New Case Summary – Sheetz v. County of El Dorado

April 12, 2024

United States Supreme Court

601 U.S. ____ (2024) (click for full text of opinion)

The United States Supreme Court held that its judicial test for the constitutionality of development exactions, known as the Nollan/Dolan rough proportionality test, applies to legislative exactions that result from an application of generally applicable ordinances to a development.

George Sheetz, a property owner in California, applied to the County of El Dorado for a building permit for a prefabricated–or modular–home on a residential property. As a condition of approval, the County imposed a traffic impact fee in the amount of $23,240. The fee was imposed pursuant to the County’s enacted general plan, and Mr. Sheetz’s fee amount was not based on Mr. Sheetz’s specific traffic impact, but rather calculated according to a defined rate schedule that took into account that type of development and location within the County. Mr. Sheetz paid the fee under protest to obtain the permit, and then sued the County claiming that the fee was an unlawful exaction of money amounting to a taking. 

Sheetz argued that the Supreme Court’s decisions in Nollan v. California Coastal Comm’n and Dolan v. City of Tigard required the County to make an individualized determination that the fee imposed on him was necessary to offset traffic congestion attributable to his project. Both the trial and appellate state courts ruled against Sheetz, the California Court of Appeal notably holding that the Nollan/Dolan test was not applicable here because it only applied to administrative decisions imposing permit conditions on an ad hoc basis, and not to a fee imposed on a class of property owners pursuant to a legislatively-enacted scheme. 

The United States Supreme granted review as state courts had reached different conclusions on whether there was a distinction between legislative and administrative conditions on land-use permits in the exactions context under Nollan/Dolan.

In an unanimous decision, the Supreme Court reversed the California Court of Appeal ruling, holding that the Takings Clause does not distinguish between legislative and administrative land-use permit conditions, and Nollan/Dolan applies to legislatively imposed exactions.

The majority’s opinion reasoned that the Nollan/Dolan test addresses the potential abuse of the permitting process, and that nothing in constitutional text, history, or precedent supports exempting legislatures from ordinary takings rules. The Court noted, however, that it did not address the validity of the traffic impact fee itself, including whether a condition imposed on a class of properties must be tailored with the same degree of specificity as a permit condition that targets a particular development. It simply was reversing the lower court ruling on the basis that it had proceeded on the erroneous premise that legislative permit conditions were categorically exempt from Nollan/Dolan.

Justices Sotomayor and Jackson authored a concurring opinion to add that an important threshold question applies to any application of Nollan/Dolan – that is, whether the permit condition would be a compensable taking if imposed outside the permitting context. The concurring Justices noted that both the Nollan and Dolan cases began by observing that if the government had directly seized the easements it sought to obtain through the permitting process, it would have committed a per se taking, and the California Court of Appeal did not consider that question and the majority’s opinion did not resolve it.

Justice Gorsuch wrote a separate concurring opinion to address the majority’s comment that it did not resolve whether the Nollan/Dolan test operates differently against a class of properties rather than a particular development, concluding that nothing in Nollan, Dolan, or the Court’s decision here supports distinguishing between government actions against the many and the few any more than it supports distinguishing between legislative and administrative actions. 

Justice Kavanaugh also concurred, but wrote a separate opinion to underscore that whereas the Court had declined to decide whether a condition imposed on a class of properties must be tailored with the same degree of specificity as imposed on a particular development, the decision did not address or prohibit the common government practice of imposing permit conditions including impact fees on new developments through reasonable formulas or schedules that assess the impact of classes of development rather than the impact of specific parcels of property.