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

No. 04-163. Argued February 22, 2005. Decided May 23, 2005. Certiorari to the United States Court of Appeals for the Ninth Circuit. Judgment reversed and case remanded (363 Federal 3d 846, reversed and remanded). Opinion of the Court by Justice O'Connor for a unanimous Court. Justice Kennedy filed a concurring opinion.

Editorial note. Concerned about the concentration of the retail gasoline market, Hawaii enacted a statute limiting the rent that an oil company may charge a lessee-dealer operating a company-owned service station to fifteen per cent of the dealer's gross profits on gasoline plus fifteen per cent of gross sales of other products. Chevron, which leased stations to independent dealers in Hawaii, challenged the rent cap as a taking, contending that it would not in fact reduce retail prices for consumers and therefore did not substantially advance the State's asserted interest.

Editorial note. The District Court, relying on economic testimony, found that the rent cap would not achieve its purpose and held it an uncompensated taking; the Court of Appeals for the Ninth Circuit affirmed, applying the 'substantially advances' formula. The Supreme Court reversed and remanded, leaving Chevron's remaining claims for consideration below.

Editorial note. The 'substantially advances' inquiry has no proper place in takings jurisprudence. The rule derived is the taxonomy the opinion sets out. A regulatory taking may be established by showing a permanent physical invasion of property, in which case Loretto applies; by showing a deprivation of all economically beneficial use, in which case Lucas applies; or by satisfying the factors of Penn Central, namely the economic impact of the regulation, the extent of interference with distinct investment-backed expectations, and the character of the governmental action. The exactions cases, Nollan and Dolan, form a special application concerned with conditions on development permission. Beyond these categories a plaintiff must show a burden on property equivalent in kind to a direct appropriation; the wisdom or efficacy of the regulation is a matter for substantive due process, not for the Takings Clause.

Editorial note. Justice O'Connor traced the Agins formula to its source in Nectow and Euclid, which were due process decisions, and explained that its migration into takings law had been an inadvertence never examined on its merits. She reasoned that a means-ends test is unsuited to the Takings Clause because the Clause presupposes a valid public purpose and asks only whether the burden of achieving it has been unfairly concentrated on a particular owner; a test focused on regulatory effectiveness would both invite courts to second-guess legislative judgment and permit compensation where no property burden had been shown. She noted that Agins itself had been correctly decided on other grounds and that nothing in the decision disturbed the substantive due process inquiry in its proper place. Justice Kennedy, concurring, observed that the opinion did not foreclose a due process challenge to arbitrary regulation.

Editorial note. Lingle is the case with which any modern account of regulatory takings should begin, because it states the categories and assigns each of the leading decisions its place. It also restores an analytical separation that the treatise maintains throughout: due process asks whether the regulation is a legitimate exercise of the police power, and the Takings Clause asks who must bear the cost of a legitimate exercise. The decision has the further practical effect of foreclosing a line of litigation in which owners sought compensation by attacking the economic rationality of ordinary economic regulation.

Editorial note. Followed as the governing framework. Applied in Murr v. Wisconsin, 582 U.S. 383 (2017), in defining the parcel as a whole, and in Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), in locating compelled access within the physical takings category. Agins v. City of Tiburon, 447 U.S. 255 (1980), is superseded to the extent it supplied a takings test.

Editorial note. Read with U.S. Const. amend. V, and the treatise chapters on regulatory takings, on physical takings, and on zoning and the police power.