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High Court's Takings Decision Marks Restoration of Logic

Los Angeles Daily Journal, Forum Column
June 1, 2005
Timothy J. Dowling

Just three years ago, things looked bleak and uncertain for those who defend health, safety and environmental safeguards against regulatory takings challenges under the Fifth Amendment.

State and local officials had suffered a 15-year string of losses in the U.S. Supreme Court at the hands of takings claimants. Certain rulings raised the specter of using the Takings Clause to strike down all kinds of land-use controls and other measures, even where the law's impact on the claimant's overall parcel was relatively small. Other decisions threatened far-reaching, Lochner-esque judicial scrutiny of economic regulations.

The so-called property rights movement was getting downright cheeky, arguing to the Supreme Court that even a 10-minute restriction on property use is a temporary taking that requires compensation.

What a difference today! Last week, the Supreme Court took another huge step toward restoring logic to regulatory takings law in Lingle v. Chevron, 2005 U.S. LEXIS 4342. In a remarkable, unanimous ruling, the court confessed error and thoroughly repudiated the notion that the Takings Clause authorizes the judiciary to evaluate the wisdom or efficacy of government action.

The error originated in Agins v. City of Tiburon, 447 U.S. 255 (1980), where the court asserted that a regulation works a taking when it fails to substantially advance a legitimate public interest. Lingle involved a takings challenge to a Hawaii consumer protection law designed to preserve price competition for gasoline by protecting independent service stations from predatory rent increases by oil companies. Chevron objected to this rent control by invoking the Agins "substantially advance" standard and arguing that the Hawaii law wouldn't work. The trial court and the 9th U.S. Circuit Court of Appeals agreed.

The Supreme Court delivered a mea culpa and unanimously reversed. The Lingle court acknowledged that its oft-repeated but seldom-applied "substantially advance" formulation had become "ensconced" in Fifth Amendment jurisprudence. But it candidly and emphatically declared that the test "has no proper place in our takings jurisprudence." Because the "substantially advance" language was unnecessary to support the specific holding in Agins, the court found no need to overrule Agins, or any other precedent for that matter.

The court's strong denunciation of any means-end analysis in the takings inquiry makes clear that such analyses may not be sneaked back in through other takings tests, including the multifactor test set forth in Penn Central Transportation Co. v. New York City, 447 U.S. 104 (1978). In the words of the Lingle court, asking whether a regulation is arbitrary or ineffective "is not a valid method of discerning whether private property has been 'taken' for purposes of the Fifth Amendment."

The court observed that the "substantially advance" standard has neither textual support nor doctrinal coherence, and it emphasized the serious practical difficulties of applying this test to land-use controls and other economic regulation, "a task for which the courts are not well suited." The "substantially advance" standard would require "courts to substitute their predictive judgments for those of elected legislatures and expert agencies." Doing so would improperly resurrect the infamous Lochner era, during which federal courts routinely applied heightened scrutiny to invalidate economic regulations.

Lingle makes clear that means-end analysis of government action should take place under the rational basis test that governs due process analysis.

If the Lingle opinion were limited to eradicating means-end scrutiny from regulatory takings analysis, that by itself would be a major victory for clarity, as well as for the primacy of our elected officials over economic policymaking. But Lingle does far more.

The Lingle opinion provides a straightforward analytical framework for regulatory takings that will help guide the law for years to come. It begins by recognizing that the original understanding of the Takings Clause did not include regulatory takings: "Early constitutional theorists did not believe the Takings Clause embraced regulations of property at all."

In view of this disconnect between constitutional meaning and regulatory takings doctrine, what is the benchmark for a regulatory taking? According to the court, the touchstone for deciding when a regulation works a taking is "functional equivalency." Each test of takings liability "aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain."

That's why the per se rules of takings liability are limited to permanent occupations of land and the complete elimination of a property's value. Each of these categories identifies government action that is the functional equivalent of a direct seizure of land. The Lingle court likewise stressed that the Penn Central multifactor test also should be driven by a functional equivalency standard, suggesting that it requires an extremely severe economic loss and interference with reasonable expectations.

As a bonus, the court reaffirmed that the exception to takings liability identified in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), extends to all background principles of property law, not just nuisance law as the claimants bar often argues.

Finally, Lingle reaffirms the proper limits on Dolan v. City of Tigard, 512 U.S. 374 (1994), and Nollan v. California Coastal Commission, 483 U.S. 825 (1987). The court observed that Dolan and Nollan involved permit conditions that required dedications of land that would allow permanent physical invasions by the public, and that these physical invasions, if unilaterally imposed, would constitute per se takings.

This discussion confirms that Dolan and Nollan are inapplicable to impact fees and other permit conditions that do not involve physical invasions. And the court's emphasis of the "adjudicative" nature of the exactions in Dolan and Nollan provides further support for the principle that those cases do not apply to legislatively imposed conditions.

Law review articles routinely condemn takings jurisprudence as a "muddle," a "mess" or worse. We need to rethink this mindset. Clarity, thy name is Lingle.

The most interesting vote in Lingle comes from Justice Antonin Scalia. He is a staunch defender of property rights under the Takings Clause, but also a severe critic of the doctrine of substantive due process, a doctrine akin to the Agins means-end inquiry. At oral argument, Scalia actively resisted the suggestion that the court should merely redefine the "substantially advance" formulation, and he tellingly referred to the court's repeated articulations of the Agins standard by asking: "So we have to eat crow no matter what we do, right?"

Lingle follows on the heels of the court's landmark ruling in Tahoe-Sierra v. TRPA, 535 U.S. 302 (2002). Tahoe shed much-needed light on the law by making clear that in evaluating whether a regulation works a taking, courts must focus on the landowner's entire parcel of property.

For instance, restricting development on 10 acres of wetlands in a 100-acre development site does not in any meaningful sense constitute a taking of the property. In fact, many studies show that such restrictions often enhance the overall value of the land. And reciprocal restrictions on neighboring parcels enhances everyone's value by reducing flood risks, preserving the quality of our drinking water, and protecting our lakes, rivers and streams.

To be sure, there is little reason to believe that the screamers in the takings debate will acknowledge the sea change occurring in the law. Indeed, within hours of the ruling, the national developers lobby issued a press release hailing the decision as "victory" for the claimants bar. If this is a win for takings claimants, state and local officials would happily welcome more of the same. The lobby should take a closer look at its own amicus brief in Lingle, which fretted that if the Agins "substantially advance" test were eliminated, the sky would fall.

The developers lobby also claimed victory because the court preserved the "rough proportionality" test for compelled dedications of land set forth in Dolan, but no one in Lingle ever disputed Dolan's validity. And they assert Lingle suggests that Dolan applies to impact fees, but just the opposite is true, as explained above. The lobby's spin-meisters plainly are working overtime.

Others in the claimants bar already have suggested, bizarrely, that Lingle might prompt the court to apply greater scrutiny to economic regulation through the due process clause in the manner that characterized the Lochner era. But every member of the court is on record as condemning Lochner, and the unanimous opinion in Lingle could not be clearer in rejecting judicial second-guessing of the wisdom or efficacy of government action.

With the possible exception of severely retroactive legislation, the rational basis test will continue to govern due process review.

When I wrote a column last year suggesting that the 9th Circuit ruling in Lingle was wrong and worthy of Supreme Court review, counsel for the developers lobby nearly blew a gasket, accusing me in a follow-up column of having "disdain" for the Constitution and property rights. This isn't about disdain for the Constitution or property rights. We all revere the Constitution, and we're all property owners. It's about not letting ideological claimants distort constitutional protections to advance a Lochner-esque political agenda.

Thankfully, every member of the Supreme Court agrees. Unlike the screamers, the justices honor the Constitution by viewing its text as a serious constraint. Lingle simply restores sanity to the law.

Timothy J. Dowling is chief counsel of Community Rights Counsel, a Washington, D.C., public interest firm that defends against constitutional challenges to environmental laws and other community protections. He is the co-author of two amicus briefs supporting Hawaii's petition for certiorari and its merits brief in Lingle.

© 2005 The Daily Journal Corporation.
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