Sheetz v. El Dorado County
The Supreme Court ruled unanimously that the Constitution's property-rights protections apply equally to building permit fees set by a legislature and those imposed by government administrators, rejecting the California courts' view that legislatively enacted fees are automatically exempt from constitutional scrutiny.
The decision means local governments across the country cannot shield development impact fees from constitutional challenge merely by packaging them in legislation rather than in case-by-case administrative decisions.
How it got here: A California trial court ruled against Sheetz; the California Court of Appeal affirmed based on a legislative-exemption rule; the California Supreme Court denied review; the U.S. Supreme Court agreed to hear the case to resolve a split among state courts.
The Case in Depth
What happened
George Sheetz wanted to build a small prefabricated home on his land in El Dorado County, California. The County required him to pay a $23,420 traffic impact fee as a condition of his building permit. The fee was set by the County's Board of Supervisors in a General Plan and calculated from a rate schedule tied to the type and location of development — not to the specific traffic impact of Sheetz's house. He paid under protest and sued, arguing the fee was an unconstitutional taking of his property.
The question before the Court
Can a local government avoid the Constitution's usual rules for building permit conditions simply by having a legislature set those conditions, rather than deciding them case by case?
The Court's answer
No — the Court ruled unanimously that the Constitution's Takings Clause draws no distinction between permit conditions imposed by a legislature and those imposed by an administrator. El Dorado County had argued that because the traffic fee was set by its Board of Supervisors through a General Plan, it was exempt from the Court's standard two-part test for permit conditions — known as the Nollan/Dolan test — which requires the government to show a genuine connection between the condition and its land-use goals, and that the condition is proportionate to the project's actual impact. The California courts agreed with the County; the Supreme Court said that was wrong.
The Court sent the case back to California courts to evaluate Sheetz's challenge under the correct legal standard. It did not decide whether the $23,420 fee is ultimately unconstitutional, nor did it resolve the related question of whether a fee applied to a broad class of developments must be tailored as precisely as one targeted at a single property — leaving those issues for the state courts to work out first.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Homebuilders, developers, and property owners can now challenge traffic impact fees and similar permit conditions in court even when a local legislature set them by formula. Local governments that rely on fee schedules covering broad classes of new development may face fresh legal challenges, though the Court left open the key question of exactly how precise those schedules must be.
What changes now
The California Court of Appeal must now reconsider Sheetz's challenge under the correct rule — that the Nollan/Dolan test applies to the County's traffic impact fee even though a legislature set it. The state courts will also decide whether the parties preserved their remaining arguments, and whether a class-wide fee schedule must be tailored with the same precision as a condition imposed on a single development. The Supreme Court left both questions entirely open.
What this does not decide
The Court explicitly did not decide whether Sheetz's specific traffic fee is unconstitutional, nor whether a fee applied to a whole class of developments must be as precisely calibrated as one targeting a single project. Justice Kavanaugh's concurrence stresses that the ruling does not prohibit common government practices of setting impact fees through reasonable formulas or schedules.
Concurrences and dissents
Concurrence — Justice Sotomayor
Justice Sotomayor joined the Court's opinion but wrote separately to flag an important threshold question the Court did not reach: the Nollan/Dolan test only applies when the permit condition would itself be a compensable taking if imposed directly — outside the permitting process. She noted that whether El Dorado County's traffic fee meets that threshold was never decided by the California courts or by the Supreme Court, and should be addressed on remand.
Concurrence — Justice Gorsuch
Justice Gorsuch joined the Court's opinion and wrote separately to signal that the class-vs.-individual distinction the Court left open should also make no difference. In his view, the Nollan/Dolan test asks whether a specific condition has an essential nexus and rough proportionality — a question that does not change based on whether the government imposed the condition on one property or a thousand. He argued that multiplying a constitutional violation across a class of property owners does not cure it.
Concurrence — Justice Kavanaugh
Justice Kavanaugh joined the Court's opinion but wrote to underscore what the decision does not do: it does not address or prohibit the common government practice of using reasonable formulas or schedules to set impact fees on classes of new development rather than on individual parcels. He noted that neither Nollan nor Dolan had ever addressed class-wide fee schedules, and that question remains entirely open after today.
How the Court got there
The legal reasoning, step by step
- The Court began with the Nollan/Dolan test — the constitutional framework for permit conditions — which requires two things: (1) an 'essential nexus' between the condition and the government's stated land-use interest (so the government isn't just using its permitting power to extract money), and (2) 'rough proportionality' between the condition and the development's actual impact on that interest. This test applies whether the condition demands land or a cash payment.
- The California Court of Appeal held this test only applies to conditions imposed administratively on a case-by-case basis, not to fees set by legislation for a class of properties. The Court rejected that distinction, finding nothing in the Constitution's text, historical practice, or prior Supreme Court decisions to support it.
- On text: the Takings Clause speaks in the passive voice and focuses on the act of taking property — not on which branch of government does the taking. The Fourteenth Amendment similarly constrains 'the State' as a unified whole, not any particular branch. There is no textual basis for treating legislative actions more leniently.
- On history: before and after the founding, legislation was actually the primary way governments exercised the power to take private property for public use, and those legislative takings were always required to pay compensation. Early constitutional scholars understood the Takings Clause to bind the legislature specifically — making a special exemption for legislatures the opposite of what history supports.
- On precedent: the Court's prior cases on physical takings, regulatory takings, and the unconstitutional conditions doctrine — which underlies the Nollan/Dolan test — all apply the same constitutional rules regardless of whether the government acted through a statute or an administrative order. Carving out an exception for legislatures would relegate property rights to a 'poor relation' status compared to other constitutional rights protected by the same unconstitutional conditions doctrine.
Doctrinal impact
Cases affected by this decision
Reaffirms Nollan v. California Coastal Comm'n (483 U.S. 825)
The Court confirmed Nollan's nexus requirement applies to permit conditions set by legislatures, not just administrators.
Reaffirms Dolan v. City of Tigard (512 U.S. 374)
The Court confirmed Dolan's proportionality requirement applies equally to legislatively imposed permit conditions.