Supreme Court Appears Likely to Side With Landowners in Fee Case

The US Supreme Court signaled a narrow victory for property owners challenging permitting fees while leaving the tougher issues for another day.

The court, following argument on Tuesday, seemed likely to say there’s no automatic exemption for fees passed by a legislature and generally applicable to all landowners, as opposed to those enacted by permitting officials on particular property owners.

That’s because even the California county that assessed the fees agreed there’s no such categorical exception. There’s “radical agreement” on that question, Justice Elena Kagan said.

But the case still presents issues that could call into question taxes and tolls that local governments traditionally impose, and eventually upend the ability to plan and fund infrastructure for new development.

The court should leave that “can of worms” for another day, Justice Neil Gorsuch said.

A narrow decision would be a win for George Sheetz, who says he was forced to pay more than $23,000 in fees to fund unrelated road improvements before he could build a house on his property in El Dorado County.

However, Sheetz could still lose if the court sends the matter back to California state court as is likely.

Kicking The Can

Sheetz challenged the fee saying it failed the so-called Nollan/Dolan test, which prohibits localities from charging unrelated fees as a condition to building on personal property.

But a California state court said the Nollan/Dolan test only applies to fees assessed by individual permitting officials, and not to legislatively enacted ones. There’s less risk of unconstitutional coercion when the fees are passed by a legislature and generally applicable to all landowners than than when done on an individual basis, the state court said.

All parties now agree that that was wrong.

The court should just answer that question “and be done,” Gorsuch said. Particularly because, as Justice Sonia Sotomayor noted, the other issues weren’t “fleshed out below.”

Those issues include whether the scheme here is even a taking subject to the test Nollan/Dolan test, or whether it could nevertheless pass some form of heightened scrutiny.

Those are questions on which the parties are still “very much at odds on,” Kagan said.

The case is Sheetz v. County of El Dorado, California, U.S., No. 22-1074, argued 1/9/24.