Lingle v. Chevron
Encyclopedia
Lingle v. Chevron U.S.A. Inc., , was a landmark case in United States regulatory takings law whereby the Court expressly overruled precedent created in Agins v. City of Tiburon
, 447 US 255, (1980). Agins held that a government regulation of private property effects a taking if such regulation does not substantially advance legitimate state interests. Writing for the Court, Justice O’Connor found the test untenable for a number of reasons, but declined to grant Chevron
relief because Chevron’s motion before the court (for grant of summary judgment) was limited to a discussion of the “substantially advances” theory which had just been struck down. The Court remanded back to the Ninth Circuit for a determination of whether the statute exacted a Penn Central-like taking.
and the logistical difficulties presented by the numerous islands that make up the state of Hawaii
, only two oil refineries and six wholesale distributors were doing business in Hawaii, thus creating an oligopoly
of gas providers. Chevron, USA was the largest refiner and marketer of gasoline in Hawaii controlling 60% of the market for gasoline produced or refined in-state and 30% of the wholesale market on Oahu, Hawaii’s most populous island. 544 U.S. at 531.
Half of all of retail service stations in Hawaii are leased from oil companies by independent lessee-dealers, some are owned by the oil companies, and some are owned by dealers who are not affiliated with any specific refinery. Chevron sells most of its products through the independent-lessee program, whereby Chevron charges the lessee a monthly rent (a percentage of the margin on sales) and requires the lessee to enter into an outputs contract, whereby the Chevron supplies the lessee with all gasoline products. Id.
In 1997, in response to concerns about the effects of concentration of retail service stations and the market implications, the Hawaii Legislature enacted Act 257, restricting, among other things, the amount of rent that an oil company can charge their dealer-lessee to 15% of the dealer’s gross profits from sales, plus an additional 15% of gross sales of other products. Id.
Chevron sued the State in the United States District Court of the District of Hawaii, claimed that the statute’s rent cap effected a taking of Chevron’s property in violation of the 5th and 14th Amendments.
provides that “private property shall not be taken for public use, without just compensation.” It is made applicable to the states through the 14th Amendment. With regard to takings claims asserted as a result of government regulation (regulatory takings), the general rule is that “if a regulation goes too far it will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon
, 260 US 393, 415 (1922). As is generally the case, the Court has been searching for exactly when a regulation goes “too far.” The Court has recognized two categories of regulatory takings that are considered per se takings: where the regulation amounts to a permanent physical invasion of private property, and second, where the regulation deprives a property owner of all economically beneficial uses of her property. See Loretto v. Teleprompter Manhattan CATV Corp.
and Lucas v. South Carolina Coastal Council
.
When a regulation falls short of an entire deprivation of economic use or a permanent physical invasion, the Court has struggled to provide meaningful standards for determining when a regulation has effected a taking. In Agins v. City of Tiburon
, the Court declared that government regulation of private property effects a taking if it does not substantially advance legitimate state interests. In the majority opinion in Lingle, Justice O’Connor determined that the Agins test is no longer appropriate for determining whether a taking has occurred (it’s seen more as a due process inquiry than a takings inquiry). In its place, an aggrieved party must assert either a physical taking, a Lucas-type “total deprivation” regulation, a Penn Central
-style taking, or a land-use exaction that acts as a taking (see, e.g. Nollan v. California Coastal Commission
and Dolan v. City of Tigard
).
In a concurring opinion, Justice Kennedy wrote separately to emphasize that the Court's decision did not foreclose Chevron's chances of prevailing on a due process claim. Justice Kennedy indicated that, on his view, a regulation of private property could perhaps be so arbitrary or irrational that it violated Constitutional guarantees of due process. This short concurrence seemed to indicate some openness on Justice Kennedy's part to substantive due process
claims in the takings context.
Agins v. City of Tiburon
Agins v. City of Tiburon, , was a case where the Supreme Court of the United States held that the test for determining whether a zoning ordinance or governmental regulation will be considered a taking is whether or not such action “substantially advances” a legitimate state interest.This test and...
, 447 US 255, (1980). Agins held that a government regulation of private property effects a taking if such regulation does not substantially advance legitimate state interests. Writing for the Court, Justice O’Connor found the test untenable for a number of reasons, but declined to grant Chevron
Chevron Corporation
Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
relief because Chevron’s motion before the court (for grant of summary judgment) was limited to a discussion of the “substantially advances” theory which had just been struck down. The Court remanded back to the Ninth Circuit for a determination of whether the statute exacted a Penn Central-like taking.
Facts
Because of the distance from the continental United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and the logistical difficulties presented by the numerous islands that make up the state of Hawaii
Hawaii
Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...
, only two oil refineries and six wholesale distributors were doing business in Hawaii, thus creating an oligopoly
Oligopoly
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers . The word is derived, by analogy with "monopoly", from the Greek ὀλίγοι "few" + πόλειν "to sell". Because there are few sellers, each oligopolist is likely to be aware of the actions of the others...
of gas providers. Chevron, USA was the largest refiner and marketer of gasoline in Hawaii controlling 60% of the market for gasoline produced or refined in-state and 30% of the wholesale market on Oahu, Hawaii’s most populous island. 544 U.S. at 531.
Half of all of retail service stations in Hawaii are leased from oil companies by independent lessee-dealers, some are owned by the oil companies, and some are owned by dealers who are not affiliated with any specific refinery. Chevron sells most of its products through the independent-lessee program, whereby Chevron charges the lessee a monthly rent (a percentage of the margin on sales) and requires the lessee to enter into an outputs contract, whereby the Chevron supplies the lessee with all gasoline products. Id.
In 1997, in response to concerns about the effects of concentration of retail service stations and the market implications, the Hawaii Legislature enacted Act 257, restricting, among other things, the amount of rent that an oil company can charge their dealer-lessee to 15% of the dealer’s gross profits from sales, plus an additional 15% of gross sales of other products. Id.
Chevron sued the State in the United States District Court of the District of Hawaii, claimed that the statute’s rent cap effected a taking of Chevron’s property in violation of the 5th and 14th Amendments.
Decision
The Fifth AmendmentFifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
provides that “private property shall not be taken for public use, without just compensation.” It is made applicable to the states through the 14th Amendment. With regard to takings claims asserted as a result of government regulation (regulatory takings), the general rule is that “if a regulation goes too far it will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon
Pennsylvania Coal Co. v. Mahon
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 , was a case in which the Supreme Court of the United States held that whether a regulatory act constitutes a taking requiring compensation depends on the extent of diminution in the value of the property....
, 260 US 393, 415 (1922). As is generally the case, the Court has been searching for exactly when a regulation goes “too far.” The Court has recognized two categories of regulatory takings that are considered per se takings: where the regulation amounts to a permanent physical invasion of private property, and second, where the regulation deprives a property owner of all economically beneficial uses of her property. See Loretto v. Teleprompter Manhattan CATV Corp.
Loretto v. Teleprompter Manhattan CATV Corp.
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 , was a case in which the Supreme Court of the United States held that when the character of the governmental action is a permanent physical occupation of property, the government actions effects regulatory taking to the extent of the...
and Lucas v. South Carolina Coastal Council
Lucas v. South Carolina Coastal Council
Lucas v. South Carolina Coastal Council, 505 U.S. 1003 , was a case in which the Supreme Court of the United States established the "total takings" test for evaluating whether a particular regulatory action constitutes a regulatory taking that requires compensation.-Parties:Plaintiff/Petitioner :...
.
When a regulation falls short of an entire deprivation of economic use or a permanent physical invasion, the Court has struggled to provide meaningful standards for determining when a regulation has effected a taking. In Agins v. City of Tiburon
Agins v. City of Tiburon
Agins v. City of Tiburon, , was a case where the Supreme Court of the United States held that the test for determining whether a zoning ordinance or governmental regulation will be considered a taking is whether or not such action “substantially advances” a legitimate state interest.This test and...
, the Court declared that government regulation of private property effects a taking if it does not substantially advance legitimate state interests. In the majority opinion in Lingle, Justice O’Connor determined that the Agins test is no longer appropriate for determining whether a taking has occurred (it’s seen more as a due process inquiry than a takings inquiry). In its place, an aggrieved party must assert either a physical taking, a Lucas-type “total deprivation” regulation, a Penn Central
Penn Central Transportation Co. v. New York City
Penn Central Transportation Co. v. New York City, was a landmark United States Supreme Court decision on compensation for regulatory takings.-The New York City Landmarks Law:...
-style taking, or a land-use exaction that acts as a taking (see, e.g. Nollan v. California Coastal Commission
Nollan v. California Coastal Commission
In Nollan v. California Coastal Commission, 483 U.S. 825 , the United States Supreme Court reviewed a regulation under which the California Coastal Commission required that an offer to dedicate a lateral public easement along the Nollans' beachfront lot be recorded on the chain of title to the...
and Dolan v. City of Tigard
Dolan v. City of Tigard
Dolan v. City of Tigard, , more commonly Dolan v. Tigard, was a United States Supreme Court case argued before the Court in 1994. It was a landmark case regarding the practice of zoning and property rights, and served to establish limits on the ability of cities and other government agencies, to...
).
In a concurring opinion, Justice Kennedy wrote separately to emphasize that the Court's decision did not foreclose Chevron's chances of prevailing on a due process claim. Justice Kennedy indicated that, on his view, a regulation of private property could perhaps be so arbitrary or irrational that it violated Constitutional guarantees of due process. This short concurrence seemed to indicate some openness on Justice Kennedy's part to substantive due process
Substantive due process
Substantive due process is one of the theories of law through which courts enforce limits on legislative and executive powers and authority...
claims in the takings context.