Lingle v. Chevron U. S. A. Inc.

PETITIONER: Linda Lingle, Governor of Hawaii, et al.
RESPONDENT: Chevron U.S.A. Inc.
LOCATION: Texas State Capitol

DOCKET NO.: 04-163
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 544 US 528 (2005)
GRANTED: Oct 12, 2004
ARGUED: Feb 22, 2005
DECIDED: May 23, 2005

ADVOCATES:
Craig E. Stewart - argued the cause for Respondent
Edwin S. Kneedler - argued the cause for Petitioners
Mark J. Bennett - argued the cause for Petitioners

Facts of the case

Hawaii enacted a limit on the rent oil companies could charge dealers leasing company-owned service stations. The rent cap was a response to concerns about the effects of market concentration on gasoline prices. Chevron, one of the state's largest oil companies, argued in federal district court that the the cap was an unconstitutional taking of its property. The district court held that the cap amounted to an uncompensated taking in violation of the Fifth Amendment, because it did not substantially advance Hawaii's asserted interest in controlling gas prices. The court cited the U.S. Supreme Court's decision in Agins v. City of Tiburon (1980), where the Court declared that government regulation of private property is "a taking if it does not substantially advance legitimate state interests." The Ninth Circuit affirmed.

Question

Does a regulation amount to an unconstitutional taking "if it does not substantially advance legitimate state interests?"

Media for Lingle v. Chevron U. S. A. Inc.

Audio Transcription for Oral Argument - February 22, 2005 in Lingle v. Chevron U. S. A. Inc.

Audio Transcription for Opinion Announcement - May 23, 2005 in Lingle v. Chevron U. S. A. Inc.

William H. Rehnquist:

The opinion of the Court in Lingle versus Chevron will be announced by Justice O'Connor.

Sandra Day O'Connor:

This case comes to us on writ of certiorari to the Court of Appeals for the Ninth Circuit.

25 years ago, in a case called Agins versus the City of Tiburon, this Court declared that government regulation of private property affects a taking if such regulation does not substantially advance legitimate state interest.

The question in today's case is does Agins substantially advance as language state a valid test for determining whether a regulation takes private property without just compensation in violation of the Fifth Amendment?

This case involves a challenge to a Hawaii statute that limits the rent that oil companies such as respondent, Chevron U.S.A. may charge to dealers who lease service stations owned by the companies.

Chevron brought suit in Federal District Court claiming that the rent cap affected an uncompensated taking of its property in violation of the Fifth and Fourteenth Amendments.

Relying on the Agins case, the District Court held that the rent cap took Chevron's property solely because the cap does not substantially advance Hawaii's interest in controlling retail gas prices.

The Ninth Circuit Court of Appeals affirmed.

In an opinion filed with the Clerk of the Court today, we reverse the Ninth Circuit's judgment and remand the case for further proceedings.

We hold that this substantially advances formula is not an appropriate test for determining whether a regulation affects a Fifth Amendment taking.

When a plaintiff challenges a regulation under the Takings Clause, the basic question is, is the regulation's effect on private property equivalent to that of a classic taking where the government appropriates or physically invades the property?

We have held that a regulation amounts to a taking if it requires an owner to suffer a permanent physical invasion of the property or if it deprives the owner of all beneficial use of the property.

Under our Penn Central decision, we examine a regulation's economic impact, the degree to which it interferes with investment backed expectations and the character of the government action to determine whether it affects a taking.

In stark contrast to these other takings tests, the so called substantially advances test tells us nothing about the magnitude or character of the burden the regulation imposes on private property rights, nor does it tell us anything about how the burden is distributed.

Instead, it asks whether a regulation is effective in achieving its intended objectives.

A regulation's effectiveness might conceivably be relevant to a due process challenge but it has no bearing at all on whether the regulation takes private property.

We therefore conclude that the substantially advances formula announced in Agins has no proper place in our takings jurisprudence.

In so holding, today's decision does not require us to disturb the holding of any of our prior decisions other than declaration in Agins, nor does it prevent future plaintiffs from bringing regulatory takings claims under any of the other theories established by our precedents.

The judgment of the Court of Appeals is reversed.

The case is remanded for further proceedings consistent with our opinion.

The opinion is unanimous.

Justice Kennedy has filed a concurrence.