Amicus Curiae Brief — Lingle v. Chevron USA Inc.

No. 04-163

In The

Supreme Court of the Anited States

*

LINDA LINGLE, GOVERNOR OF

THE STATE OF HAWAII, ET AL.,

Petitioners,

V.

CHEVRON USA, INC.,

Respondent.

o

On Writ Of Certiorari To The

United States Court Of Appeals

For The Ninth Circuit

¢

BRIEF AMICI CURIAE OF CHARLES W. COUPE,

ROBERT NIGEL RICHARDS,

JOAN ELIZABETH COUPE, AND JOAN COUPE

IN SUPPORT OF RESPONDENT

o

KENNETH R. KUPCHAK*

ROBERT H. THOMAS

DAMON KEY LEONG

KUPCHAK HASTERT

1600 Pauahi Tower

1001 Bishop Street

Honolulu, Hawaii 96813

Telephone: (808) 531-8031

Counsel for Amici Curiae

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Does a regulation that fails to substantially advance

legitimate state interests violate the Public Use re-

quirement of the Fifth Amendment?

Does the substantially advance legitimate state

interests criterion require scrutiny beyond minimum

rationality?

il

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .................ccssseeeeeseseeeeeeees i

TABLE OF AUTHORITIES. ..............cccccsssscccesssseeseess iv

INTEREST OF AMICI CURIABE .................cceeceeeeeees 1

SUMMARY OF ARGUMENT ................::ccccceseseeeeeeees 2

ABSUBEIIIN YE ..000000cccccccessecesscecsenssennesiennninnennnnnnnnnnnnn 4

I. “SUBSTANTIALLY ADVANCE _LEGITI-

Il.

MATE STATE INTERESTS” IS A TEST OF

PUES UIE wcccccesceveresnesensenenseuneunnennynnnnnninn

A. The Fifth Amendment’s Takings Clause

Requires Public Use As Well As Just

COERORBRRIGR, .....10000crencscessetsenseeneennene

B. Regulatory Takings Doctrine Recognizes

The Fifth Amendment Restrains More

Than Government’s Overt Eminent Do-

GREER FOU GP oececcvcccveveescasonnessauneaeeenee

C. Invalidation For Lack Of Public Use In

Eminent Domain Is The Same Remedy

For A Regulation That Fails To Substan-

tially Advance Legitimate State Inter-

GERD .orcccccceccescvevesesecessensesessuceneneeennnnnennnnnnn

D. It Matters Little Whether Property Is

Taken By Eminent Domain Or Regula-

CEGT cccecccscesotaninl lcocecececesessssesseseenieennnnnnnnn

/

“SUBSTANTIALLY ADVANCE = LEGITI-

MATE STATE INTERESTS” REQUIRES

SCRUTINY BEYOND MINIMUM RATION-

ill

TABLE OF CONTENTS - Continued

Page

A. Takings Clause Analysis Has Long Re-

quired More Than Minin.am Rationality

When Reviewing Regulation Impacting

TANIA iesrainedinadsenncscnsssnensocccceoes 10

B. Regulation Is Not Insulated From Re-

view Simply Because It Is Labeled “Eco-

Eee 13

C. Dismissing The Substantially Advance

Standard As A Due Process Test Writes

Out The Public Use Requirement From

The Fifth Amendment.......................0000005 15

D. Courts May Review The Means Used To

Achieve Government’s Goals.................... 16

E. “Substantive” Due Process Protects Dif-

ferent Interests Than The Takings

Clause, And Reaffirmation Of The Sub-

stantially Advance Standard Is Not A

a esensscneoos 20

Siti ietcietaccennsncstscosesecosocsvesocsecesesoocococes 23

iv

TABLE OF AUTHORITIES

Page

CASES

Adarand Constructors, Inc. v. Pena, 515 U.S. 200

CEE cnitnnceninenennstencttinnicniniibiipianiaisidiidiaieiseidsiaminsitiimmacimaiminaiaii 22

Agins v. City of Tiburon, 447 U.S. 255 (1980) .... 3, 7, 11, 12

Air Pollution Variance Bd. of Colorado v. Western

Alfalfa Corp., 416 U.S. 861 (1974)... cceeeeeeeeeeeeeees 14

Andrus v. Allard, 444 U.S. 51 (1979) ...........cccccccceeeeeeseeeeeees 7

Babbitt v. Youpee, 519 U.S. 234 (1997)............ccccccceeeeeeeeeees 6

Backus v. Fort Street Union Depot Co., 169 U.S. 557

ee cvcwncsecneennvemneniienscasiniamiitiitichaasliiiticiniacimiaaatiasiacinaedeiaiila 8

Berman v. Parker, 348 U.S. 26 (1954) .................00. 8, 19, 22

Board of Regents v. Roth, 408 U.S. 564 (1972)................. 21

Boos v. Barry, 485 U.S. 312 (1988) .............ccicseesseeeeeeeeeeeees 7

Brown v. Legal Foundation of Washington, 538

RIE SI dccniniscicaniasciberigindddiintndiiadninensiamemmanaiiinted 4, 6, 16

Central Hudson Gas & Elec. Corp. v. Public Serv.

Comm'n of New York, 447 U.S. 557 (1980)................... 14

Chevron USA, Inc. v. Bronster, 363 F.3d 846 (9th

i Se cccnenncciensenedunitaininsigenenbieinnipanmalecmiitiieiie daa ais: 14

City of Monterey v. Del Monte Dunes at Monterey,

Lid., 526 U.S. 687 (1999)..............cccccccceeees 5, 9, 12, 17, 22

City of Richmond v. J.A. Croson Co., 488 U.S. 469

(Gare i cnaecsssssessiniatoniennitaranseioansaseniniaiaiiaicislelaasd dicate sidisiaaltaiaaid 20

Dolan v. City of Tigard, 512 U.S. 374 (1994)............. passim

Dunn v. Blumstein, 405 U.S. 330 (1972)............ccccccceeeeeees 20

TABLE OF AUTHORITIES -— Continued

Page

First English Evangelical Lutheran Church v.

County of Los Angeles, 482 U.S. 304 (1987).............. 6, 11

Goldblatt v. Town of Hempstead, 369 U.S. 590

STITT ccsecencsncsntsensiettonetaestusitiemanaiitinnitbtiainiiaiiciainiataeiainidiiadinainuaeiduatiiiieigs 11

Hawaii Hous. Authority v. Midkiff, 467 U.S. 229

Fee crenscscmscentsatensnmnuninnmeninennineneetd passim

Hodel v. Irving, 481 U.S. 704 (1987) .........c.:ccccccceceeeeeeeeees 17

Kaiser Aetna v. United States, 444 U.S. 164 (1979)....6, 11, 19

Kelo v. City of New London, No. 04-108....... 1, 16, 17, 19, 23

Ladue v. Gilleo, 512 U.S. 43 (1994)............cccecssseeneeeeeeeeees 21

Lochner v. New York, 198 U.S. 45 (1905) ...........::::cccceeee 21

Loretto v. Teleprompter Manhattan CATV Corp.,

ee Ce withiiiniasiciiaaiieiiiaiiainintiniaaiaipiianiiaineanadiais 6, 19

Lucas v. South Carolina Coastal Council, 505 U.S.

aa csnesicibinninineticibiinaiieidenaicieiaamsiasatieanlaliiata 8, 9, 12

Lynch v. Household Finance Corp., 504 U.S. 538

SIE icicteccneciahseitleeinnniitaiditeadainianiiitiniebarniiaiiibiinmmaninnatatiaiatiiiaeaaaiaal 21

Marshall v. Barlow’s Inc., 436 U.S. 307 (1978)................. 14

Moore v. City of East Cleveland, 431 U.S. 494

en ee TE ee eS Te 11

Nectow v. City of Cambridge, 277 U.S. 183 (1928)........... 11

New York v. Burger, 482 U.S. 691 (1987) ............ccccceeeeeeee 14

Nollan v. California Coastal Comm’n, 482 U.S. 825

GiIEI ED ccnnsatatsentaninesntennteeninteesdtatatanminnmeanenantnesl passim

Palazzolo v. Rhode Island, 533 U.S. 606 (2001)................. 9

Payne v. Tennessee, 501 U.S. 808 (1991) .0....... cc ceeeeeeee 12

vi

TABLE OF AUTHORITIES — Continued

Page

Penn Central Trans. Co. v. New York City, 438 U.S.

Se en een wane See 10, 11, 12, 15

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

ricci ciated bal indamdemsei 6, 10, 11, 19

Poe v. Ullman, 367 U.S. 497 (1961) ................:cccccceeeeeeeeees 21

Pumpelly v. Green Bay & Mississippi Canal Co., 80

ERIS rE inve ye av Enero a tean aN 10

Rukab v. City of Jacksonville, 811 So.2d 727 (Fla.

aE Tits: TIT iccsciccsdecinisnarcesntiiiagabcetesariclenadibaidedituasietipaiianiseiati 9

San Diego Gas & Elec. Co. v. City of San Diego, 450

aaa asamasiusbaablemsaalbisiabslide 8

State Oil Co. v. Khan, 522 U.S. 3 (1997)..............5.ccccceeeees 12

Tahoe-Sierra Preservation Council v. Tahoe Re-

gional Planning Agency, 535 U.S. 302 (2002)............... 12

Thompson v. Consolidated Gas Corp., 300 U.S. 55 P

STITT isceuideciciehanateleshioniishdeedinsshianabainaieabianiaiaaiianataeidinsiamaddaaaamiabsadiuaias 4

United States v. 56.564 Acres of Land, 441 U.S. 506

TTT detnetinammsedetnaaetiiesstimimcpeidendeamadbcianinseniiahaaeThiaesiteiemieieiaaeimehcaitiia 8

United States v. Gaudin, 515 U.S. 506 (1995).................. 12

Vanhorne’s Lessee v. Dorrance, 2 U.S. (2 Dall.) 304

NG, i 4

Yee v. City of Escondido, 503 U.S. 519 (1992) ............00.... 18

CONSTITUTIONAL PROVISIONS

Se et MI, Tr csiciciinniinatsnininiainiesinespinienpesiniasiesainial passim

CRs eee ae neat ore Do 4

vii

TABLE OF AUTHORITIES — Continued

Page

FEDERAL STATUTES

a: Sita cir cesciirinnssetacinantinmntinnteitaaintaiaainaiedaemiiiapiiiaaaibdi 9

STATE STATUTES

Act 257, Haw. Rev. Stat. § 486H-10-4 (1997)........... 2,5, 14

OTHER AUTHORITIES

Thomas W. Merrill, The Economics of Public Use,

72 Cornell L. Rev. 61 (1986)................... catadpibeialimeniindats 17

R.S. Radford, Of Course a Land Use Regulation

That Fails to Substantially Advance Legitimate

State Interests Results in a Regulatory Taking, 15

Fordham Env. L. Rev. 353 (2004) .0...........ccccccceeeeeeneneees 11

1

INTEREST OF AMICI CURIAE

Amici curiae Charles W. Coupe, Robert Nigel Rich-

ards, Joan Elizabeth Coupe, and Joan Coupe (Richards

Family) respectfully submit this brief in accordance with

Supreme Court Rule 37.’

The Richards Family has for generations owned

private real property on the Big Island of Hawaii that now

is being threatened with eminent domain to benefit

private developers. The Richards Family filed a brief amici

curiae in Kelo v. City of New London, No. 04-108 — which is

scheduled for oral argument on the same day as the

present case — explaining why the exercise of eminent

domain in that case must substantially advance a legiti-

mate state interest in order to satisfy the Public Use

requirement of the Fifth Amendment. The Richards

Family appears as amici in the present case because it

iepresents the other half of that analysis: the “substan-

tially advance” standard is a test of Public Use governing

regulatory takings, and enforcing regulations that do not

substantially advance a legitimate state interest is no

different than allowing the government to abuse eminent

domain power.

The Richards Family has borne the cost of preparing

this brief because this case is of overwhelming importance

to them and other property owners nationwide who suffer

* The parties consented to the filing of amici curiae briefs, and

copies of the parties’ written consents have been filed with the Clerk of

the Court. This brief was not authored in any part by counsel for either

party, and no person or entity other than amici curiae and counsel

made a monetary contribution toward the preparation or submission of

this brief.

takings of property by illegitimate exercises of government

power, whether by eminent domain or by regulation.

Amici are also consumers of gasoline, and would be

directly affected by Act 257, Haw. Rev. Stat. § 486H-10-4

(1997), the State’s feckless attempt to lower consumer gas

prices in Hawaii — a geographically distant market with

few suppliers — by enacting a law capping the rent gas

company lessors may charge their tenants for renting

service stations.

As the courts below determined, if Act 257 is not

invalidated, Hawaii consumers such as the Richards

Family will pay the price by actually paying higher — not

lower — prices at the pump. Amici respectfully urge this

Court to affirm the courts below.

e

SUMMARY OF ARGUMENT

Regulations that fail to “substantially advance legiti-

mate state interests” violate the Public Use requirement of

the Fifth Amendment.

This conclusion results from an examination of the

text of the Takings Clause itself, which contains two

substantive limitations: (1) the taking must be for public

use and (2) just compensation must be provided. Dual

remedies give effect to these limitations: if an action is not

for public use it is void, and if just compensation has not

been provided, a property owner may compel payment.

Review of what uses are “public,” and what compensation

is “just” is reserved for the courts.

The Fifth Amendment limits more than overt exer-

cises of eminent domain. It is a settled element of this

3

Court’s jurisprudence that a regulation -— even one

branded as “economic” — violates the Takings Clause if it

(1) fails to substantially advance legitimate state interests,

or (2) deprives an owner of beneficial use of property.

Agins v. City of Tiburon, 447 U.S. 255, 260 (1980). This

regulatory takings standard’s two-part foundation paral-

lels the Takings Clause’s dual requirements of Public Use

and Just Compensation.

The “substantially advance” standard is a test of

public use.

This brie: sets forth why the “substantially advance”

test is a Takings Clause standard and why heightened

scrutiny should continue to be utilized to review regula-

tory actions alleged to violate the Fifth Amendment.

Regulatory takings jurisprudence has long recognized the

intermediate scrutiny of the substantially advance test

requires more than the minimum rationality of due process.

This case presents the Court with the opportunity to

clarify that the Public Use Clause limits all government

actions impacting private property. Amici urge the Court

to reaffirm that unless the government shows that a

regulation substantially advances legitimate state inter-

ests, it is invalid as an act beyond the limited scope of

government’s power, in violation of the Takings Clause.

The Court of Appeals should be affirmed.

*

4

ARGUMENT

I. “SUBSTANTIALLY ADVANCE LEGITIMATE STATE

INTERESTS” IS A TEST OF PUBLIC USE

A. The Fifth Amendment’s Takings Clause

Requires Public Use As Well As Just Com-

pensation

The Takings Clause contains two distinct limitations

on government action, requiring both “public use” and

“just compensation” —

... nor shall private property be taken for public

use, without just compensation.

U.S. Const. amend. V. See Brown v. Legal Foundation of

Washington, 538 U.S. 216, 232-33 (2003).

The Constitution contains neither a grant of eminent

domain power, nor of “police power,” only limitations on

their exercise, with the proviso that any powers not

expressly delegated to the national or state governments

“are reserved ... to the People.” U.S. Const. amend. X.

Consequently, this Court has long held that an action that

takes property is beyond the power of government if it is

not for public use. See Vanhorne’s Lessee v. Dorrance, 2

U.S. (2 Dall.) 304, 310 (C.C.D. Pa. 1795) (legislature has

“no authority to make an act, divesting one citizen of his

freehold and vesting it in another, even with compensa-

tion.”); Thompson v. Consolidated Gas Corp., 300 U.S. 55,

80 (1937) (public use is an explicit limit on the power of

government to take private property even if justly com-

pensated).

A taking that is not for public use is therefore illegiti-

mate and void. See, e.g., Hawaii Hous. Authority v. Mid-

kiff, 467 U.S. 229, 245 (1984) (action that fails public use

— - om

5

requirement serves no legitimate purpose of government

and is void).

Determination of whether an action violates the

Public Use Clause is a judicial function, and even if review

is limited in scope, it is never absolutely immune from

judicial scrutiny. Jd. at 240 (“There is, of course, a role for

courts to play in reviewing a legislature’s judgment of

what constitutes a public use . . .”); City of Monterey v. Del

Monte Dunes at Monterey, Ltd., 526 U.S. 687, 707 (1999)

(“To the extent the city argues that, as a matter of law, its

land-use decisions are immune from judicial scrutiny

under all circumstances, its position is contrary to settled

regulatory takings principles.”).

Requiring public use insures that private property

owners are not being unfairly forced to contribute their

property to someone else’s private use, that the public is

benefitted, and that the government’s purported need for

the property is genuine before an individual’s fundamental

rights are disturbed.

Thus, the Just Compensation Clause alone may not, as

the State’s Questions Presented posit, authorize a court to

invalidate regulation that takes property.’ The Just Com-

pensation Clause, however, as the text of the Fifth Amend-

ment plainly reveals, is onty-half of the takings calculus.

The Public Use Clause is the textual support for invalida-

tion of regulatory actions that go “too far.”

? Petitioners frame the Questions Presented to suggest this case

implicates only the Just Compensation Clause. Respondent, however,

did not challenge Act 257 simply for failing to provide just compensa-

tion, it sought to invalidate the Act as violation of the Takings Clause.

6

B. Regulatory Takings Doctrine Recognizes The

Fifth Amendment Restrains More Than Gov-

ernment’s Overt Eminent Domain Power

All exercises of government power, and not only overt

exercises of eminent domain, are limited by the public use

and Just Compensation requirements. See, e.g., Brown,

538 U.S. at 232 (interest on lawyer’s trust account regula-

tory scheme took property but takings satisfied public use

requirement); First English Evangelical Lutheran Church

v. County of Los Angeles, 482 U.S. 304, 315 (1987) (Fifth

Amendment requires both invalidation and just compensa-

tion remedies for police power regulations that violate

Takings Clause); Loretto v. Teleprompter Manhattan CATV

Corp., 458 U.S. 419, 425 (1982) (regulation served legiti-

mate public purpose).

“Regulatory taking” is an expression of the notion that

government’s power to rearrange private property rights

operates on a continuum, and when it crosses a line — goes

“too far” — either in rationale or effect — it matters not

what label the legislature attaches to the exercise of

power, what matters is the impact of such action on

the fundamental right of property. See First English,

482 U.S. at 316 (“While the typical taking occurs when

the government acts to condemn property in the exercise

of its power of eminent domain, the entire doctrine of

inverse condemnation is predicated on the proposition

that a taking may occur without such formal proceed-

ings.”); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393,

413 (1922) (Kohler Act enacted pursuant to state’s

police power went “too far”); Kaiser Aetna v. United

States, 444 U.S. 164, 172 (1979) (imposition of a naviga-

tional servitude pursuant to the federal commerce power

would be an invalid taking); Babbitt v. Youpee, 519 U.S.

7

234, 242-45 (1997) (striki..4 down exercise of federal power

to regulate Indian trust lands for violating Takings

Clause); Andrus v. Allard, 444 U.S. 51, 64 & n.21 (1979)

(federal power to protect endangered species measured

against Takings Clause; “there is no abstract or fixed point

at which judicial intervention under the Takings Clause

becomes appropriate”).’

Thus, the Takings Clause is violated when the gov-

ernment restricts property to such an extent that it has

effectively attempted to exercise eminent domain, the only

differences being the government does not formally invoke

the power of eminent domain and does not recognize an

ligation to provide compensation.

A regulation fails this Court’s two-part Takings Clause

test when it either (1) does not substantially advance

legitimate state interests, or (2) deprives the owner of all

beneficial use of property. Agins v. City of Tiburon, 447

U.S. 255, 260 (1980).

C. Invalidation For Lack Of Public Use In

Eminent Domain Is The Same Remedy For

A Regulation That Fails To Substantially

Advance Legitimate State Interests

Remedies available under the two tests for a taking by

regulation are the same as those available to an owner

* Similar analysis is applied to other limitations on government

power that protect fundamental rights, and these limitations do not

depend on the power the government claims to be exercising. For

example, police power regulations are reviewed with strict scrutiny if

the regulation is alleged to impact free speech rights, even if the

regulation is not affirmative government censorship. See, e.g., Boos v.

Barry, 485 U.S. 312 (1988) (invalidating law restricting placement of

signs within 500 feet of embassy because it was not narrowly tailored).

8

resisting a taking by eminent domain because the owner of

private property facing eminent domain stands in the

same position as the owner who asserts that regulation

has the same effect. See Lucas v. South Carolina Coastal

Council, 505 U.S. 1003, 1017 (1992) (from landowner’s

point of view overregulation is the same as appropriation).

If a taking is not for public use, it is invalid. See, e.g.,

Midkiff, 467 U.S. at 234-35 (property owner sought injunc-

tion and invalidation of state legislation alleged to be in

violation of Public Use Clause); Berman v. Parker, 348

U.S. 26, 28 (1954) (property owner sought injunction and

invalidation of federal legislation alleged to violate Public

Use Clause).

Similarly, if a regulation does not substantially

advance legitimate state interests, it is invalid and may be

enjoined. See, e.g., Nollan v. California Coastal Comm’n,

482 U.S. 825, 828-29 (1987) (property owner sought writ of

administrative mandamus to invalidate action for viola-

tion of Takings Clause); Dolan v. City of Tigard, 512 U.S.

374, 387 (1994) (owner sought to compel issuance of

permit without unconstitutional conditions attached).*

* The compensation remedies for eminent domain and regulatory

takings are also the Same. If property is taken by eminent domain but

the compensation provided is not adequate, the owner is entitled to a

judicial determination of the just amount. See, eg., Backus v. Fort

Street Union Depot Co., 169 U.S. 557, 573 (1898) (Constitution requires

full and adequate compensation); United States v. 56.564 Acres of Land,

441 U.S. 506, 513-14 (1979) (fair market value, not replacement cost,

measures just compensation). If the owner is denied beneficial use of

property by a regulation, she is entitled to just compensation in an

action in inverse condemnation and the court establishes the amount

due. See, e.g., San Diego Gas & Elec. Co. v. City of San Diego, 450 US.

621, 638 n.2 (1981) (Brennan, J., dissenting) (“The phrase ‘inverse

(Continued on following page)

9

D. It Matters Little Whether Property Is

Taken By Eminent Domain Or Regulation

Having the same textual foundation, eminent domain

and regulatory takings jurisprudence cannot be logically

or practically separated, particularly since from the

property owner’s perspective it matters little that in one

instance the government is threatening to affirmatively

confiscate his property by illegitimate means with com-

pensation, while in the other the threatened confiscation is

de facto rather than de jure and no compensation is

provided. See, e.g., Lucas, 505 U.S. at 1017 (taking by

overregulation is the same as appropriation); Rukab v.

City of Jacksonville, 811 So.2d 727, 733 (Fla. Dist. Ct. App.

2002) (“We see no reason to treat a direct condemnation

action differently from an inverse condemnation claim in

this context.

This Court has long recognized that regulatory tak-

ings are not different in effect from affirmative exercises of

the eminent domain power when a property owner is

either dispossessed of property for improper reasons, or

left with little of value:

condemnation’ generally describes a cause of action against a govern-

ment defendant in which a landowner may recover just compensation

for a ‘taking’ of his property under the Fifth Amendment, even though

formal condemnation proceedings in exercise of the sovereign’s power of

eminent domain have not been instituted by the govermment entity.”);

Palazzolo v. Rhode Island, 533 U.S. 606, 618 (2001) (property owner

sought compensation alleging denial of beneficial use); Lucas, 505 U.S.

at 1009 (owner conceded regulation was valid and sought only compen-

sation); City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 US.

687, 689 (1999) (property owner sought damages under 42 USC.

§ 1983 for just compensation for deprivation of beneficial use).

10

It would be a very curious and unsatisfactory re-

sult if in construing [the Takings Clause] it shall

be held that if the government refrains from ab-

solute conversion of real property to the use of

the public it can destroy its value entirely, can in-

flict irreparable and permanent injury to any ex-

tent, can, in effect, subject it to total destruction

without making any compensation, because, in

the narrowest sense of that word, it is not taken

for the public use.

Pumpelly v. Green Bay & Mississippi Canal Co., 80 U.S.

166, 176-78 (1871).

Il. “SUBSTANTIALLY ADVANCE LEGITIMATE

STATE INTERESTS” REQUIRES SCRUTINY

BEYOND MINIMUM RATIONALITY

A. Takings Clause Analysis Has Long Re-

quired More Than Minimum Rationality

When Reviewing Regulation Impacting

Property

Requiring that regulations “substantially advance

legitimate state interests” plainly calls for more scrutiny

than minimum rationality to determine whether regula-

tion has gone “too far.” Pennsylvania Coal Co. v. Mahon,

260 U.S. 393, 415 (1922):

[O]ur opinions do not establish that these stan-

dards are the same as those applied to due proc-

ess and equal protection claims.

Nollan, 482 U.S. at 834 n.3. See also Dolan, 512 U.S. at

391. Heightened scrutiny is required. Penn Central Trans.

Co. v. New York City, 438 U.S. 104, 127 (1978). In Penn

Central, the Court held that a regulation is a not taking

when it serves “a substantial public purpose.” Jd. at 127

11

(citing Goldblatt v. Town of Hempstead, 369 U.S. 590

(1962)). The Court held it is:

implicit in Goldblatt that a use restriction on

real property may constitute a “taking” if not

reasonably necessary to the effectuation of a sub-

stantial public purpose .. . or perhaps if it has an

unduly harsh impact upon the owner’s use of the

property.

Penn Central, 438 U.S. at 127 (emphasis added) (citing

Nectow v. City of Cambridge, 277 U.S. 183 (1928); Moore v.

City of East Cleveland, 431 U.S. 494 (1977) (Stevens, J.,

concurring)). Thus, courts may examine the means used to

accomplish important government ends, and the use of

“substantial public purpose” rather than “legitimate state

interest” is telling, for it demonstrates the textual connec-

tion between Agins’ formulation of the standard and the

Public Use Clause.”

This Court has continued to examine regulation under

this standard for over three-quarters of a century. First

English, 482 U.S. at 316 (“It has also been established

doctrine at least since Justice Holmes’ opinion for the

Court in [Mahon] that ‘[t]he general rule at least is, that

while property may be regulated to a certain extent, if

regulation goes too far it will be recognized as a taking.’”)

(quoting Mahon, 260 U.S. at 415). See also R.S. Radford,

Of Course a Land Use Regulation That Fails to Substan-

tially Advance Legitimate State Interests Results in a

* The Court sometimes uses the language “character of the

government action” to examine the means used. See Kaiser Aetna, 444

U.S. at 175 (imposition of navigational servitude would violate Takings

Clause) (quoting Penn Central, 438 U.S. at 124).

12

Regulatory Taking, 15 Fordham Env. L. Rev. 353 (2004)

(detailing origins of substantially advance standard).

Subsequent decisions of this Court repeatedly con-

firmed the continuing validity of the standard, most

recently in Tahoe-Sierra Preservation Council v. Tahoe

Regional Planning Agency, 535 U.S. 302, 333-34 (2002).

Between Penn Central and Tahoe, the Court invoked the

substantially advance tdst many times. See, e.g., Lucas v.

South Carolina Coastal Council, 505 U.S. 1003, 1016

(1992) (“As we have said on numerous occasions, the Fifth

Amendment is violated when land-use regulation ‘does not

substantially advance legitimate state interests’”); City of

Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S.

687, 704 (1999) (“requirement that a regulation substan-

tially advance legitimate public interests”); Agins, 447

U.S. at 260 (same).*

In Nollan and Dolan, the substantially advance

standard provided the rule of decision, and the Court

scrutinized the government’s method even though the owner

* Unless Petitioners establish an irresistible reason to abandon the

substantially advance test, the principle of stare decisis compels

affirmance, as property owners have relied on the limited protection the

test has offered for years. See State Oil Co. v. Khan, 522 US. 3, 20

(1997) (stare decisis promotes evenhanded, predictable, and consistent

development of legal principles, fosters reliance on judicial decisions,

and contributes to the actual and perceived integrity of the judicial

process) (quoting Payne v. Tennessee, 501 U.S. 808, 827 (1991)). Stare

decisis concerns are “at their acme in cases involving property and

contract rights.” State Oil, 522 U.S. at 20 (citing Payne, 501 U.S. at

828). The repeated affirmations of the substantially advance standard

by the Court mean something and should not be lightly brushed aside.

Cf. United States v. Gaudin, 515 U.S. 506, 521 (1995) (stare decisis may

yield where a prior decision’s “underpinnings [have been] eroded, by

subsequent decisions of this Court”).

13

retained some beneficial use of the property that was

alleged to have been taken. See Nollan, 482 U.S. at 834

(when regulatory means did not have essential nexus to

legitimate goals, there is a danger that government is

leveraging police power in an “out-and-out plan of extor-

tion”); Dolan, 512 U.S. at 387 (classifying the coastal

commission’s attempt to obtain the Nollan easement as

“gimmickry”).

Petitioners dismiss this long line of precedent as a

“mistaken transposition of substantive due process doc-

trine into takings law,” Brief for Petitioners at 23, insist-

ing that courts cannot inquire whether regulation

substantially advances legitimate state interests if the

legislature labels its regulation “economic.” According to

Petitioners, once branded “economic,” regulations are

virtually immune from challenge, even where — as here —

it is undisputed the regulation does not come close to

advancing the goal the legislature established, and in fact

has the opposite effect.

B. Regulation Is Not Insulated From Review

Simply Because It Is Labeled “Economic”

A government action is not immune from public use

review simply because it is labeled an “economic” regula-

tion:

But simply denominating a governmental meas-

ure as a “business regulation” does not immunize

it from constitutional challenge on the ground

that it violates a provision of the Bill of Rights.

We see no reasons why the Takings Clause of the

Fifth Amendment, as much a part of the Bill of

14

Rights and the First Amendment or Fourth

Amendment, should be relegated to the status of

a poor relation in these comparable circum-

stances.

Dolan, 512 U.S. at 392 (citing Marshall v. Barlow’s Inc.,

436 U.S. 307 (1978); Air Pollution Variance Bd. of Colo-

rado v. Western Alfalfa Corp., 416 U.S. 861 (1974); New

York v. Burger, 482 U.S. 691 (1987); Central Hudson Gas

& Elec. Corp. v. Public Serv. Comm’n of New York, 447

U.S. 557 (1980)).

nee

___

It is dangerous to rely on legislative labels, rather

than effect, because even clear expressions of the purpose

of legislation are often ignored or recast after-the-fact by

advocates advancing “plausible” rationales to support the

regulation when challenged. See, e.g., Chevron USA, Inc. v.

Bronster, 363 F.3d 846, 855-56 (9th Cir. 2004) (during

litigation the State attempted to change its reason for

enacting Act 257 from lowering consumer gas prices to

protecting dealers). Creative lawyering, not actual effect,

would carry the day and completely swallow up the public

use requirement and the regulatory takings doctrine. Cf.

Nollan, 483 U.S. at 841 (“We view the Fifth Amendment’s

Property Clause to be more than a pleading requirement,

and compliance with it to be more than an exercise in

cleverness and imagination.”).

One clear example from the case at bar is the State’s

changing posture on Act 257: as the legislative history

reveals, the rent control measure was very plainly enacted

in order to lower consumer gas prices. The Hawaii Legisla-

ture expressly said so. However, when confronted with the

fact that the Act would have the opposite effect, the State

altered its supporting rationale, instead arguing it is

designed to protect service station lessees from a gas

15

company oligopoly. See, e.g., Brief for Petitioners at 1-2

(“This case involves a challenge to legislation enacted by the

State of Hawaii to forestall the evils of oligopolistic concen-

tration in the retail market for gasoline in this State.”).

Now, the State is seeking to dispense addressing such

inconsistencies altogether, asking the Court to insulate

regulatory actions from any meaningful public use inquiry.

C. Dismissing The Substantially Advance Stan-

dard As A Due Process Test Writes Out The

Public Use Requirement From The Fifth

Amendment

In takings where the property owner alleges the

regulation is beyond the power of government, the Public

Use Clause calls for the heightened scrutiny of the sub-

stantially advance test. See Nollan, 483 U.S. at 834-35;

Dolan, 512 U.S. at 396.

Petitioners assert that the validity of regulation may

only be challenged under “substantive” due process stan-

dards. See Brief for Petitioners at 23-36. This assertion,

however, virtually ignores the Public Use Clause and

strikes it out of the Fifth Amendment when it is invoked

as a limitation on the police power. As the Court reminded

in Dolan, however, both the Takings Clause as well as the

Due Process Clause restrict government power. Dolan, 512

U.S. at 384 n.5. Ever since the Court recognized that

regulations could violate the Takings Clause, it has ap-

plied the substantially advance standard to review the

public use of regulation. Penn Central, 438 U.S. at 127

(regulation is a “‘taking’ if not reasonably necessary to

the effectuation of a substantial public purpose”). The

Public Use Clause empowers courts to inquire into the

16

government’s choice of illegitimate means to accomplish its

goals. Midkiff, 467 U.S. at 240.

Regulation, like exercises of eminent domain, is

subject to public use requirement. See, e.g., Brown, 538

U.S. at 232 (regulation satisfied public use requirement).

The public use requirement cannot be ignored merely

because it is regulation that is effecting the taking and not

eminent domain.

Thus, the question in the case at bar is whether it

would be a public use for the State to have attempted to

exercise eminent domain to condemn the rent premium

and turn it over to its lessees in order to reduce consumer

gas prices. It is beyond doubt that if this question arose in

the context of an eminent domain action, the court would

be entitled to make that public use inquiry even if com-

pensation were being provided.

D. Courts May Review The Means Used To

Achieve Government’s Goals

A strikingly similar scheme is being reviewed by this

Court in Kelo v. City of New London, No. 04-108, the case

set for oral argument on the same day as the case at bar.’

” Because the issues in Kelo and the present case are two halves of

the same whole, the Richards Family also submitted an amici brief in

Kelo explaining why exercises of eminent domain should be reviewed

under the substantially advance test for public use. See Brief Amici

Curiae of Robert Nigel Richards, et al. Supporting Petitioners, No. 04-

108 (filed Dec. 3, 2004). Other amici agree. See, e.g., Brief Amicus

Curiae of Professors David L. Callies, et a/. in Support of Petitioners,

No.04-108 (filed Dec. 3, 2004); Brief of Cascade Policy Institute, et ai.,

as Amici Curiae in Support of Petitioners, No. 04-108 (filed Dec. 3,

2004).

17

In Kelo, the property owners are asserting that the gov-

ernment violates the Public Use Clause when it exercises

eminent domain to take their property and turn it over to

another private user supported only by promises the new

owner will make more productive use of it. The public use

advanced in that case by the government is that a better

economy will result. However, the government has not

established that seizing that Mrs. Kelo’s home will better

the economy.

This Court’s public use jurisprudence holds that the

requirement is “coterminous with the scope of the sover-

eign’s police powers.” Midkiff, 467 U.S. at 240. This

formula:ion of public use is less instructive in regulatory

takings, however, since “police power” is defined as any

regulation not effecting a taking. Thomas W. Merril., The

Economics of Public Use, 72 Cornell L. Rev. 61, 70 (1986)

(“[T]he outer limit of the police power has traditionally

marked the line between non-compensable regulation and

compensable takings of property.... Legitimately exer-

cised, the police power requires no compensation.”).

In undertaking this public use review, courts should ~

not defer to the means used. Nollan, 483 U.S. at 834-35

(“Our cases have not elaborated on the standards for

determining what constitutes a ‘legitimate state interest|,]’

[but] they have made clear ... that a broad range of

governmental purposes and regulations satisfy these

requirements.”); Dolan, 512 U.S. at 396 (goals established

by government were “commendable”). See also Del Monte

Dunes at Monterey, Ltd., 526 U.S. at 706 (“the jury was

instructed, in unmistakable terms, that the various purposes

asserted by the city were legitimate public interests”);

Hodel v. Irving, 481 U.S. 704, 712 (1987) (“We agree with

18

the Government that encouraging the consolidation of

Indian lands is a-public purpose of high order.”).

Nollan and Dolan represent two instances where the

Court held that a regulation did not substantially advance

a legitimate state interest and therefore violated the

Takings Clause. In neither case, however, did the Court

question the validity of the goal advanced by the govern-

ment, only the means used to accomplish it. See, e.g.,

Dolan, 512 U.S. at 396 (“The city’s goals of reducing

flooding hazards and traffic congestion, and providing for

public greenways, are laudable, but there are outer limits

to how this may be done.”) (emphasis added).

Here, when the means the State chose to lower gas

prices will not result in lower gas prices, but would instead

raise them, an owner who is being forced to turn over its

property to another for illegitimate reasons must be

allowed the opportunity to challenge the regulation and

not simply be limited to just compensation. The courts are

obligated to scrutinize such actions for more than a mini-

mum of rationality.

Public use criteria restricts regulation to public

purposes. If the regulation impacts an individual’s funda-

mental property rights, heightened scrutiny is merited to

insure that the democratic process has not broken down

and the government has not resorted to improper means to

achieve proper goals. See, e.8)» Yee v. City of Escondido, 503

U.S. 519, 530 (1992) (rent premium triggers heightened

scrutiny of government’s means); Nollan, 482 U.S. at 837

(when no compensation provided and regulation has no

19

nexus to legitimate government goal, danger exists that

regulation is “an out-and-out plan of extortion”)."

The State’s gas station rent control measure is very

similar to Kelo’s “economic development” taking, and both

exercises of government power should be measured

against the public use requirement under the same stan-

dard. Thus, in Kelo, heightened scrutiny will be useful to

“smoke out” illegitimate criteria when the condemning

authority is using the “suspect tool” of eminent domain

* Amici suggest that Berman requires first instance deference only

to the government’s advanced goals, because the means used in that

case — condemnation of blighted property with payment of compensa-

tion — were substantially related to the interesi of alleviating blight.

However, even if Berman and Midkiff involve deference to the means

used as well as the goal, that does not undercut the application of

heightened scrutiny in regulatory takings. In eminent domain, the just

compensation requirement acts as a limitation on the exercise of the

power, making the government less likely to choose illegitimate means.

Any unwarranted benefits to the government are negated by the

compensation it must provide, theoretically resulting in a net gain of

zero to both the government and the property owner. But where no

compensation is provided, this dynamic vanishes, heightening the

danger that the purpose advanced is pretextual, and the government

has “forglotten] that a strong public desire to improve the public

condition is not enough to warrant achieving the desire by a shorter cut

than the constitutional way of paying for the change.” Mahon, 260 US.

at 416. Those cases in which the Court invalidated regulation as a

taking for failure to pay just compensation can best be understood as

cases in which the public use requirement also was not satisfied

because the legitimate government interest was not advanced substan-

tially by a confiscation of property without just compensation. See, e.g.,

Loretto, 458 U.S. at 424 (property owner sought injunctive relief for

regulatory taking), Kaiser Aetna, 444 U.S. at 176 (“But this is not a case

in which the Government recognizes any obligation whatever to

condemn ‘fast lands’ and pay just compensation .. . ”); Nollan, 482 U.S.

at 841-42 (state is free to use power of eminent domain to accomplish

the public purpose it attempted to advance by regulation).

20

supported only by promises of economic development. City

of Richmond v. J.A. Croson Co., 488 U.S. 469, 493 (1989).

A similar rationale supports application of the sub-

stantially advance test in the present case. When it

attempts to redefine property rights, a legislature not

constrained by the just compensation obligation may not

choose to accomplish its goal by means having the least

profound impact on private property rights, but may

target certain individuals unfairly to bear more than their

share by effectively confiscating their property with no

attendant public benefit. See Dunn v. Blumstein, 405 U.S.

330, 343 (1972) (state should take path that lessens

burdens on constitutionally protected activity).

This case illustrates this danger. The State is taking

Respondent’s property and giving it to its lessees in an

attempt to lower consumer gas prices. As the lower courts

found, this goal will not be accomplished by the regulation.

Thus, the “average reciprocity of advantage” rationale that

supports the uncompensated exercise of police power does

not exist. Chevron is deprived of its property, the lessees

are the only parties enriched, and the public sees no

benefit at all, and may even be worse off. A regulation loses

its public character when it is patently unable to accom-

plish its purported goal. |

E. “Substantive” Due Process Protects Dif-

ferent Interests Than The Takings Clause,

And Reaffirmation Of The Substantially

Advance Standard Is Not A Return To

Lochner —

Dismissing the substantially advance standard as an

orphaned due process test also ignores the different

21

interests protected by the Takings Clause and the Due

Process Clause.

“Substantive” due process protects the right to avoid

regulation that intrudes upon extra-textual “liberty”

interests. See, e.g., Poe v. Ullman, 367 U.S. 497, 516-17

(1961) (Douglas, J., dissenting) (in addition to fair proce-

dures, due process includes the right to travel, the right to

marry, and the right to privacy). The Takings Clause

protects private property from de jure or de facto appro-

priation, and requires that any taking be for public use

and that compensation is provided. This does not call for a

guarantee of “economic liberty” protected under the now

discredited Lochner v. New York, 198 U.S. 45 (1905) and

its progeny. A regulatory takings plaintiff must allege and

prove that she has a legitimate claim of entitlement to

property, see Board of Regents v. Roth, 408 U.S. 564 (1972),

not merely that she has some unrealized economic expec-

tations that have been thwarted by regulation.

In the eighty-plus years of its existence, judicial

scrutiny under the substantially advance standard has not

resulted in unwarranted intrusion into legislative func-

tions, or presaged a return to Lochner’s theory of economic

liberty.

First, heightened scrutiny, as Nollan and Dolan make

clear, applies to the means used by government to achieve

its goals. The Court has never hesitated to review police

power regulations that impact fundamental constitu-

tional rights with heightened scrutiny. See, e.g., Ladue v.

Gilleo, 512 U.S. 43 (1994) (invalidating under the First

Amendment municipal regulation of residential signs

as not closely tailored). Property is a fundamental right.

See Lynch v. Household Finance Corp., 504 U.S. 538,

22

552 (1972) (“The dichotomy between personal liberties and

property rights is a false one.”); Dolan, 512 U.S. at 392 (all

fundamental rights deserve constitutional scrutiny).

Second, some regulations will pass even strict scru-

tiny, see Adarand Constructors, Inc. v. Pena, 515 U.S. 200,

201 (1995) (“we wish to dispel the notion that strict scrutiny

is strict in theory, but fatal in fact”), so there is no reason to

suspect that the intermediate substantially advance level of

scrutiny will result in wholesale invalidation of legislation.

For example, the regulatory schemes in Berman and

Midkiff would pass substantially advance scrutiny.”

Third, the Court addressed the concern of judicial

“second-guessing” in City of Monterey v. Del Monte Dunes

at Monterey, Ltd., 526 U.S. 687, 704 (1999). In that case, a

jury found the government’s repeated permit denials did

not substantially advance a legitimate state interest. Id. at

703-04. The city asserted that jury instructions should not

have permitted the jury to review its land use determina-

tions. Jd. at 704 (“(T)he city maintains that the Court of

Appeals adopted a legal standard for regulatory takings

* The government actions in Berman and Midktff pass intermedi-

ate scrutiny, because the means chosen by the government - eminent

domain with the payment of just compensation - were substantially

related to the advanced goals. In Berman, the regulation was designed

to improve severely blighted property in Washington, D.C. Berman, 348

U.S. at 30. In Midkiff, the Hawaii Land Reform Act was enacted to

remedy the ills perceived to be caused by concentrated land ownership.

Midkiff, 467 U.S. at 232-33, 241-42. The Court did not question that

eliminating blight and the breakup of land oligopolies are legitimate

government goals. The means used in the cases substantially advanced

those ends: taking blighted property by eminent domain and putting

it into the hands of a redeveloper alleviated the blight; exercising

eminent domain to vest individual owners with title diversified

ownership.

23

liability that allows juries to second-guess public land-use

policy.”). The Court noted first that the jury charge was

“consistent with our previous general discussions of

regulatory takings liability,” id., then rejected the city’s

argument that the substantially advance standard opened

up legislative determinations to judicial scrutiny.

o

CONCLUSION

Textually rooted in the Public Use Clause, the “sub-

stantially advance” takings requirement cannot be lightly

brushed aside or simply subsumed within “substantive”

due process analysis. The Fifth Amendment contains

independent limitations on government power, which

requires that regulations satisfy public use standards, not

simply that the government provide compensation if the

regulation impacts property's value.

In the end this case, like Kelo, is reduced to this vital

fact: the Constitution contains the Public Use Clause, not

just the Just Compensation Clause.

The Court of Appeals should be affirmed.

Respectfully submitted,

KENNETH R. KUPCHAK*

ROBERT H. THOMAS

DAMON KEY LEONG

KUPCHAK HASTERT

1600 Pauahi Tower

— 1001 Bishop Street

Honolulu, Hawaii 96813

Telephone: (808) 531-8031

*Counsel of Record