Sheetz v. County of El Dorado: Unconstitutional Impact Fees and Permit Exactions

Sheetz v. County of El Dorado, California
(U.S., Apr. 12, 2024, No. 22-1074)


The US Supreme Court’s decision in Sheetz v. County of El Dorado limits local agency exaction of legislatively enacted impact fees. In a unanimous opinion, the Court held that the “Nollan/Dolan” criteria of an “essential nexus” to the government’s land use interest and “rough proportionality” to the proposed development’s impact applies not just to administrative permit conditions but also to legislatively enacted permit conditions. Noncompliant conditions and fee exactions are unconstitutional under the Takings Clause of the Fifth Amendment.


The case of George Sheetz against the County of El Dorado centered on a dispute over a $23,420 traffic impact fee imposed by the County as a prerequisite for obtaining a building permit to construct a single-family residence. To address traffic congestion concerns, the County had added the traffic impact fee to their general plan as a condition of receiving a building permit. Sheetz paid the fee under protest to obtain the requested permit, subsequently challenging it in state court as violating the California Mitigation Fee Act and the Takings Clause of the United States Constitution. The Superior Court rejected the claim, which decision was upheld by the California Court of Appeal. The matter escalated to the U.S. Supreme Court, which granted review and ultimately decided the case.

Takings Clause

The Takings Clause in the Fifth Amendment of the U.S. Constitution is designed to protect private property owners from the government’s use of its eminent domain power without providing just compensation. This clause requires that if the government takes private property for public use, it must compensate the property owner fairly, typically at market value. The Takings Clause is triggered not only by the government physically appropriating property but also by regulations that significantly interfere with an owner’s ability to use their property.

The Takings Clause was invoked here not due to physical appropriation or regulatory action, but due to the conditions attached to a permit. If permit conditions are unrelated to legitimate land use objectives, they may be an unconstitutional exaction. For example, if a permit is withheld unless the landowner concedes to uses of her property that benefit the government in ways unrelated to land use planning, it could be considered an improper use of government power.

Nollan and Dolan Tests

The previously decided cases of Nollan v. California Coastal Com’n (1987) 483 U.S. 825, and Dolan v. City of Tigard (1994) 512 U.S. 374 set out a two-part test to determine whether an administrative condition or exaction is constitutional. First, permit conditions must have an “essential nexus” to the government’s land use interest, ensuring the government is acting to further its stated purpose. Second, permit conditions must have “rough proportionality” to the development’s impact on the land use interest. A permit condition demanding that a landowner surrender more than is required to offset the impacts of new development carries the same risk of misuse as a condition that bears no relation to that objective.

Supreme Court Holding

In a unanimous decision authored by Justice Barrett, the Supreme Court held that the criteria established in the Nollan and Dolan decisions should apply universally to both legislative and administrative actions. The Court’s rationale was grounded in a broad interpretation of the Takings Clause, emphasizing that the constitutional protection against uncompensated takings should not differentiate between the types of governmental actions. By extending the Nollan and Dolan tests, the Court aimed to ensure that all property owners are afforded the same level of protection against the imposition of arbitrary conditions that could amount to a taking. This interpretation marks a shift, as prior to this decision, the Nollan and Dolan tests were thought to be limited to individual, administrative decisions.

The Court did not ultimately decide the validity of the County’s impact fee in this case. It also did not decide the specificity required when tailoring a development impact fee to a class of properties, versus one development. Instead, it remanded the matter to state court for further proceedings.

A number of Justices separately penned concurrences that may provide additional guidance to agencies as they contend with tailoring their impact fees to comply with the opinion.


The Court’s ruling does not outright prohibit legislatively-enacted impact fees, but it does heighten the constitutional scrutiny of such exactions. Local governments must carefully justify fees and conditions imposed on a project as relates to an individual property, even if the fees were broadly applied. While it is unlikely local governments will abandon impact fees, they will face significant challenges demonstrating the strict “essential nexus” and “rough proportionality” criteria. In the future, we may anticipate an increase in challenges by builders and developers invoking the Takings Clause to contest fees for failing to meet these criteria.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert.  Legal counsel should be sought for answers to specific legal questions.]