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AN E-BULLETIN
LEGAL INFORMATION INSTITUTE -- CORNELL LAW SCHOOL
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LINGLE V. CHEVRON U.S. A. INC. (04-163)
Web-accessible at:
http://supct.law.cornell.edu/supct/html/04-163.ZS.html
Argued February 22, 2005 -- Decided May 23, 2005
Opinion author: O'Connor
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Concerned about the effects of market
concentration on retail gasoline prices, the Hawaii Legislature
passed Act 257, which limits the rent oil companies may charge
dealers leasing company-owned service stations. Respondent
Chevron U.S. A. Inc., then one of the largest oil companies in
Hawaii, brought this suit seeking a declaration that the rent
cap effected an unconstitutional taking of its property and an
injunction against application of the cap to its stations.
Applying Agins v. City of Tiburon, 447 U.S. 255,
260--where this Court declared that government regulation
of private property "effects a taking if [it] does not
substantially advance legitimate state interests"--the
District Court held that the rent cap effects an uncompensated
taking in violation of the Fifth and Fourteenth
Amendments because it does not substantially advance
Hawaii's asserted interest in controlling retail gas
prices. The Ninth Circuit affirmed.
Held: Agins' "substantially advance[s]" formula is not an
appropriate test for determining whether a regulation effects a
Fifth Amendment
taking. Pp. 6-19.
(a) The paradigmatic taking requiring just compensation is a
direct government appropriation or physical invasion of private
property. See, e.g., United States v. Pewee Coal Co., 341 U.S.
114. Beginning with Pennsylvania Coal Co. v. Mahon, 260 U.S.
393, however, the Court recognized that government regulation of
private property may be so onerous that its effect is tantamount to
a direct appropriation or ouster. Regulatory actions generally will
be deemed per se takings for Fifth Amendment purposes (1)
where government requires an owner to suffer a permanent
physical invasion of her property, see Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419, or (2) where regulations
completely deprive an owner of "all economically beneficial us[e]"
of her property, Lucas v. South Carolina Coastal Council, 505
U.S. 1003, 1019. Outside these two categories (and the special
context of land-use exactions discussed below), regulatory
takings challenges are governed by Penn Central Transportation
Co. v. New York City, 438 U.S. 104, 124. Penn Central identified
several factors--including the regulation's economic impact on the
claimant, the extent to which it interferes with distinct investment-
backed expectations, and the character of the government action-
-that are particularly significant in determining whether a
regulation effects a taking.Because the three inquiries reflected in
Loretto, Lucas, and Penn Central all aim to identify regulatory
actions that are functionally equivalent to a direct appropriation of
or ouster from private property, each of them focuses upon the
severity of the burden that government imposes upon property
rights. Pp. 6-10.
(b) The "substantially advances" formula is not a valid method
of identifying compensable regulatory takings. It prescribes an
inquiry in the nature of a due process test, which has no proper
place in the Court's takings jurisprudence.The formula
unquestionably was derived from due process precedents, since
Agins supported it with citations to Nectow v. Cambridge, 277
U.S. 183, 185, and Village of Euclid v. Ambler Realty Co., 272
U.S. 365, 395. Although Agins' reliance on those precedents is
understandable when viewed in historical context, the language
the Court selected was imprecise. It suggests a means-ends test,
asking, in essence, whether a regulation of private property is
effective in achieving some legitimate public purpose. Such an
inquiry is not a valid method of discerning whether private
property has been "taken" for Fifth Amendment purposes. In
stark contrast to the three regulatory takings tests discussed
above, the "substantially advances" inquiry reveals nothing about
the magnitude or character of the burden a particular regulation
imposes upon private property rights or how any regulatory
burden is distributed among property owners. Thus, this test
does not help to identify those regulations whose effects are
functionally comparable to government appropriation or invasion
of private property; it is tethered neither to the text of the Takings
Clause nor to the basic justification for allowing regulatory actions
to be challenged under the Clause. Moreover, the Agins
formula's application as a takings test would present serious
practical difficulties. Reading it to demand heightened means-
ends review of virtually all regulation of private property would
require courts to scrutinize the efficacy of a vast array of state and
federal regulations--a task for which they are not well suited. It
would also empower--and might often require--courts to substitute
their predictive judgments for those of elected legislatures and
expert agencies. Pp. 10-15.
(c) The Court's holding here does not require it to disturb any of
its prior holdings. Although it applied a "substantially advances"
inquiry in Agins itself, see 447 U.S., at 261-262, and arguably in
Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470,
485-492, it has never found a compensable taking based on such
an inquiry. Moreover, in most of the cases reciting the Agins
formula, the Court has merely assumed its validity when referring
to it in dicta.See, e.g., Tahoe-Sierra Preservation Council, Inc.
v. Tahoe Regional Planning Agency, 535 U.S. 302, 334. Although
Nollan v. California Coastal Commission, 483 U.S. 825, 834, and
Dolan v. City of Tigard, 512 U.S. 374, 385, drew upon Agins'
language, the rule those cases established is entirely distinct from
the "substantially advances" test: They involved a special
application of the "doctrine of unconstitutional conditions," which
provides that the government may not require a person to give up
the constitutional right to receive just compensation when
property is taken for a public use in exchange for a discretionary
benefit that has little or no relationship to the property. Ibid. Pp.
16-18.
(d) A plaintiff seeking to challenge a government regulation as
an uncompensated taking of private property may proceed by
alleging a "physical" taking, a Lucas-type total regulatory taking, a
Penn Central taking, or a land-use exaction violating the Nollan
and Dolan standards. Because Chevron argued only a
"substantially advances" theory, it was not entitled to summary
judgment on its takings claim. Pp. 18-19.
363 F.3d 846, reversed and remanded.
O'Connor, J.,
delivered the opinion for a unanimous Court. Kennedy, J.,
filed a concurring opinion.
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