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Legal Test for Takings Liability an Issue in Supreme Court Case

The Court last Tuesday heard oral arguments in the case of Lingle v. Chevron U.S.A., which concerns one of the well-established tests for a taking under the Fifth Amendment to the U.S. Constitution — namely, whether a taking arises when a regulation “fails to substantially advance a legitimate government interest.”

Lingle is Linda Lingle, Hawaii’s governor, representing the state.

The precedent that the Supreme Court must consider was established in 1980 in Agins v. City of Tiburon. In that case, the Court said that a taking occurs when a regulation either fails to substantially advance a legitimate government interest, or deprives a property owner of economically viable use of his land.

The current case before the Supreme Court arises from a Hawaiian rent-control law that places a cap on the maximum amount of rent that gasoline companies can charge for their service station leases. The intent of the legislation was to lower gasoline prices, but experts agree that any savings from fixed rents haven’t been passed through to consumers at the pump.

Chevron, which does business in Hawaii, challenged the statute under the Fifth Amendment Takings Clause, arguing that the rent control “failed to substantially advance a legitimate government interest."

The Ninth Circuit Court, which is usually hostile to takings claims, upheld a trial court decision agreeing with Chevron and specifically endorsed the “substantial advancement” test.

Should the state of Hawaii prevail, it would be a significant reversal of the “legitimate government interest” test for takings liability that was established in 1980.

For more information, e-mail Duane Desiderio, or call him at 800-368-5242 x8146.

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