The U.S. Supreme Court unanimously shut a door it opened 25 years ago, holding that the question whether a regulation substantially advances legitimate governmental interests is not a proper inquiry in a takings claim. Instead, a regulatory taking analysis should focus on the effect the regulation has on property rights. Lingle v. Chevron, 544 U.S. __ (2005) No. 04-163.
In 1997, the Hawaii state legislature passed Act 257 to limit the amount of rent oil companies could charge dealers leasing company-owned service stations. The legislation was intended to prevent market concentration and its tendency to raise retail gasoline prices. The lower courts determined that the law did not "substantially advance" these goals, since the law would not actually reduce dealers’ costs or retail prices. The U.S. Supreme Court reversed.
The high court explained that the "substantially advances" test was derived from its 1980
Agins decision, which had improperly commingled due process and takings principles. The "substantially advances" language asks only whether a regulation achieves a public purpose, and not whether property has been "taken." Because the Takings Clause does not bar government from interfering with property rights, but rather requires compensation "in the event of otherwise proper interference amounting to a taking," the Agins "substantially advances" inquiry is not appropriate. It does not address the magnitude or character of the burden a regulation imposes on private property, or how any regulatory burden is distributed among property owners.
The Court affirmed that a plaintiff seeking to challenge a regulation as a taking may proceed under any of the established theories that evaluate invasions of property rights: (1) a physical invasion (as discussed in Loretto); (2) a regulation that denies all economically beneficial use (as discussed in Lucas); (3) a regulation that goes too far when viewed in light of factors that may include the economic impact of the regulation, its interference with distinct investment-backed expectations, and the character of the government action (as discussed in Penn Central); or (4) the principles applied in Nollan and Dolan, which overturned conditions of approval requiring easements due to lack of nexus and rough proportionality.
Lingle is undoubtedly a momentous decision, though its specific application, and whether the "substantially advances" test will play a role in other constitutional claims, remains to be seen.
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