WASHINGTON (Reuters) - In a victory for advocates of private property rights, the U.S. Supreme Court ruled on Tuesday that governments may owe compensation to property owners who are denied permits to develop their land.

A television news producer sprints down the steps from the U.S. Supreme Court building with their printed rulings in cases heard earlier this year in Washington, June 24, 2013. REUTERS/Jonathan Ernst

Critics said the 5-4 decision, with the conservative justices comprising the majority, will make it more difficult and costly for governments to promote development or enact environmental changes designed to help the public generally.

The court sided with Coy Koontz, a Florida man who said limits imposed by the St. Johns River Water Management District on how he used his land were a “taking” subject to compensation under the Fifth Amendment of the U.S. Constitution.

He was supported by conservative legal groups and the U.S. Chamber of Commerce business group, while the U.S. government, 19 states and wetlands conservation activists backed St. Johns.

“The decision is a very serious loss for local governments,” said John Echeverria, a Vermont Law School professor specializing in land use and property rights who filed a brief for state and local government associations on St. Johns’ behalf.

“It means requirements to pay fees or other payments as a condition of permit approvals will be subject to heightened scrutiny. That is a revolutionary change in the law,” he added.

Koontz prevailed after a battle lasting more than 18 years that he and his late father waged over the development of their nearly 15-acre (six-hectare) parcel of land east of Orlando.

After Florida declared much of the parcel as protected wetlands, Koontz proposed to develop about a quarter of it and dedicate the rest for conservation, only to have local officials insist that he pay money to protect wetlands elsewhere.

Koontz said no, and a trial court awarded him $327,500 for being unable to use his property. Florida’s highest court then threw this award out, saying that because St. Johns never issued a permit and Koontz never spent money, “nothing was ever taken.”

Writing for the Supreme Court majority, Justice Samuel Alito said governments may not condition land-use permits on owners giving up the use of some property absent a “nexus” and “rough proportionality” between the demand and the effect of the proposed land use.

Alito said this rule applied even if the permit were denied, and the demand was for money.

“So long as the building permit is more valuable than any just compensation the owner could hope to receive for the right-of-way, the owner is likely to accede to the government’s demand, no matter how unreasonable,” Alito wrote.

“Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them,” he added.

Joining Alito’s opinion were Chief Justice John Roberts, and Justices Antonin Scalia, Anthony Kennedy and Clarence Thomas.

NO CARTE BLANCHE

Paul Beard, principal attorney at the Pacific Legal Foundation, who argued Koontz’s appeal, said the decision raises the bar for governments to extract money from owners of land, homes or businesses, even if it may be to serve the public good.

“This case reaffirms the principle that government must show a connection between what it asks for and what the property owner wants to do,” Beard said in an interview. “Governments don’t have carte blanche any more to say, ‘Give us $100,000 and we’ll give you a permit.’”

The decision came two weeks after the Supreme Court cleared the way for California raisin growers to challenge, as an improper taking, a 1930s-era law requiring them to keep part of their crop off the market.

Justice Elena Kagan dissented from Tuesday’s decision, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.

Kagan elaborated on the idea that nothing had been taken from Koontz - a point that Scalia also made during January’s oral argument.

“In what legal universe could a law authorizing damages only for a ‘taking’ also provide damages when (as all agree) no taking has occurred?” Kagan wrote. “I doubt that inside-out, upside-down universe is the state of Florida.”

Kagan also said the decision “threatens to subject a vast array of land-use regulations, applied daily in states and localities throughout the country, to heightened constitutional scrutiny. I would not embark on so unwise an adventure.”

The case is Koontz v. St. Johns River Water Management District, U.S. Supreme Court, No. 1447.