# Amicus Curiae Brief — Lingle v. Chevron USA Inc.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0032%3A25

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 544 U.S. 528

## Text

No. 04-163

In the

Supreme Court of the United States

—>

LINDA LINGLE, Governor of the
State of Hawaii, and MARK J. BENNETT,
Attorney General of the State of Hawaii,

Petitioners,
Vv.
CHEVRON USA, INC..,
Respondent.
+

On Writ of Certiorari to the United States
Court of Appeals for the Ninth Circuit

+

BRIEF AMICUS CURIAE OF PACIFIC
LEGAL FOUNDATION; GENE CASHMAN;
ATHENA SUTSOS; WESTERN MANUFACTURED
HOUSING COMMUNITIES ASSOCIATION; and
DEFENDERS OF PROPERTY RIGHTS IN
SUPPORT OF RESPONDENT CHEVRON USA, INC.

+
NANCIE G. MARZULLA R.S. RADFORD

Of Counsel Counsel of Record
Defenders of Property Rights Pacific Legal Foundation
1350 Connecticut Avenue, N.W. 3900 Lennane Drive, Suite 200
Suite 410 Sacramento, California 95834
Washington, DC 20035 Telephone: (916) 419-7111
Telephone: (202) 822-6760 Facsimile: (916) 419-7747

Facsimile: (202) 822-6774

Counsel for Amici Curiae

i
QUESTIONS PRESENTED

1. Should this Court reverse 24 years of precedent and
abandon what it has called its “general test” of liability for a
regulatory taking: whether a land-use regulation substantially
advances legitimate state interests?

2. Should this Court continue to afford meaningful
protection to individual rights guaranteed under the Takings
Clause of the Fifth Amendment, by applying mid-level scrutiny
to land-use regulations challenged under the “substantial
advancement” test, as mandated by Nollan v. California
Coastal Commission and its progeny?

TABLE OF CONTENTS

Page
QUESTIONS PRESENEGD «co ccscvecsestiésuneen 1
TABLE OF AUTIOORIUEBS «occcctesessteenseeee IV
IDENTITY AND INTEREST OF AMICI CURIAE ...... l

INTRODUCTION AND STATEMENT
OF Tite CARE... cccccccesseeeus ene 3
ARGUDMIENT ...+.0000000850560606 05 5 une 5

I. WHETHER A LAND-USE REGULATION
SUBSTANTIALLY ADVANCES A
LEGITIMATE STATE INTEREST HAS
LONG BEEN—AND SHOULD
REMAIN—THIS COURT'S “GENERAL
TEST” FOR A REGULATORY TAKING ........ 5

A. The Substantial Advancement Test
Is a Settled, Long-Established, and
Coherent Regulatory Takings Standard ....... 5

B. The Pedigree of the Substantial
Advancement Test Stretches Back
Through Penn Central to Pennsylvania Coal ... 8

C. No Phantom “Majority” of the
Eastern Enterprises (Or Any Other)
Court Has Repudiated the Substantial
Advancement Standard ................08. 11

Il. REGULATORY TAKINGS CLAIMS
BROUGHT UNDER THE SUBSTANTIAL
ADVANCEMENT STANDARD MUST
RECEIVE A HIGHER LEVEL OF JUDICIAL
REVIEW THAN SUBSTANTIVE DUE
PROCESS CLABGS 2.0 0000006005000 00e eee 15

TABLE OF CONTENTS—Continued
Page

Ill. THIS COURT’S SUBSTANTIAL
ADVANCEMENT TAKINGS ANALYSIS
IS ESSENTIAL TO EXPOSE AND REMEDY
NAKED MAJORITARIAN RENT SEEKING,
SUCH AS IS EVIDENCED IN MOBILE HOME
PARK RENT CONTROL ......... 660000 e ees 20

IV. THE CORRECT APPLICATION OF THE
SUBSTANTIAL ADVANCEMENT
STANDARD IS A STRAIGHTFORWARD
EXERCISE OF THE LEGITIMATE
FUNCTION OF JUDICIAL REVIEW ..........- 26

IMS occ ccc cece cccccccccscccccccccees 30

iv
TABLE OF AUTHORITIES
Page
Cases
Agins v. City of Tiburon,
ey a i Ceeee recat eee 3-6, 10
Armstrong v. United States,
PP ED ‘eedbdicdhidcnacdbuscescencek 29
Bennett v. Spear, 520 U.S. 154 (1997) ................ 3
Cashman vy. City of Cotati,
374 F.3d 887 (9th Cir. 2004)................ 2, 25-26
Chevron U.S.A. Inc. v. Cayetano,
224 F.3d 1030 (9th Cir. 2000) ..................-. “4
Chicago, B. & Q. R. Co. v. Chicago,
Se EE cndevasdesacdandsweshaudens 7
City of Monterey v. Del Monte Dunes at
Monterey, Lid., 526 U.S. 687 (1999) ..... 3-4, 13-14, 29
Dews v. Town of Sunnyvale,
109 F. Supp. 2d 526 (N.D. Tex. 2000) .......... 19-20
Dolan v. City of Tigard,
Pee NE i. d'b-65000004806t0eueeedicns 3-4
Eastern Enterprises v. Apfel,
Pe GEE a0 nscccccoccccad¥ecteece 11-13
Euclid v. Ambler Realty Co.,

PEED Sundbcedsdvedcesceeesuances 10
Hage v. United States,

PPPOE énecdcecadeéceueccecunoees 29

Hall v. City of Santa Barbara,

833 F.2d 1270 (1986) ...... ee. -eeeeee ee. 17, 22-23

Vv

TABLE OF AUTHORITIES—Continued

Page

Keene Corp. v. United States,

SEBS, FID CIGSD cccceccscccccccencessecsoss 3
Keystone Bituminous Coal Ass'n v.

DeBenedictis, 480 U.S. 470 (1987) ..........+55. 4,11
Loretto v. Teleprompter Manhattan

CATV Corp., 458 U.S. 419 (1982) ..... 2... eee eee 22
Lucas v. South Carolina Coastal

Council, 505 U.S. 1003 (1992) ..........66. 3-4,10, 17
Marbury v. Madison,

§ U.S. (1 Cranch) 137 (1803) ..........2e eee eeeee 28
Mayhew v. Town of Sunnyvale,

964 S.W. 2d 922 (Tex. 1998) ......... 2c eee ee eeee 19
Moore v. City of East Cleveland,

GO UD, GOO CISOD cc cccccccccesccccccsesscnces 7
Nectow v. City of Cambridge,

BITTE, GE GHND ccc cccdcccdcccccscceccsece 6-8
Nollan v. California Coastal Commission,

GER UG. GRP CSSD cccccccccccccess 1, 4, 6-7, 10, 16
Palazzolo v. Rhode Island,

TIDE. GROG cc cccccccceseccccccesccese 1,3
Penn Central Transportation Co. v.

City of New York, 438 U.S. 104 (1978) .........- 8, 10
Pennell v. City of San Jose,

GER US. CORTE cccccccccecccccccceseceses 18, 19
Pennsylvania Coal Co. v. Mahon,

y LIE | . SPPrerriririrr eee —

vi

TABLE OF AUTHORITIES—Continued

Page
Phillips v. Washington Legal Foundation,
ny es ae clea eau ncents 3
Richardson v. City and County of Honolulu,
roe fi lk ee 24
San Diego Gas & Electric Co. v. City of
San Diego, 450 U.S. 621 (1981) ............... 27-28
Solid Waste Agency of Northern Cook County vy.
U.S. Army Corps of Engineers,
Be ee EY GCovdnateneebadsnddddduvnces 3
Suitum v. Tahoe Regional Planning Agency,
SP SEE. Ndnecenedldeeuscesdkséecnis 1,3
Tahoe-Sierra Preservation Council v. Tahoe Regional
Planning Agency, 535 U.S. 302 (2002) ........ 4, 14-17
United States v. Riverside Bayview
Homes, Inc., 474 U.S. 121 (1985) .. 2.0... 2 eee ee 4
Yee v. City of Escondido
PPC, cscecddecsudsedesadces 4, 23-24
Statutes
Haw. Rev. Stat. § 486H-10.4 ............... 0... cee eee 4
Miscellaneous
Bickel, Alexander M., The Least Dangerous
SPE, SOS GIS GE, FEED cc cc sccccesesesecscess 28

Cordes, Mark W., Legal Limits on Development
Exactions: Responding to Nollan and Dolan,
BP Oe Ge Oh Ee BE DED OUNOED cocccccccecccccese 16

Vii

TABLE OF AUTHORITIES—Continued
Page

Dale-Johnson, David, Deng, Yongheng,
Gordon, Peter & Zheng, Diehang,
An Examination of the Impact of Rent
Control on Mobile Home Prices in California,
Working Paper No. 2004-1010, Lusk
Center for Real Estate, University-of
Southern California (Nov. 1, 2004).............55. 22

Dringman, Page Carroccia, Comment, Regulatory
Takings: The Search for a Definitive Standard,
55 Mont. L. Rev. 245 (1994) .......... cece cece eens 16

Echeverria, John D., Does a Regulation That
Fails to Advance a Legitimate Governmental

Interest Result in a Regulatory Taking?,
2D Baw, L. GSB CIGGOD oc ccccccccccccscseses 8-9, 11

Epstein, Richard A., Yee v. City of Escondido:
The Supreme Court Strikes Out Again,
26 Loy. L.A. L. Rev. 3 (1992) .......ceceeccccees 21

Hirsch, Werner Z., An Inquiry into Effects
of Mobile Home Park Rent Control,
36 5. Ui. Bowe. BEB CIGEED 2 cc cccccccccccccscces 21,22

Hirsch, Wemer Z., & Hirsch, Joel C., Legal-Economic
Analysis of Rent Controls in a Mobile Home Context:
Placement Values and Vacancy Decontrol,

35 UCLA L. Rev. 399 (1988) .... 2... eee eee ee eee 21

Hirsch, Werner Z., & Rufolo, Anthony M., The
Regulation of Immobile Housing Assets Under Divided
Ownership, 19 Int'l Rev. L. & Econ. 383 (1999) ..... 22

Vill
TABLE OF AUTHORITIES—Continued

Kahn, Jordan C., Lake Tahoe Clarity and
Takings Jurisprudence: The Supreme Court
Advances Land Use Planning in Tahoe-Sierra,

26-Fall Environs 33 (2002) ........cccceccccececs

Lazarus, Richard J., Restoring What's Environmental
About Environmental Law in the Supreme Court,

47 UCLA L, Rev. 703 (2000) ... nc ccccccvvceess

Mandelker, Daniel R., & Payne, John M., Planning
and Control of Land Development: Cases and

MMateriaks 119 (SG OB. BIBT) . ww cccccccccccccces

McUsic, Molly S., Looking Inside Out: Institutional
Analysis and the Problem of Takings,

Fe Pew. U. £. Rav. SOG CIGGED cc ccccccccccsccce

Quigley, John M., Economic Analysis of
Mobile Home Rent Control: The Example of

San Rafael, California (Sept. 12, 2002) ..........

Radford, R.S., Why Rent Control Is a Regulatory

Taking, 6 Fordham Envtl. L.J. 755 (1995) ........

Salzberg, Kenneth, Rights with Responsibilities
Land Use Law Symposium: “Takings” as Due
Process, or Due Process as “Takings”’?,

36 Val. U. L. Rev. 413 (2002)..........0..0000.

Skouras, George, Takings Law and the
Supreme Court: Judicial Oversight of the
Regulatory State's Acquisition, Use and

Control of Private Property 117 (1998) .........

Sutton, Victoria, Constitutional Taking Doctrine—
Did Lucas Really Make a Difference?,

18 Pace Envtl. L. Rev. 505 (2001) .............

Page

ix

TABLE OF AUTHORITIES—Continued
Page

Williams, Norman, et al., The White River Junction
Manifesto, 9 Vt. L. Rev. 193 (1984) «0.6.55 e eee eens 28

l

IDENTITY AND INTEREST
OF AMICI CURIAE'

Pacific Legal Foundation (PLF) is the largest and most
experienced public interest legal foundation of its kind in the
United States. Founded over 30 years ago, PLF is a nonprofit,
tax-exempt corporation organized under the laws of California
for the purpose of litigating matters affecting the public interest
at all levels of state and federal courts. Representing the views
of tens of thousands of members and supporters nationwide,
PLF is an advocate of individual rights, including the
fundamental right to own and make productive use of private
property. PLF has appeared before this Court in many high-
orofile cases arising under the Takings Clause of the Fifth
Amendment to the United States Constitution. PLF attorneys
were counsel of record in Palazzolo v. Rhode Island, 533 U.S.
606 (2001); Suitum v. Tahoe Regional Planning Agency, 520
U.S. 725 (1997); and Nollan v. California Coastal Commission,
483 U.S. 825 (1987). PLF has also participated as amicus
curiae in nearly every major real property takings case heard by
this Court in the last two decades.

Gene Cashman and Athena Sutsos are owners of small
mobile home parks in Cotati, California, which are subject to
that city’s mobile home rent control scheme. Regulations of
this type enable park tenants (who dominate the political
process in small towns like Cotati) to capture cash windfalls
representing part of the value of the mobile home parks in
which they reside. By enacting rent control and promptly
selling their mobile homes in rent controlled parks, these

' All parties have consented to the filing of this brief under the terms
of general consent letters, which have been filed by the parties with
the Clerk of the Court. No counsel for any party authored this brief
in whole or in part, and no person or entity made a monetary

contribution specifically for the preparation or submission of this
brief.

2

tenants acquire part of the value of the park owners’ property,
with no benefit accruing to the community as a whole.
Cashman and Sutsos successfully challenged this scheme as a
regulatory taking in Cashman v. City of Cotati, 374 F.3d 887
(9th Cir. 2004), a decision that relies on a straightforward
application of the substantial advancement takings test from
Agins v. City of Tiburon. Cotati’s petition for rehearing or
rehearing en banc is currently pending before the Ninth Circuit,
where it awaits this Court's disposition of the present case.

Western Manufactured Housing Communities
Association represents 1,700 mobile home park operators. It
is the largest such organization in the United States. The
Association has a vital interest in the issues raised by this case
because its members face those same_ issues
continuously—particularly in California, where mobile home
rent control ordinances are ubiquitous and the state courts are
inhospitable to the claims of park owners to a fair return on
their investments. In most cases, these owners’ only
meaningful avenue of relief from confiscatory rent regulations
is to pursue regulatory takings claims in federal court, relying
on the “substantial advancement” prong of Agins v. City of
Tiburon. If this Court rejects or significantly restricts the
applicability of the substantial advancement standard, the
Association's members will have no effective judicial remedy
for the systematic confiscation of the value of their property via
mobile home park rent control.

Defenders of Property Rights (Defenders) is the only
national legal defense foundation dedicated exclusively to
protecting private property rights. Based in Washington, D.C.,
Defenders was founded as a nonprofit, public interest legal
foundation in 1991. Its mission is to protect vigorously those
rights considered essential by the framers of the Constitution,
and to promote a better understanding of the relationship
between private property rights and individual liberty.
Defenders engages in litigation across the country on behalf of

3

its thousands of members and the public interest to prevent
government incursion into protections guaranteed by the Bill of
Rights. Since its inception, Defenders has participated in every
major property rights case before this Court, including
Palazzolo v. Rhode Island, 533 U.S. 606; Solid Waste Agency
of Northern Cook County v. U.S. Army Corps of Engineers, 531
U.S. 159 (2001); City of Monterey v. Del Monte Dunes at
Monterey, Ltd., 526 U.S. 687 (1999); Phillips v. Washington
Legal Foundation, 524 U.S. 156 (1998); Suitum v. Tahoe
Regional Planning Agency, 520 U.S. 725; Bennett v. Spear, 520
U.S. 154 (1997); Dolan v. City of Tigard, 512 U.S. 374 (1994);
Keene Corp. v. United States, 508 U.S. 200 (1993); and Lucas
v. South Carolina Coastal Council, 505 U.S. 1003 (1992).

Counsel for amici are familiar with the issues in this case
and have reviewed the Brief for Petitioners (Pet. Brf.) and the
amicus brief filed in this matter by the Solicitor General. Amici
believe these briefs incorporate fundamental doctrinal errors
based upon misinterpretations of this Court’s regulatory takings
jurisprudence. Amici further believe that their experience with
regulatory regimes such as the rent control statute at issue in
this case, together with their litigation experience in the issues
involved, their special expertise in regulatory takings law, and
their public interest perspective will assist this Court in
resolving the important issues presented by this case.

INTRODUCTION AND
STATEMENT OF THE CASE

Twenty-four years ago, in Agins v. City of Tiburon, 447
U.S. 255 (1980), a case involving a facial challenge to a
residential zoning ordinance, this Court explained the criteria
for finding such measures unconstitutional under the Takings
Clause of the Fifth Amendment:

The application of a general zoning law to particular
property effects a taking if the ordinance does not

4

substantially advance legitimate state interests . . . or
denies an owner economically viable use of his land.

Id. at 260. Since 1980, this Court has frequently reiterated and
applied the “substantial advancement” prong of Agins as a test
for regulatory takings in cases involving a wide variety of both
facial and as-applied challenges to legislative enactments and
regulatory actions. See Tahoe-Sierra Preservation Council vy.
Tahoe Regional Planning Agency, 535 U.S. 302, 334 (2002);
City of Monterey v. Del Monte Dunes at Monterey, Ltd.,526
U.S. 687 at 704, Dolan v. City of Tigard, 512 U.S. 374 at 385;
Lucas v. South Carolina Coastal Council, 505 U.S. 1003 at
1016; Yee v. City of Escondido, 503 U.S. 519, 534 (1992);
Keystone Bituminous Coal Ass'n. v. DeBenedictis, 480 U.S.
470,485 (1987); Nollan v. California Coastal Commission, 483
U.S. 825 at 834; United States v. Riverside Bayview Homes,
Inc., 474 U.S. 121, 126 (1985). This standard is so thoroughly
ingrained in this Court's protection of individual rights
guaranteed under the Fifth Amendment it has been described as
the Court’s “general test” for a regulatory taking. City of
Monterey, 526 U.S. at 704.

The present case involves the application of the substantial
advancement test by the Ninth Circuit Court of Appeals to
strike down a state law that controls the rent oil companies may
charge to the lessees of their service stations. The ostensible
purpose of the statute, Haw. Rev. Stat. § 486H-10.4, is to hold
down the price of gasoline to consumers. Plaintiff-Appellee
Chevron U.S.A., Inc. (Chevron), sued to have the law declared
unconstitutional as an uncompensated taking of its property in
violation of the Fifth and Fourteenth Amendments to the United
States Constitution.

Chevron initially prevailed on a motion for summary
judgment, the trial court finding that the rent control scheme
failed to substantially advance legitimate state interests as a
matter of law, and therefore violated the Takings Clause. On

5

remand by the Ninth Circuit, a trial was held which again
resulted in a judgment that the rent control law effected a
regulatory taking under the substantial advancement standard.
The trial court found, inter alia, that controlling Chevron’s
station rents will not, as a factual matter, advance the law’s
objective of reducing gasoline prices. Instead, the operative
effect of the law is merely to create a premium in the value of
rent-controlled service stations, that Chevron’s lessees can
capture by selling their leases.

On certiorari to this Court, the State and its amici argue
that the trial court’s inquiry into whether Haw. Rev. Stat. §
486H-10.4 substantially advances legitimate state interests—
which has long been recognized as the appropriate standard for
regulatory takings claims of this sort—should in fact be
regarded as a substantive due process inquiry. Similarly,
rejecting 17 years of Supreme Court precedent, the State and its
amici urge this Court to return to the deferential review of
constitutionally suspect regulations that prevailed prior to
Nollan.

ARGUMENT
I

WHETHER A LAND-USE REGULATION
SUBSTANTIALLY ADVANCES A
LEGITIMATE STATE INTEREST HAS
LONG BEEN—AND SHOULD REMAIN—
THIS COURT’S “GENERAL TEST”
FOR A REGULATORY TAKING

A. The Substantial Advancement Test
Is a Settled, Long-Established, and
Coherent Regulatory Takings Standard

The State of Hawaii and its amicus, the Solicitor General,
have assumed the burden of persuading this Court to jettison 24
years of precedent and repudiate the first prong of Agins v. City

—-

6

of Tiburon, which holds that “[t]he application of a general
zoning law to particular property effects a taking if the
ordinance does not substantially advance legitimate state
interests.” 447 U.S. at 260. Such a sharp break with this
Court's historical jurisprudence would deal a crushing blow to
constitutional protections of the rights of property owners.
Moreover, the arguments that are advanced in support of this
radical revisionism are not supported by careful analysis.

The core insight advanced by the State and the Solicitor
General amounts to nothing more than the self-evident
proposition that, in setting forth the first prong of its takings
test, the Agins Court cited to Nectow v. City of Cambridge, 277
U.S. 183 (1928), a challenge to a zoning ordinance brought
under the Fourteenth Amendment’s Due Process Clause. The
State's implicit reasoning is that, because the language of
“substantial advancement” was previously used in a due process
case, when that terminology is subsequently cited in a
regulatory takings decision, the cited language must remain a
due process standard.

The difficulties with this position are manifold. Perhaps
most crucially, it assumes a doctrinal fastidiousness that never
exists in the real world of constitutional adjudication.
Standards and criteria developed in cases brought under one
Constitutional provision are commonly brought to bear on
issues implicating completely different clauses or even
Amendments, without prompting analysts to protest that these
tests must remain permanently and solely wed to the
applications in which the Court first found them useful. The
use of evaluative standards that seem similar or even identical
does not imply that the Court has confused the Free Exercise
Clause with the Equal Protection Clause, or that it has chosen
to use the same test for both clauses by mistake. See, e.g.,
Nollan, 483 U.S. at 834 n.3:

7

There is no reason to believe (and the language
of our cases gives some reason to disbelieve) that so
long as the regulation of property is at issue, the
standards for takings challenges, due process
challenges, and equal protection challenges are
identical, any more than there is any reason to believe
that so long as the regulation of speech is at issue, the
standards for due process challenges, equal protection
challenges, and First Amendment challenges are
identical.

The migration of standards between the Takings and Due
Process Clauses is especially unremarkable, given the close
historical relationship between the two provisions. On its own
terms, the Takings Clause—like the rest of the Bill of Rights—
applies only against the federal government. It was not until the
Fifth Amendment was deemed incorporated into the Fourteenth
Amendment’s Due Process Clause in 1897 that it became
possible to plead a cause of action against a state or local
governmental entity under the Takings Clause. See Chicago, B.
& O. R. Co. v. Chicago, 166 U.S. 226, 239 (1897).

In the first decades following this development, the fact
that nearly every takings claim also entailed a due process
violation led to a substantial conflation of terminology. As
Justice Stevens has explained, the Court in the early years of the
20th century had “fused the two express constitutional
restrictions on any state interference with private property that
property shall not be taken without due process nor for a public
purpose without just compensation, into a single standard,
Moore v. City of East Cleveland, 431 U.S. 494, 514 (1997)
(Stevens, J., concurring), and “this principle was applied in
Nectow.” Id.

Thus, far from being surprised that Nectow was cited in
Agins, we should be surprised if it were not cited in other
regulatory takings cases—and, in fact, it has been. Even the

8

recently proclaimed “polestar” of the Court’s regulatory takings
jurisprudence, Penn Central, cites Nectow as authority. See
Penn Central Transportation Co. v. City of New York, 438 U.S.
104, 127 (1978) (citing Nectow, 227 U.S. at 188). Of course,
the same objections can be (and have been) raised to Nectow’s
appearance in Penn Central as to its citation in Agins, but the
argument becomes more strained as the underlying enterprise
takes on more clarity. See John D. Echeverria, Does a
Regulation That Fails to Advance a Legitimate Governmental
Interest Result in a Regulatory Taking?, 29 Envtl. L. 853, 857-
58 (1999):

In Penn Central, the Court relied upon due
process, not takings, precedents .... Nectow patently
was not a takings case, but instead involved a due
process claim that the ordinance ‘deprived [the owner]
of his property without due process of law in
contravention of the Fourteenth Amendment.”

It is one thing to cling to a formalistic insistence that each
constitutional provision should have its own neatly
compartmentalized set of doctrines, but it is something else
again to insist that violating these largely imaginary doctrinal
boundaries is grounds for jettisoning this Court’s entire corpus
of regulatory takings law—which is, in fact, precisely the
enterprise the State and the Solicitor General have undertaken.

B. The Pedigree of the Substantial
Advancement Test Stretches Back
Through Penn Central to Pennsylvania Coal

In any event, it isn’t necessary to go back to Nectow to
trace the lineage of Agins’ two-pronged takings test, since its
immediate progenitor is much closer at hand. It has long been
recognized that the takings standards set out in Agins differ only
in terminology from Penn Central's focus on “the character of
the governmental action” and “(t]he economic impact of the
regulation on the claimant.” 438 U.S. at 124. Conceptually, the

9

Agins and Penn Central standards are equivalent. See John D.
Echeverria, Does a Regulation That Fails to Advance a

Legitimate Governmental Interest Result in a Regulatory
Taking?, 29 Envtl. L. at 855:

More than twenty years ago, in Penn Central
Transportation Co. v. New York City (Penn Central),
the Court stated that “a use restriction may constitute
a ‘taking’ if [it is] not reasonably necessary to the
effectuation of a substantial government purpose.”
Two years later, in Agins v. City of Tiburon, the Court
said essentially the same thing: a government action
“effects a taking” if it “does not substantially advance
legitimate state interests.”

See also Jordan C. Kahn, Lake Tahoe Clarity and Takings
Jurisprudence: The Supreme Court Advances Land Use
Planning in Tahoe-Sierra, 26-Fall Environs 33,57 n.160 (2002)
(“the ‘character of government action’ factor in the Penn
Central analysis . . . includes a consideration of whether the
regulation at issue does or ‘does not substantially advance
legitimate state interests’ ”); Victoria Sutton, Constitutional
Taking Doctrine—Did Lucas Really Make a Difference?, 18
Pace Envtl. L. Rev. 505, 509 (2001) (characterizing Penn
Central's “character of the government action” test as “the
progenitor of the ‘substantially advances legitimate state
interests’ test articulated two years later in Agins”); R. S.
Radford, Why Rent Control Is a Regulatory Taking, 6 Fordham
Envtl. L.J. 755, 757 (1995) (“In Agins, the two-part Penn
Central inquiry was recast in terms of whether the challenged
measure: (1) substantially advances legitimate state interests;
or (2) denies the owner economically viable use of the land.”).

Justice Brennan advanced the clearest statement of the
equivalence (indeed, the virtual identity) of the standards set out
by the two cases in his Nollan dissent:

10

Our phraseology may differ slightly from case to
case—c.g., regulation must “substantially advance,” Agins
v. Tiburon, 447 U.S. 255, 260 (1980), or be“reasonably
necessary to,” Penn Central Transportation Co. v. New
York City, 438 U.S. 104, 127, (1978), the government's
end. These minor differences cannot, however, obscure
the fact that the inquiry in each case is the same.

Nollan, 483 U.S. at 845 (Brennan, J. dissenting) (emphasis
added). More recently, Justice Scalia’s majority opinion in
Lucas provided a further refutation of the view that Agins’ first
prong marked a departure from the Court's established takings
jurisprudence:

“Harmful or noxious use” analysis was, in other
words, simply the progenitor of our more
contemporary statements that “land-use regulation
does not effect a taking if it ‘substantially advance[s]
legitimate state interests’ ”. . . . . Nollan, supra, 483
U.S. at 834 (quoting Agins v. Tiburon, 447 U.S. at
260); see also Penn Central Transportation Co.,
supra, 438 U.S. at 127; Euclid v. Ambler Realty Co.,
272 U.S. 365, 387-388, (1926).

Lucas, 505 U.S. at 1023-24.

In fact, as this Court has noted, Agins’ two-pronged
takings inquiry can be traced back not just to Penn Certral, but
to the very font of its modern takings jurisprudence,
Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922):

Justice Holmes rested on two propositions, both
critical to the Court’s decision. First, because it
served only private interests, not health or safety, the
Kohler Act could not be “sustained as an exercise of
the police power.” Second, the statute made it
“commercially impracticable” to mine “certain coal”
in the areas affected by the Kohler Act.

11

Keystone, 480 U.S. at 484. See also George Skouras, Takings
Law and the Supreme Court: Judicial Oversight of the
Regulatory State's Acquisition, Use and Control of Private
Property 117 (1998) (“Justice Holmes, working through
balancing tests, established a set of criteria that continue
unabated until this day.... The criteria in Pennsylvania Coal
were refined in Penn Central.”).

The doctrinal equivalence of Penn Central and Agins is
acknowledged by the more perceptive critics of the substantial
advancement standard, but this only serves to shift their
objections back a step—to Penn Central itself, or in extreme
cases, all the way back to Pennsylvania Coal. See, e.g., John D.
Echeverria, Does a Regulation That Fails to Advance a
Legitimate Governmental Interest Result in a Regulatory
Taking?, at 857-58. With this shift, however, the very
consistency of their argument undermines its credibility. If
Agins’ first prong were, as is sometimes claimed, an isolated
anomaly, it is arguably not too far-fetched to suppose that the
substantial advancement standard might be dismissed as some
sort of doctrinal slip of the pen. But when we realize we are
dealing with a standard that has been deeply ingrained into the
entire corpus of regulatory takings law from the beginning,
nothing less than the modern Court’s protection of the
constitutionally-guaranteed rights of property owners hangs in
the balance.

C. No Phantom “Majority” of the Eastern
Enterprises (Or Any Other) Court
Has Repudiated the Substantial
Advancement Standard

In the face of this Court’s long-established use of the
substantial advancement test to resolve regulatory takings
claims, the State invokes a phantom “majority” that supposedly
backed away from this standard in Eastern Enterprises v-Apfel,
524 U.S. 498 (1998). See Pet. Brf. at 30-32. This remarkable

12

claim, which is recycled from the State's unsuccessful brief to
the Ninth Circuit, is simply ungrounded in reality.

In Eastern, Justice O’Connor’s plurality opinion found a
statute’s creation of retroactive financial liability to be
unconstitutional under the Takings Clause. The plurality did
not cite to Agins, nor did it decide the case under the substantial
advancement standard. Instead, Justice O’Connor applied a
straightforward Penn Central analysis, finding that the character
of the regulation was such that it “singles out certain
employers” based on long-past activities, thereby “implicat[ing]
fundamental principles of fairness underlying the Takings
Clause.” Jd at 537.

Concurring in the result, Justice Kennedy agreed that the
statute was unconstitutional as applied to Eastern, but he would
strike it down “as contrary to essential due process principles,
without regard to the Takings Clause of the Fifth Amendment.”
Id. at 539 (Kennedy, J., concurring in the judgment and
dissenting in part). The crux of Justice Kennedy's concérn was
that the Act did not directly impinge upon any identifiable
property interest. Without a direct link between the impact of
the law and “a specific property right or interest” protected by
the Fifth Amendment, id. at 541, Justice Kennedy felt the
Takings Clause was not implicated. In this context, he worried
that

[t]he imprecision of our regulatory takings doctrine
does open the door to normative considerations about
the wisdom of government decisions. See, e.g., Agins
v. City of Tiburon, 447 U.S. at 260 (zoning constitutes
a taking if it does not “substantially advance
legitimate state interests”).

Id. at 545. But of course, Agins did involve governmental
interference with a traditional, constitutionally cognizable
property interest, and therefore presumably escaped Justice

13

Kennedy's concern about the applicability of the Takings
Clause.

Writing for a four-Justice dissent, Justice Breyer agreed
that “[t]he Constitution’s Takings Clause does not apply.” /d.
at 554 (Breyer, J., dissenting). Like Justice Kennedy, the
dissent was troubled by the plurality’s application of the
Takings Clause to a case that

involves not an interest in physical or intellectual

property, but an ordinary liability to pay money, and
not to the Government, but to third parties.

Id. Like the plurality, however, the dissent did not address the
substantial advancement standard.

In view of these facts, the State’s present effort to concoct
a five-Justice “majority” out of a concurrence and a dissent—
including four Justices who did not so much as mention the
substantial advancement issue—seems puckish at best. That
Justice Kennedy's concurrence in Eastern Enterprises cannot
be construed as a general rejection of the substantial
advancement takings standard is evident from the opinion of the
Court he drafted just eleven months later in City of Monterey v.
Del Monte Dunes at Monterey, 526 U.S. 687. In City of
Monterey, a property owner brought a regulatory takings suit
based on a city’s repeated, unreasonable denials of development
permits. See id. at 695-98. The case went to a jury on a strange
amalgam of Agins and Lucas: the trial court instructed the
panel that takings liability should be found either if the permit
denials deprived the owner of all economically viable use of the
property, or if the city’s actions did not “substantially advance
a legitimate public purpose.” See id. at 700. As a practical
matter, only the latter criterion provided a realistic basis for
takings liability, since the plaintiffs had sold the regulated
property for $4.5 million. The jury returned a general verdict
of liability, see id. at 701, in effect finding a compensable
taking because the City’s successive denials of the plaintiff's

14

permit applications failed to substantially advance legitimate
governmental interests. See, e.g., Daniel R. Mandelker & John
M. Payne, Planning and Control of Land Development: Cases
and Materials 119 (5th ed. 2001) (the City of Monterey trial
court “essentially put the case to the jury on the first prong of
Agins, and because it was a general verdict, it had to be
presumed that the jury had decided on this theory”).

In affirming the finding of a taking, Justice Kennedy's
opinion for the Court repeatedly expressed its satisfaction with
the jury instructions, and with the substantial advancement
inquiry serving as the basis for takings liability. See City of
Monterey, 526 U.S. at 702-07. The Supreme Court's answer to
the City of Monterey’s question was clear: “the trial court's
instructions are consistent with our previous general discussions
of regulatory takings liability.” 526 U.S. at 704. In other
words, Eastern Enterprises notwithstanding, Justice Kennedy's
opinion in City of Monterey expressly reiterated this Court's
traditional understanding that takings liability may properly be
grounded on the failure of land-use regulations to substantially
advance legitimate state interests, going sc far as to characterize
this as “the general test for regulatory takings liability.” Id.
(emphasis added).

With the exception of the State’s counsel, virtually all
commentators have acknowledged that City of Monterey
reaffirms the substantial advancement test as a central element
of the Supreme Court's regulatory takings jurisprudence. See,
e.g., Richard J. Lazarus, Restoring What's Environmental
About Environmental Law in the Supreme Court, 47 UCLA L.
Rev. 703, 720 n.89 (2000) (“[t]he ruling in favor of the property
owner in City of Monterey is especially significant because it
represents the first occasion that the Court has ever upheld a
regulatory takings claiia based just on the so-called first prong
of the regulatory takings test announced in Agins v. City of
Tiburon). This understanding was underscored in the Court’s
most recent regulatory takings decision, Tahoe-Sierra

15

Preservation Council v. Tahoe Regional Planning Agency, 535
U.S. 302, in which the Court enumerated seven alternative
theories under which a development moratorium could give rise
to a regulatory taking, including:

Sixth, apart from the District Court’s finding that
TRPA’s actions represented a proportional response
to a serious risk of harm to the !ake, petitioners might
have argued that the moratoria did not substantially

advance a legitimate state interest, see Agins and
Monterey.

Id. at 334 (emphasis added).

In short, in the half-decade since the Court’s fragmented
decision in Eastern Enterprises, every Justice has written or
joined opinions applying, upholding, or expressly reaffirming
the general applicability of the substantial advancement test to
regulatory takings. Thus, as of its last major land-use takings
decision, the Court is unanimous in its understanding that a
land-use regulation that fails to substantially advance legitimate
state interests does result in a regulatory taking.

REGULATORY TAKINGS CLAIMS BROUGHT
UNDER THE SUBSTANTIAL ADVANCEMENT
STANDARD MUST RECEIVE A HIGHER —
LEVEL OF JUDICIAL REVIEW THAN
SUBSTANTIVE DUE PROCESS CLAIMS

As a corollary to their efforts to relegate the substantial
advancement takings test to a toothless variety of due process
review, the State and its amici also seek to undermine the level
of scrutiny required by this Court in regulatory takings cases.
See Pet. Brf. at 37-50. At issue is No/lan’s footnote 3, which
has been under continuous attack by virtually every level of the

16

regulatory bureaucracy since the day it was enunciated, over 17
years ago:

—

[O]ur opinions do not establish that [takings] stan-
dards are the same as those applied to due process or
equal protection claims. To the contrary, .. . [w]e
have required that the regulation “substantially
advance” the “legitimate state interest” sought to be
achieved, not that “the State ‘could rationally have
decided’ that the measure adopted might achieve the
State’s objective.”

Nollan, 483 U.S. at 834 n.3 (citations omitted).

Obviously, substantial advancement takings claims cannot
both be subjected to deferential review and be expressly
distinguished from the level of scrutiny applied in due process
or equal protection claims. The theoretical significance of this
Court's requirement of heightened scrutiny has been clear to
commentators from the outset. See, e.g., Mark W. Cordes,
Legal Limits on Development Exactions: Responding to Nollan
and Dolan, 15 N. Ill. U. L. Rev. 513, 534 (1995) (noting that
the Dolan “Court's analysis demonstrated a seriousness of
review to protect [against] unjustified intrusions on property
interests”); Page Carroccia Dringman, Comment, Regulatory
Takings: The Search for a Definitive Standard, 55 Mont. L.
Rev. 245, 253 (1994) (“Nollan v. California Coastal
Commission signaled the United States Supreme Court's
movement away from a ‘rubber stamp’ or superficial
application of the rational basis test to a more rigorous standard
ol review”).

This Court's application of heightened scrutiny under
Agins’ first prong is not an aberration, nor is it an arbitrary or
mistaken appendage to takings law. Rather, the requirement of
an elevated standard of review is implied by the very existence
of a cause of action for regulatory takings. As the Tahoe-Sierra
Court noted, regulatory takings differ in nature from physical

17

occupations or invasions, either directly by the government or
by third parties acting under governmental authority. See 535
U.S. at 322-23. It is this very difference that gives rise to the
need for heightened scrutiny of regulatory takings claims.
Physical invasions or occupations of private property by the
state are normally obvious to a fact finder employing even a
minimal standard of review. The only question in such cases is
whether just compensation has been paid—again, an inquiry
that can be conducted on the level of an evidentiary hearing,
without need for probing review on the part of the court. The
situation is completely different when the government,
inadvertently or by design, accomplishes the same effect as if
it had taken title to private property, but without acknowiedging
either the usurpation or the requirement to compensate. As the
Ninth Circuit Court of Appeals has observed:

It makes considerable sense to give greater deference
to the legislature where it deliberately resorts to its
eminent domain power than where it may have
stumbled into exercising it through actions that
incidentally result in a taking.

Hall v. City of Santa Barbara, 833 F.2d 1270, 1280 n.25
(1986). In the successive two-part inquiries set out in
Pennsylvania Coal, Penn Central, and Agins, this Court has
recognized the necessity of examining the nature and impact of
challenged regulations to determine whether they are the
functional equivalent of seizures, pressing private property
“into some form of public service under the guise of mitigating
serious public harm,” but without payment of compensation.
Lucas, 505 U.S. at 1018. Such an inquiry, by definition,
requires going behind the surface of the regulatory rationale—
i.€., it requires an elevated level of scrutiny.

But the heightened scrutiny requirement implicit in Agins’
first prong does not flow automatically from the mere
invocation of the standard; applying meaningful review of state

18

action requires an act of judicial will. This responsibility can
easily be evaded. The most common way to convert the
substantial advancement standard into deferential review 1s to
characterize it as merely requiring a rational relationship
between regulatory ends and means—since requiring means-
ends consistency is just another way of describing rational basis
review.

In Nollan, this Court did inquire into the relations.ip
between regulatory ends and means. Far more important,
however, was No//an’s emphasis on the need for a close causal
nexus between the burdens imposed by the regulations, and the
social costs that would otherwise be imposed by the property's
unregulated use. As Professor McUsic points out,

[The Nollan] Court described the “substantially
advance” test as one that examines the proportionate
relationship between the amount of public harm
caused by the owner and the regulatory burden
imposed: a cause-effect test. ...

The second meaning of the substantially
advance requirement—the cause-effect test—focuses
on whether the burden of a regulation is properly
placed on a particular owner.

Molly S. McUsic, Looking Inside Out: Institutional Analysis
and the Problem of Takings, 92 Nw. U—L-Rev. 591, 602
(1998). It is the requirement of a cause-effect nexus, not just an
ends-means fit, that offers real protection against the imposition
of unjustified or disproportionate burdens on individual
property owners. This fact was emphasized by Justice Scalia in
his separate opinion in Pennell v. City of San Jose, 485 U.S. 1
(1988), in which he explained:

Traditional land-use regulation (short of that which
totally destroys the economic value of property) does
not violate this [substantial advancement] principle

ee —- -- —

- eS ~_—

19

because there is a cause-and-effect relationship
between the property use restricted by the regulation
and the social evil that the regulation seeks to remedy.

Id. at 20 (Scalia, J., concurring in part and dissenting in part).

The crucial importance of applying heightened scrutiny in
conjuiiction with the substantial advancement test has never
been more dramatically illustrated than by a pair of cases
springing from a common factual setting: Mayhew v. Town of
Sunnyvale, 964 S.W. 2d 922 (Tex. 1998), and Dews v. Town of
Sunnyvale, 109 F. Supp. 2d 526 (N.D. Tex. 2000). In Mayhew,
a proposed residential development was prohibited after years
of negotiations on the grounds that it would be inconsistent
with the town’s minimum lot size requirements. The property
owners sued, alleging that the town’s actions failed to
substantially advance legitimate state interests. A trial court
agreed, finding that the town’s denial of the Mayhews’ project

-

_“does not bear any factual relationship to valid planning

principles or objectives.” 964 S.W.2d at 927. The state
supreme court reversed, applying a deferential level of scrutiny
to conclude that the permit denial advanced Sunnyvale’s
legitimate interest in maintaining “the overall character of the

community and the unique character and lifestyle of the Town.”
Id. at 935.

Following a second permit denial, the Mayhews’
successors in interest sued in federal district court on equal
protection grounds. In contrast to the Texas Supreme Court, the
federal judge applied a heightened standard of review and found
the town’s building restrictions were racially motivated—
designed primarily to prevent minorities from moving into the
community. Dews, 109 F. Supp. 2d at 568-71. In other words,
by probing beneath the town’s superficial rationale, the federal
court was able to determine that what local officials meant by
preserving the “unique character and lifestyle” of the town, was
keeping it White. The official rationalizations, unquestioningly

20

accepted under the state court's deferential review, were found
to have comprised merely “a facade in an unsuccessful attempt
to shield [the Town] from liability for excluding both African-
Americans and affordable housing from Sunnyvale.” /d. at 572.

This sobering example should not be taken to mean that
governmental bad faith is the sole rationale for a meaningful
standard of review in takings cases. The nature and effect of
restrictive land-use regulations must be subjected to more than
bare rationality review if courts are to determine whether any
such measure effectively takes private property for public use,
no matter how well-intentioned it may be. Nevertheless, as was
clear to the Founders and has been demonstrated repeatedly
throughout our Nation's history, good faith on the part of the
regulatory bureaucracy can never be presumed. Abandoning
heightened scrutiny for the deferential review urged on this
Court by the State and the Solicitor General would be
tantamount to shifting every property owner in the United
States from the position of the plaintiffs in Dews, to those in
Mayhew.

——

THIS COURT’S SUBSTANTIAL
ADVANCEMENT TAKINGS ANALYSIS
IS ESSENTIAL TO EXPOSE AND REMEDY
NAKED MAJORITARIAN RENT SEEKING,
SUCH AS IS EVIDENCED IN MOBILE
HOME PARK RENT CONTROL

Mobile home park rent control offers a paradigm example
of the capture of local legislative processes by rent-seeking
majorities, whose eagerness to transfer the assets of property-
owning minorities to themselves cannot be checked except by
vigorous judicial review. This type of regulation embodies an
especially malevolent breakdown in the political process,

because once tenant-lobbyist-legislators succeed in imposing

controls, they can immediately “cash out,” capturing the full

21

present value of below-market rents by selling their mobile
home coaches in place in rent-controlled parks. See, e.g.,
Richard A. Epstein, Yee v. City of Escondido: The Supreme
Court Strikes Out Again, 26 Loy. L.A. L. Rev. 3, 10 (1992)
(Mobile home park rent control “increases the returns to local
renters from the passage of the rent control statute by allowing
them to capture the full stream of future periodic expropriations
from the landlord.”’).

The mechanism that facilitates this is both obvious and
simple enough to have been employed by hundreds of tenant-
dominated localities in California. Mobile home park tenants
normally own their own coaches, which sit on “pads” owned by
the mobile home park. Their housing costs are therefore the
sum of mortgage payments on the coach, plus rent payments on
the underlying land. Rent control obviously reduces the second
component, but in addition, the assurance of below-market rents
in the future is capitalized into the resale value of the coach.
This “premium,” or incremental resale value attributable to rent
control, represents the present value of the future stream of
financial benefits tenants will receive from the regulations,
discounted at an appropriate rate. It is an amount equal to the
decrease in value of the underlying land because of rent control,
and therefore is the equivalent of a direct cash transfer from
park owner to tenant, effected via the legisiative process. See,
e.g., Werner Z. Hirsch & Joel C. Hirsch, Legal-Economic
Analysis of Rent Controls in a Mobile Home Context:
Placement Values and Vacancy Decontrol, 35 UCLA L. Rev.
399, 423-24 (1988).

The capitalization into coach prices of the monetary value
of mobile home park rent control has been well documented
empirically. As long ago as 1988, research by the
internationally reputed economist, Dr. Werner Hirsch, showed
that California mobile home park tenants used rent control to
transfer to themselves a part of the value of mobile home parks
equal to 32% of the resale value of their coaches. See Werner

22

Z. Hirsch, An Inquiry into Effects of Mobile Home Park Rent
Control, 24 J. Urb. Econ. 212, 223-24 (1988). A second study
published more than a decade later confirmed that these
regulations were still being successfully used by tenant
majorities to transfer to themselves the cash value of mobile
home park assets. See Werner Z. Hirsch & Anthony M. Rufolo,
The Regulation of Immobile Housing Assets Under Divided
Ownership, 19 Intl Rev. L. & Econ. 383, 396 (1999). Again in
2002, an empirical study by a University of California
economist showed that in one upscale California community,
tenant-legislators were able to pocket almost $61,000 per coach
in confiscated asset value as a direct result of enacting mobile
home park rent control. See John M. Quigley, Economic
Analysis of Mobile Home Rent Control: The Example of San
Rafael, California (Sept. 12, 2002). The most recent scholarly
research on this topic was conducted by economists at the
prestigious Lusk Center for Real Estate at the University of
Southern California. Like Hirsch, Hirsch & Rufolo, and
Quigley, these researchers confirmed that mobile home park
rent control is a powerful and effective mechanism for
confiscating the value of park land and transferring it to tenants
who then convert it to cash. See David Dale-Johnson,
Yongheng Deng, Peter Gordon & Diehang Zheng, An
Examination of the Impact of Rent Control on Mobile Home
Prices in California, Working Paper No. 2004-1010, Lus!
Center for Real Estate, University of Southern California (Nov.
1, 2004).

This confiscation by tenants of the value of park owners’
land was initially challenged as a taking under the “permanent
physical occupation” theory of Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419 (1982). The Ninth
Circuit agreed with this analysis, striking down a mobile home
rent control scheme in Hall v. City of Santa Barbara, 833 F.2d
1270. Significantly, the court of appeals went beyond the
physical taking issue presented by the plaintiffs, to consider

23

whether Santa Barbara’s ordinance could be said to
substantially advance legitimate state interests—and found that
it could not. See id. at 1280. Because new tenants would
receive no financial benefit from rent control, having paid its
full cash value to the previous coach owners, the Hall court
found that the law “may well hinder” its objective of alleviating
a “critical shortage of low and moderate income housing.” /d.
at 1280-81.

The successful Hail litigation triggered a number of
lawsuits challenging the constitutionality of mobile home rent

~ control in California. In 1992, one such action, Yee v. City of

Escondido, 503 U.S. 519, was accepted for review by this
Court. Justice O’Connor’s majority opinion focused on the
legal-theoretical shortcomings of applying the Loretto physical
takings model to rent control. The Court recognized and
addressed the effect of Escondido’s ordinance in enabling
tenant-legislators to capture the monetary value of the
regulations in the resale price of their coaches. See id. at 530.
Yet, while acknowledging that such an explicit majoritarian
wealth transfer might fall “within the scope of our regulatory
taking cases,” id. at 527, the Court rejected the park owners’
argument that the tenants’ capture of the value of occupying the
plaintiffs’ property effected a physical taking. Perhaps most
significantly, Justice O’Connor went on to add:

This effect might have some bearing on whether the
ordinance causes a regulatory taking, as it may shed
some light on whether there is a sufficient nexus
between the effect of the ordinance and the objectives

it is supposed to advance.

Id. at 530 (citing Nollan, 483 U.S. at 834-35). This is, of
course, a reference to the substantial advancement takings
standard, already cited by the Ninth Circuit as an alternative
basis for takings liability in Hall. Yet despite the urging of
Judge Bork’s brief for the petitioners and an amicus brief filed

24

in their support by Pacific Legal Foundation, the Court declined
to consider the merits of a regulatory takings claim in Yee, on
the technical grounds that this question had not been presented
in the Yees’ petition for certiorari. See id. at 533.

The first response to Yee’s seeming invitation came in
Richardson v. City and County of Honolulu, 124 F.3d 1150 (9th
Cir. 1997). Typically, there is divided ownership of
condominiums on Oahu and the underlying land. The
ordinance at issue in Richardson limited land-rent increases and
specifically provided that the below-market rents were
transferable, thereby facilitating capture and capitalization of
the financial benefits of rent control by condominium residents.
As in the analogous case of mobile home parks, the Ninth
Circuit recognized that “[i]ncumbent owner occupants who sell
to those who intend to occupy the apartment will charge a
premium for the benefit of living in a rent controlled
condominium.” /d. at 1166. Drawing on Yee, the court of
appeals went on to note that this feature of the ordinance
prevented it from substantially advancing legitimate
governmental interests:

The conveyance provision, as explained above
{facilitating the capitalization and capture of the
monetary benefits of rent control], vitiates the cause-
and-effect relationship between the preperty use
restricted (rent rates) and the social evil the Ordinance
seeks to remedy (lack of affordable housing).

Id. at 1165.

f
A similar analysis was subsequently applied in Chevron

U.S.A. Inc. v. Cayetano, 224 F.3d 1030 (9th Cir. 2000), the
immediate forerunner of the present case before the Court.
However, the Ninth Circuit found that summary judgment had
been improperly granted because of the existence of conflicting
expert testimony on whether the premium created by the
regulations could be capitalized and captured by the dealers, or

/

25

whether Chevron could offset this effect by adjusting the
wholesale price of its gasoline. At this point the factual dispute
in Chevron diverges from the mobile home park paradigm,
since in the latter case there is no possibility of a secondary,
offsetting revenue flow between owners and tenants.

Meanwhile, independently of the Chevron litigation, a
Richardson-based regulatory takings challenge to a mobile
home park rent control scheme came before the Ninth Circuit.
In 1998, the voters of the City of Cotati terminated years of
litigation by repealing that city’s general rent control ordinance.
But no sooner had the electorate voted to remove rent control
from the books, than the city council adopted a new measure
that applied rent control exclusively to mobile home parks. The
city’s three park owners, including the present amici Gene
Cashman and Athena Sutsos, filed suit under a Richardson-
style substantial advancement takings theory. This case,
Cashman vy. City of Cotati, 374 F.3d 887, reached the Ninth
Circuit in 2004.

In a decision that closely tracks the legal analysis of
Richardson, the Cashman panel reversed a trial court’s ruling
that Cotati’s new rent ordinance passed constitutional muster,
and held that an earlier order granting summary judgment to the
park owners should be reinstated. The panel noted the case’s
factual similarity to Richardson, which was also decided on

summary judgment:

Like in Richardson, there is no dispute that Ordinance
No. 680 does not on its face prevent mobilehome
tenants from capturing a premium. There is separate
ownership of the mobilehome coaches and the
underlying land, controlled rent, and the ability of
incumbent tenants to sell their mobilehomes subject
to this controlled rent. This creates the possibility of

26

a premium, which undermines the City’s interest in
creating or maintaining affordable housing.

Cashman vy. City of Cotati, 374 F.3d 887, 899 (2004).

Moreover, the Cashman court pointed to the absence of
extraneous variables such as were present in Chevron, that
could potentially prevent Cotati’s tenants from capitalizing and
capturing the rent control premium.

On August 3, 2004, the City of Cotati filed a petition with
the Ninth Circuit seeking rehearing or rehearing en banc, once
again urging rejection of the substantial advancement standard
and heightened scrutiny of regulatory takings claims. This
petition remains pending, presumably awaiting this Court's
determination of the present case.

It is essential that this Court maintain the vitality of the
substantial advancement test if there is to be any justice for
victims of majoritarian rent-seeking such as Gene Cashman and
Athena Sutsos. Under a deferential due process standard, the
constitutional rights of Cashman, Sutsos, and hundreds of other
mobile home park owners in California will be worth no more
than those of the plaintiffs in Mayhew.

IV

THE CORRECT APPLICATION OF
THE SUBSTANTIAL ADVANCEMENT
STANDARD IS A STRAIGHTFORWARD
EXERCISE OF THE LEGITIMATE
FUNCTION OF JUDICIAL REVIEW

The radical position advanced by the State and the Solicitor
General in this case comprises a protest against this Court's
fundamental approach to regulatory takings analysis—and
indeed, against the very concept of regulatory takings. The
argument to relegate Agins’ first prong to a due process inquiry
may seem more plausible, because it appears to be more

27

limited, than calls for overruling Penn Central and
Pennsylvania Coal, or for the outright elimination of regulatory
takings as a viable constitutional claim. Nevertheless, since the
substantial advancement test or its conceptual equivalent has
been an essential element of this Court’s takings jurisprudence
since its inception, appeals to eliminate this standard fit easily
within the broader assault on regulatory takings per se. The
underlying theme is that courts should not apply the Takings
Clause in any situation »t involving outright physical
appropriations:

What is wrong with a simple reading of the Takings
Clause that would apply it to occasions when the
government actually physically takes and uses the
land in question? What limitations could there then
be on the government’s overreaching by regulation?
What should a court do when the government goes too
far? If “goes too far” means the same thing as
interfering with due process rights in property, then
the more consistent, predictable, and traditional result
would be to strike down the regulation as an
unconstitutional denial of due process.

Kenn¢th Salzberg, Rights with Responsibilities Land Use Law
Symposium: “Takings” as Due Process, or Due Process as
“Takings "’?, 36 Val. U. L. Rev. 413, 418 (2002).

Of course, what's “wrong” with eliminating the doctrine of
regulatory takings was spelled out by Justice Brennan in his
dissent in San Diego Gas & Electric Co. v. City of San Diego,
450 U.S. 621 (1981), the first opinion to employ the term,
“regulatory taking.” In that case, the California Supreme Court
adopted the rule proposed by the passage above: a land-use
regulation can never violate the Takings Clause, but at worst
may be invalidated as a violation of due process. See id. at 621.
As Justice Brennan pointed out, invalidation is hardly an
adequate remedy for a plaintiff who (in that case) was deprived

28

of the use of its property for seven years. At least equally
important, the unavailability of a regulatory taking claim
encourages government agencies to promptly adopt new
regulations whenever one is struck down on due process
grounds, to maintain oppressive and unconstitutional
restrictions indefinitely. Justice Brennan brought this point
home by quoting extensively, in his San Diego Gas dissent,
from a tract circulated by a California city attorney, light-
heartedly urging his colleagues to do just that. See id. at 655-
57.

A few of the staunchest regulatory partisans have directly
repudiated Justice Brennan's reasoning, insisting that
compensation under the Takings Clause should never be
required for land-use regulations, no matier how draconian or
basely motivated. See, e.g., Norman Williams, et al., The White
River Junction Manifesto, 9 Vt. L. Rev. 193, 193-97 (1984).
More commonly, however, as in the case at bar, the imposition
of regulatory takings liability is rejected on more abstract
grounds: close judicial review of legislative or administrative
actions is said to undermine the separation of powers, threaten
the principle of democratic self-government, be contrary to the
plain language of the Drafters, or signal a return to
“Lochnerism.” See, e.g., Pet. Brf. at 39; Brf. for United States
at 12-13. At this level of generality, however, these arguments
run aground on the commonplace observation that the
Constitution was intended to check majoritarian excesses, and
interpreting the document's proper application to the other two
branches of government has been an essential attribute of the
judiciary since Marbury v. Madison, 5 U.S. (1 Cranch) 137
(1803). See also Alexander M. Bickel, The Least Dangerous
Branch, 1-14 (2d ed. 1986) (critiquing the argument for judicial
review flowing from Marbury). As for the bogey of Lochner,
no supra-textual normative charter is required for courts to
administer the straightforward protections of property owners
that animate the Fifth and Fourteenth Amendments. The proper

29

role of a court applying the substantial advancement test to
takings claims has seldom been expressed more clearly than by
Chief Judge Loren Smith of the Court of Federal Claims:

In takings claims the judge does not sit as super
legislator or executive, intent on preventing regulation
that “goes too far,” as a facile reading of Justice
Holmes might imply. The job of the court is to deal
with a concrete claim, by an aggrieved person or
persons, that their Constitutional rights under the Fifth
Amendment have been violated by some
governmental action. The court must proceed to
analyze this claim, as any other legal claim, regardless
of the consequences to government policy.

Hage v. United States, 35 Fed. Cl. 147, 150-51 (1996).

In the final analysis, courts engaged in the proper
application of the substantial advancement test are doing no
more than performing their responsibility under our
constitutional system of checks and balances. As the majority
of this Court’s Justices noted in Eastern Enterprise, the first
requisite for the application of this standard is the existence of
a discrete, constitutionally protected property interest. Once
that threshold is met, the test resolves to a two-part inquiry: (1)
Is the regulation designed to mitigate some public harm that
would otherwise be caused by the unregulated use of the
property in question? (2) Does the regulatory scheme single out
some small group of property owners to bear a burden that
should, in fairness and justice, be borne by the public as a
whole? See Armstrong v. United States, 346 U.S. 40, 49
(1960). If the answer to the first inquiry is negative, or if the
answer to the second inquiry is affirmative, the regulatory
scheme in question fails to substantially advance legitimate
state interests “within the meaning of our regulatory takings
doctrine,” City of Monterey, 526 U.S. at 721 (emphasis added),
and thereby violates the Takings Clause.

30

CONCLUSION

For all the reasons set forth above, the opinion of the court
below should be AFFIRMED.

DATED: December, 2004.

Respectfully submitted,

NANCIE G. MARZULLA R.S. RADFORD
Of Counsel Counsel of Record
Defenders of Property Rights Pacific Legal Foundation
1350 Connecticut Avenue 3900 Lennane Drive, Suite 200
Suite 410 Sacramento, California 95834
Washington. DC 20036 Telephone: (916) 419-7111
Telephone: (202) 822-6760 Facsimile: (916) 419-7747

Facsimile: (202) 822-6774

Counsel for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0032%3A25. Public record. Not legal advice.