Two Constitutional Theories for Invalidating Extortionate Exactions

Publication year2021
CitationVol. 78

78 Nebraska L. Rev. 348. Two Constitutional Theories for Invalidating Extortionate Exactions


Alan Romero*

Two Constitutional Theories for Invalidating Extortionate Exactions


I. Introduction .......................................... 348
II. The Supreme Court's Opinions on Extortionate
Exactions ............................................. 350
A. Nollan v. California Coastal Commission .......... 350
B. Dolan v. City of Tigard ............................ 354
III. In Defense of the Restated Nollan Theory ............. 357
A. Land-Use Restrictions Are Uncompensated Takings
or Deny Substantive Due Process If They Do Not
Substantially Advance Legitimate State Interests . . 358
B. Substantive Due Process or Takings ............... 362
1. Takings ....................................... 362
2. Substantive Due Process ....................... 370
IV. The Consequences of the Theory ...................... 374
A. The Exacted Interest Need Not Be a Taking ....... 374
B. Cash Fees Must Be Proportional and Related ...... 376
C. The Government Cannot Constitutionally Reverse
the Exaction Process .............................. 378
D. Requiring an "Individualized Determination" Makes
Sense ............................................. 383
V. Conclusion ............................................ 385


A condition to a land-use permit is invalid if it is insufficiently related or proportionate to the negative effects that would justify denying the permit. Such conditions, or exactions,1 may be considered


extortionate because the government uses the threat of denial to extract some property interest from the owner, rather than simply trying to mitigate the negative public effects of the proposed land use.

The Supreme Court has tried twice to identify a constitutional theory for invalidating extortionate exactions. Although both opinions were mostly right, neither opinion clearly expressed the essential constitutional objection to extortionate exactions. To make things worse, many have misunderstood the Court's theories, thereby creating even more confusion about when an exaction is invalid.

The Court first considered unrelated exactions in Nollan v. California Coastal Commission.2 Although people have disagreed about what Justice Scalia's majority opinion meant to say, I believe the opinion's constitutional theory was essentially right. The Court's main theory was that proposing an unrelated condition to a land-use permit changes the purpose of the land-use regulation that would have justi-fied outright denial of the permit. The regulation is no longer imposed to further legitimate public planning interests, but instead is imposed to create leverage with which the government can extract property from the property owner. A land-use restriction imposed for such a purpose does not "substantially advance legitimate state interests," and therefore is a taking that requires just compensation under the Fifth Amendment.


Many courts and commentators did not see it quite this way, how-ever. Probably in part to put an end to the confusion, the Supreme Court in Dolan v. City of Tigard 3 tried to inconspicuously substitute a new constitutional theory while reaffirming the relation or nexus re-quirement of Nollan. The Court's new theory-presented as if the Court were simply recounting the theory in Nollan-was that the un-related exaction is an unconstitutional condition. That is, the unre-lated (or disproportionate) exaction, rather than the land-use regulation that the government offers to relax in exchange, is uncon-stitutional because it requires a property owner to give up a constitu-tional right-the right to compensation for taken property-in order to receive a governmental benefit-the requested land-use permit.

The Court's unconstitutional conditions theory is probably right, but the Court's earlier theory from Nollan, or at least my version of it, is more right. The Nollan theory better explains why we object to ex-tortionate exactions, and better prevents extortionate exactions. Although Nollan could have relied on substantive due process rather than the Takings Clause, either version of the theory works. An unre-lated or disproportionate exaction reveals that the government's only purpose for applying a particular land-use restriction to a particular property is to obtain some property interest from the owner, rather than to harmonize public and private interests by mitigating the nega-tive effects of the requested land use. Such a purpose is illegitimate. The land-use restriction, not the exaction, therefore takes property without compensation or deprives the owner of substantive due process.

Part II of this article recounts the Nollan and Dolan theories for invalidating extortionate exactions. Part III explains and defends both the takings and substantive due process versions of the theory. Part IV then discusses the implications of this theory and its advan-tages over the unconstitutional conditions theory.


A. Nollan v. California Coastal Commission

Nollan v. California Coastal Commission was the first Supreme Court case to consider exactions. In Nollan, the Nollans had applied for a coastal development permit to demolish a bungalow and build a larger house on a beachfront lot. The California Coastal Commission granted the permit on the condition that the Nollans give the public an easement to pass along the beach behind the house.4 After a Cali-fornia court remanded the matter to the Coastal Commission, the


Coastal Commission reaffirmed the exaction based on factual findings that a larger house on the lot would increase private use of the beach and create a visual and psychological barrier that would prevent the public from recognizing and accessing the public beach from the street on the other side of the houses.5

In the Supreme Court's majority opinion, Justice Scalia reasoned that the greater power to deny a land-use permit includes the lesser power to condition the permit in a way that will mitigate the negative effects of the requested land use.6 Thus, if the Coastal Commission could constitutionally deny a permit to build a bigger house because it would impair the public's view of the ocean behind the house, then the Coastal Commission could constitutionally grant the permit on the condition that the owners give the public some viewing spot or other-wise surrender some property interest to mitigate the effect on the ocean view.7

Although the greater does not always include the lesser, this con-clusion was certainly right. Of course, the government cannot de-mand mitigation for every private land use that imposes public costs. If the government has no right to prohibit a certain land use without compensation, the government cannot conditionally prohibit the land use by imposing an exaction either.8 But if the government could pro-hibit a land use without taking property, then the government surely can permit the land use on the condition that the owner mitigate the public costs somehow, rather than denying permission altogether.9 Harmonizing public and private interests in such a way is the essence of land-use planning.

But even though the Court's conclusion is right, the greater-includes- the-lesser argument is unnecessary to justify exactions. The Court could have simply observed that such an exaction does not deny substantive due process or take property from an owner. An exaction itself will almost never deny substantive due process because it will almost always be a rational way to pursue some public purpose.10


That may be easier to see by supposing that the Coastal Commission had simply required the Nollans to convey a lateral easement, without any connection to a development permit. In that case, the Nollans could not argue that the taking of an easement denies substantive due process, because obtaining the easement is clearly a rational way to pursue a legitimate public interest in use of the beach. Requiring the Nollans to voluntarily convey the easement in order to obtain a permit, rather than just taking the easement, does not make irrational the Coastal Commission's determination to pursue the public interest by obtaining lateral easements.

Of course, if the Coastal Commission had just taken the easement, the Nollans would have had a claim for just compensation even though they wouldn't have had a claim for denial of substantive due process. An exaction, on the other hand, is not a taking. If the owner surrenders a property right to the government, the owner does so voluntarily.11 The owner instead can choose to do without the requested land-use permit. In Nollan, for example, the Nollans did not have to give up a lateral easement. They could instead have decided not to build a bigger house on their land. The government's incentive to voluntarily convey the property does not make the conveyance an involuntary taking.

Justice Scalia's justification of related exactions therefore may in-dicate that he was anticipating an unconstitutional conditions argu-ment. Even though exactions themselves do not take property or deny substantive due process, they may be considered unconstitutional con-ditions because they require the owner to give up a constitutional right of just compensation in exchange for a governmental benefit, a land-use permit.12 Of course, this was the theory that Dolan adopted to invalidate unrelated or disproportionate conditions.13 But even a related and proportionate exaction requires the surrender of a right to just compensation in exchange for a governmental benefit. So even though Justice Scalia's greater-includes-the-lesser argument is not necessary to defend related exactions against substantive due process or takings challenges, it is...

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