Life After Lingle
The much anticipated decision in Lingle v. Chevron U.S.A., Inc. (U.S., 2005) 125 S. Ct. 2074 resulted in a unanimous Supreme Court decision, which held that the “failure to substantially advance” theory which formed the basis for the Ninth Circuit’s decision was not a valid “takings” analysis. The decision was a blow to property rights supporters who previously could challenge land use enactments by showing that they did not “substantially advance” their intended purposes.
The "failure to substantially advance" test had become a useful tool in challenging rent control. In fact, HKC successfully invalidated the mobile home rent control ordinance adopted by the City of Goleta by showing it did not “substantially advance” the purposes of rent control, affordable housing, because the rent savings were capitalized into higher prices for mobile homes. With Lingle, public entities emitted a huge sigh of relief, realizing that, once again, they would not be expected to pass laws which actually serve a valid legal purpose.
The logic of the Supreme Court in Lingle was that the Fifth Amendment was not designed as a mechanism to limit the ability of government to regulate. Rather, the Supreme Court reiterated how takings are proved and reaffirmed that the Fifth Amendment bars “taking without compensation.” This principle, combined with the natural hesitancy of the conservatives on the Supreme Court to interfere in the decisions of local governments, appears to have led to the unanimous result.
Looking beneath the surface at Lingle, it may signal a Supreme Court which is more inclined to require compensation in cases where the impact of regulation is severe and the relationship to a legitimate state purpose is tenuous. The Court in Lingle was careful to point out that the property owner could have pursued a takings claim based on a showing of the actual impact of regulation on the property owner, under the traditional ad hoc balancing analysis described in Penn Central Transp. Co. v. New York City 438 U.S. 104 (1978). The Supreme Court in Lingle emphasized that:
"Chevron has not clearly argued—let alone established—that it has been singled out to bear any particularly severe regulatory burden. Rather the gravamen of Chevron’s claim is simply that Hawaii’s rent cap will not actually serve the State’s legitimate interest . . . Whatever the merits of that claim, it does not sound under the Takings Clause. Chevron plainly does not seek compensation for a taking of its property for legitimate public use, but rather an injunction against enforcement of a regulation that it alleges to be fundamentally arbitrary and irrational."
Thus, the Court in Lingle held that a property cannot prove a takings claim by challenging the wisdom or effectiveness of governmental regulation, but repeatedly recognized that one fundamental justification for the Fifth Amendment is to “bar the government from forcing some people alone to bear public burdens which, in all fairness and justice should be borne by the public as a whole.” Id, quoting Armstrong v. United States, 364 U.S. 40, 49.
The concurring opinion in Lingle also makes clear that in the right setting a property owner may still be able to establish that the existence of premiums can cause an ordinance to violate due process because the regulation is arbitrary or irrational. In the Ninth Circuit, this is actually an expansion of remedies because prior Ninth Circuit decisions had limited the rights of property owners to pursue due process claims where a takings claim was available.
After Lingle, the often blurred line between due process challenges and takings challenges appears to be more clear. Due process challenges, which have the remedy of invalidation, will require the traditional, higher showing that the enactment does not have a rational basis. Regulatory takings claims, which do not involve “per se” physical takings or a confiscation of all of the value of property, will be considered under the Penn Central balancing test, with the remedy being compensation. Lingle may signal a Court hesitant to second-guess the wisdom of government enactments, but more willing to require compensation when those enactments have the effect of a direct condemnation—or at least we can hope that it does!