a government benefit, violate the Constitution? Does the fact that it was imposed by a legislature make it constitutional?
Significance: The Supreme Court has stepped into this case to provide a broad answer to a question that has split the state courts – five states on one side, five states on the other – on the question of “unconstitutional conditions” for access to a public benefit when those conditions are imposed by legislation rather than by a government agency rule.
In a string of decisions by the Supreme Court, going back at least to 1926, the Justices have steadily expanded that doctrine with the practical effect of significantly widening protection for owners of private property seeking to develop what they own. In modern times, it has repeatedly closed loopholes that lower courts had written into the doctrine, and now is being asked to do so in a case that began in a California city but now sweeps nationwide. The result could be the most important property rights decision by the Court in the past three decades.
Tuesday’s second hearing: U.S. Trustee v. John Q. Hammons Fall LLC (and others) This hearing will begin after the property rights case has ended; it is scheduled for one hour.
Background on issues: The Constitution’s Article I Section 8 gives Congress the power to pass laws to govern the treatment of debtors who seek help in dealing with creditors. That provision requires that bankruptcy laws be uniform “throughout the United States.”
This case involves a highly technical dispute that has been unfolding for most of the past three decades, involving the fees that are charged to pay for the “United States trustees” – that is, the officials who preside over bankruptcy cases, sorting out ways to give debtors a fresh start and to try to protect creditors. The fees are supposed to make the trustee system pay for itself, but that has not been happening.
Under a 2017 federal law, a schedule was set up for quarterly fees to support the trustee program. Because that law applied only to 88 federal court districts which had trustees, and not to six districts which managed bankruptcy cases without a trustee, the Supreme Court ruled last year that this differing treatment violated the demand for uniformity across the country.
This appeal, filed by the Justice Department for a U.S. trustee, asks the Court now to choose a remedy for making the fee system uniform throughout the U.S. The Court appears to have two options: to provide refunds in the districts where the fees were assessed, or to impose the fee structure in the districts where there are no trustees.
The case does not have significance beyond the technical question of how to impose uniformity in the fee structure under the 2017 law.
The Court will broadcast “live” the audio (no video) of the hearings on its homepage, supremecourt.gov To listen, click on “Live Audio” and follow the prompt when the courtroom scene appears lower on the page. The audio also will be available, under the title of each case, on C-Span TV at this link: cspan.org/supremecourt