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Keywords

appealregulationdue process

regulationdue process

Related Cases

Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876, 73 USLW 4343, 35 Envtl. L. Rep. 20,106, 05 Cal. Daily Op. Serv. 4301, 2005 Daily Journal D.A.R. 5868, 18 Fla. L. Weekly Fed. S 303

Facts

In response to concerns about market concentration affecting retail gasoline prices, the Hawaii Legislature enacted Act 257, which limited the rent oil companies could charge lessee-dealers. Chevron, the largest oil company in Hawaii, sued the state, arguing that the rent cap constituted an unconstitutional taking of its property under the Fifth and Fourteenth Amendments. The District Court found that the rent cap did not substantially advance Hawaii's interest in controlling gas prices, leading to a series of appeals that ultimately reached the Supreme Court.

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.

Issue

Is the 'substantially advances' formula an appropriate test for determining whether a regulation effects a Fifth Amendment taking?

This case requires us to decide whether the 'substantially advances' formula announced in Agins is an appropriate test for determining whether a regulation effects a Fifth Amendment taking.

Rule

The Supreme Court held that the 'substantially advances' formula is not a valid method for identifying compensable regulatory takings and is more akin to a due process inquiry.

We conclude that this formula prescribes an inquiry in the nature of a due process, not a takings, test, and that it has no proper place in our takings jurisprudence.

Analysis

The Court determined that the lower courts incorrectly applied the 'substantially advances' test, which does not adequately assess the burden imposed on property rights or how that burden is distributed among property owners. Instead, the Court emphasized the need to focus on the severity of the burden imposed by government regulations, referencing established tests for regulatory takings that consider economic impact and the character of governmental action.

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.

Conclusion

The Supreme Court reversed the lower courts' decisions, concluding that the 'substantially advances' test is not suitable for evaluating regulatory takings under the Fifth Amendment.

The Court has held that physical takings require compensation because of the unique burden they impose: A permanent physical invasion, however minimal the economic cost it entails, eviscerates the owner's right to exclude others from entering and using her property.

Who won?

Chevron U.S.A. Inc. prevailed in the case as the Supreme Court ruled that the application of the 'substantially advances' test was inappropriate for determining a Fifth Amendment taking.

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