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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0032%3A27

## Record

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

## Text

| SANT 4 20085
No. 04-163 \_OPFICE OF THE CLERK |

In the
Supreme Court of the Anited States

LInDA LINGLE, GOVERNOR OF HAWAII, ET AL.,
Petitioners,
Vv.

CHEVRON U.S.A. INc.,
Respondent.

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

BRIEF OF AMICI CURIAE SMALL PROPERTY
OWNERS OF SAN FRANCISCO INSTITUTE, SAN
FRANCISCO APARTMENT ASSOCIATION,
CALIFORNIA APARTMENT ASSOCIATION and
SAN FRANCISCO ASSOCIATION OF REALTORS IN
SUPPORT OF RESPONDENT, CHEVRON U.S.A. INC.

Paut F. UTRECHT
Counsel of Record

Law Orrices OF Pau F. Utrecut
235 MONTGOMERY STREET

Suite 1130

SAN Francisco, CA 94104

(415) 956-8100

Becker Gallagher Legal Publishing, Inc. 800.890.5001

TABLE OF CONTENTS

re eee ea dees eo ON ee wae Os i
CE ee ee ee eee il
RE a 1
EE ee ee 3
eed sae ia ine ae eee ew ee ee ee 6

I. THE STATE OF HAWAII PRESENTS NO
REASON FOR THIS COURT TO OVERRULE
ITS DECISIONS UNDER THE SUBSTANTIAL
ADVANCEMENT TEST ............2.-. 6

A. The Takings Clause Does Not Prohibit
Government Action; It Ensures that No Group
is Singled Out to Bear the Cost of a Public
i seceuecten be caches eee ee es 9

B. Even If Invalidation Were the Wrong Remedy
in this Case, That Does Not Affect the Issue of
Whether Heightened Scrutiny Is Required by
the Fifth Amendment ................ 11

Il. HEIGHTENED SCRUTINY IS NECESSARY TO
INSURE THAT PUBLIC COSTS ARE NOT
SHIFTED TO PARTICULAR PROPERTY
OWNERS UNDER THE GUISE OF ORDINARY
ECONOMIC REGULATIONS ............ 14

a he 19

ii
TABLE OF AUTHORITIES
CASES
Agins v. Tiburon, 447 U.S. 255 (1980) ........ 6, 7,9

Armstrong v. United States, 364 U.S. 40 (1960) .. 10, 19

Babbitt v. Youpee, 519 U.S. 234 (1997)... 2.2.2... 12
Block v. Hirsh, 256 U.S. 135 (1921) ............. 14
Cwynar v. San Francisco,

90 Cal. Agpp.4ah G37 GAGE) . ww eee ccuueueeee 3
Dolan v. Tigard, 512 U.S. 374 (1994) ......... passim
Drouet v. Superior Court, 31 Cal.4th 583 (2003) ..... l
Eastern Enterprises v. Apfel,

504 U.S. G56 (ISTED . we cece teen eee 15, 16
Ehrlich v. Culver City, 12 Cal.4th 854 (1996) ....... 17
First English Evangelical Lutheran Church v. Los Angeles,

462 U.S. 306 (1967) .. ec cesses ue eee 10, 12
Kelo v. New London, No. 04-108 ............... 11

Lochner v. New York, 198 U.S. 45 (1905) . 4, 7, 8, 10, 11

Lucas v. South Carolina Coastal Council,
SOS U.S. KGS (Seen occ ecaee ee 4,6, 7,15

New State Ice Co. v. Liebmann, 285 U.S. 262 (1932) .. 11

Nollan v. California Coastal Commission,

EE Es ceccesecccc cc « passim
Parking Ass'n of Georgia, Inc. v. City of Atlanta,

WE BUUDQNSED ccc ccc cece cece cece. 17
Pennsylvania Coal Co. v. Mahon,

ccc cece. 4,9, 14
San Remo Hotel v. San Francisco,

27 Cal.4th 643 (2002) ......... I 7)
San Remo Hotel v. San Francisco, No. 04-340 ...... l
State Oil v. Kahn, 522 U.S. 3 (1997) ............. 7

Tom v. San Francisco, 120 Cal.App.4th 674 (2004) .. 1-3

Town of Flower Mound v. Stafford Estates, Ltd. ,

DEEP occ ccc ccccesrccccccs 16
CONSTITUTIONAL PROVISION
EE Cec c cc cece cceccces passim
OTHER AUTHORITY

Fred R. Shapiro, The Oxford Dictionary of American
Legal Quotations 401 (Oxford Univ. Press 1993) .. 13

1
STATEMENT OF INTEREST

Small Property Owners of San Francisco Institute, San
Francisco Apartment Association, California Apartment
Association and San Francisco Association of Realtors submit
this amici curiae brief supporting Chevron USA, Inc.'

The Small Property Owners of San Francisco Institute is
a non-profit organization dedicated to the fair treatment of
small property owners in San Francisco. The Institute was
recently founded to expand upon the efforts of Small Property
Owners of San Francisco (“SPOSF”), whose members
typically own buildings with two to six apartments. SPOSF
together with SFAA and SFAR recently has defeated a local
ordinance prohibiting property owners from living in their
own properties. Tom v. San Francisco, 120 Cal.App.4th 674
(2004). SPOSF has also filed amicus briefs in the California
courts. E.g., Drouet v. Superior Court, 31 Cal.4th 583
(2003). Most recently, the Institute joined the Washington
Legal Foundation in filing an amicus brief in San Remo Hotel
v. San Francisco, No. 04-340. The Institute also conducts
education, outreach, and research programs designed to help
small property owners understand and protect their rights, and
works to help San Francisco’s residents understand the
societal costs of restrictive regulations and rent control.

The San Francisco Apartment Association (“SFAA”) has
been a non-profit trade association since 1917. SFAA’s 2,700
‘members own small to medium-sized apartment buildings in

' The parties have filed letters consenting to the filing of this amici
curiae brief. No counsel for any of the parties authored any part
of this brief. No person or entity other than the amici filing this
brief has made any monetary contribution to the preparation or
submission of this brief.

2

San Francisco with more than 60,000 rental units. SFAA
defends its members by challenging unfair local government
regulations, has prosecuted several actions, e.g., Tom v. San
Francisco, 120 Cal.App. 4th 674 (2004)(successful challenge
to ordinance prohibiting owner occupancy of property), and
has filed amicus briefs in the California courts. SFAA also
advises its members concerning the extraordinarily complex
and growing regulations imposed by the City and County of
San Francisco.

The California Apartment Association (“CAA”) is the
largest statewide rental-housing trade association in the United
States, with a diverse membership of 50,000 rental property
owners and managers ranging from California’s largest
property management companies to individuals with a single
rental unit, which control nearly two million rental units in
California. CAA provides a voice for rental property
providers throughout California, and encourages the fair,
ethical, and professional operation of rental housing.

The San Francisco Association of Realtors (“SFAR”)
(formerly the San Francisco Real Estate Board) was founded
as a non-profit association on February 6, 1905. It antedates
the National Association of Realtors and the California
Association of Realtors. It actively participated in the
formation of both of these organizations. SFAR presently
represents more than 4,200 members, most of whom are
active residential real estate brokers and agents. It is dedicated
to providing service to its membevs, the community, and the
public at large. SFAR was founded upon the principle that
the wise utilization of real property is fundamental to the
growth and survival of this country. To that end, it promotes
policies that lead to the highest and best use of land, the
safeguarding of property rights, equal opportunity in housing,
and professional competence. SFAR actively lobbies local

3

government in this regard and when necessary and appropriate
it properly challenges local ordinances. It joined with SFAA
and SPOSF in Tom v. San Francisco, 120 Cal.App.4th 674
(2004). It took the lead in Cwynar v. San Francisco, 90
Cal.App.4th 637 (2001), a takings challenge to a local
ordinance that limited the occupancy rights of owners of
residential real property. SFAR joins in filing this amicus
brief to advance the interest in fair judicial scrutiny under the
United States Constitution of local laws and regulations that
so diminish the bundle of sticks that is ownership as to effect
a taking.

SUMMARY OF ARGUMENT

Amici file this brief because the constitutional issues
raised by this case are poorly presented by a fight waged by
a multi-national corporation with billions of dollars and a state
with millions of taxpayers. Unlike the property owners who
will be most affected by the decision in this case, Chevron can
afford to protect itself by using its Tesources to influence the
political process.

The consequences of the constitutional issue are best
illustrated by the millions of property owners who are
targeted by cities and states to pay the costs of public goods
that should be borne by the public as a whole. The vast
majority of those property owners cannot protect themselves
in the political process and are, accordingly, targeted by cities
and states to pay for problems that they did not cause and did
not exacerbate. It is all too easy for legislators to exact funds
from the few, rather than explain tax increases to the voters.
And, with enormous budget deficits, state and local
governments are increasingly reaching for easy options.

4

The appeal of such easy options was predicted by Justice
Oliver Wendell Holmes more than 70 years ago, when this
Court held that the police power to regulate property must be
limited by the courts under the Fifth Amendment:

If instead, the uses of private property were subject to
unbridled, uncompensated qualification under the
police power, “the natural tendency of human nature
[would be] to extend the qualification more and more
until at last private property disappear[ed]” .

Luéas v. South Carolina Coastal Council, 505 U.S. 1003,
1014 (1992), quoting Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 415 (1922).

Hawaii seeks to preserve and protect those easy options,
and asks this Court to reverse its prior decisions in order to
give state and local governments that luxury. In Hawaii’s
view, any meaningful judicial review of its legislation under
the decades-old substantial advancement test would amount to
a return to the Lochner era. Hawaii raises the specter that
judicial review of legislation that imposes public costs on a
few private property owners will transform the courts into an
unelected, super-legislature.

That argument is wrong. No decision of the courts under
the Takings Clause could ever prohibit Hawaii’s legislature
from acting in its own perception of the public good. The
Takings Clause requires only that Hawaii’s taxpayers pay the
costs of regulations that go too far. Indeed, that is the only
question in this case, and the lower courts properly held that
Hawaii may not single out two property owners to pay the
entire cost of this attempted solution to a public problem. The
cost should be borne by the public as a whole. ~

5

In short, this is an unusual case that presents the usual
problems. Here, Hawaii has chosen to regulate Chevron’s
property, requiring Chevron to subsidize its gasoline station
operators. Hawaii's stated purpose was to reduce the price of
gasoline to the consumer for the public good. But, the law’s
failure to advance that purpose demonstrates that Hawaii’s
real (if unstated) purpose was to provide a subsidy for local
gasoline station operators at Chevron’s expense, and that is a
cost that the public should bear.

The State argues, however, that the courts may not even
evaluate the legislation under the substantial advancement test.
The State claims that if the courts ask whether a legislative
decision to subsidize gasoline station operators at the expense
of two property owners substantially advances a legitimate
government purpose, the legislative heavens will fall. And,
Hawaii stretches the argument even further. As Hawaii

‘ould strike the “balance” between legislators and the courts,
the courts must give legislators free rein to reduce their
burgeoning deficits and appease their taxpayers by imposing
the costs of public programs on small groups of property
owners.

This Court has long disagreed. The issues raised by
Hawaii have long been foreclosed by decisions of this Court
establishing the substantial advancement test. Nothing new is
offered by Hawaii. Contrary to Hawaii’s claims, this Court’s
substantial advancement decisions have not transformed the
courts into super-legislatures. Indeed, the substantial
advancement test makes the courts precisely what they should
be: guardians of the Constitution. :

In this case, the lower courts merely required, as the
Takings Clause demands, that Hawaii not impose the cost of
this regulation on Chevron. If this law is invalidated because

6

the State chooses not to pay that cost, that does not mean that
the courts have imposed their own economic policies. The
State is free, and remains free, to adopt economic regulations
that its legislators believe will create a public benefit, as long
as they do not impose the cost of those decisions on a few
property owners, rather than Hawaii’s taxpayers as a whole.

In sum, while Chevron may not be the most sympathetic
beneficiary of the Fifth Amendment, this case hardly provides
a reason to revisit this Court’s decisions under the Takings
Clause. When the courts protect the few -- even the richest of
the few -- they send a message that legislators must follow the
Constitution. The lower courts followed this Court’s
decisions and those decisions were right.

ARGUMENT

I. THE STATE OF HAWAII PRESENTS NO REASON
FOR THIS COURT TO OVERRULE ITS DECISIONS
UNDER THE SUBSTANTIAL ADVANCEMENT
TEST :

In Agins v. Tiburon, 447 U.S. 255, 260 (1980), this Court
held that an economic regulation violates the Takings Clause
of the Fifth Amendment if it fails to substantially advance a
legitimate government interest. This Court has repeatedly
reaffirmed that holding. E.g., Lucas, 505 U.S. at 1016.

This Court has also expressly rejected the very argument
that Hawaii makes here -- that Takings Clause claims should
be reviewed under the same test as claims under the Due
Process Clause. Petitioners’ Brief on the Merits (“Pet. Mer.
Br.”) at 14-36; Nollan v. California Coastal Commission,
483 U.S. 825, 834 n. 3 (1987) (takings tests are not “the same
as those applied to due process and equal protection claims”);

—

7

Dolan v. Tigard, 512 U.S. 374, 391 (1994) (reasonable
relationship test does not apply under Takings Clause because
it “seems confusingly similar to the term ‘rational basis’
which describes the minimal level of scrutiny under the Equal
Protection Clause”).

Understandably, the State does not even address the
standards set out by this Court for overturning its own
decisions. E.g., State Oil v. Kahn, 522 U.S. 3, 20 (1997)
(“We approach the reconsideration of decisions of this Court
with the utmost caution.”). Instead, the State offers its fear
that this Court’s Takings Clause decisions will result in a
judicial reviv.i of Lochner v. New York, 198 U.S. 45 (1905).

Hawaii’s arguments have been made and rejected before,
and this legislation giving subsidies to its gasoline station
operators for the “public good” adds nothing to the debate.
As an obvious point, this Court was fully aware of Lochner-
era jurisprudence when it decided Agins, and when it
repeatedly reaffirmed the underlying doctrinal grounds for
Agins’ holding. E.g., Lucas, 505 U.S. at 1016. The Takings
Clause addresses dangers of governmental leveraging that the
Due Process Clause does not address. Nollan, 483 U.S. at
834-837. The substantial advancement test under the Takings
Clause is required to prevent legislators from using
regulations to force a few property owners io bear the general
costs of remedying societal problems. That potential for
mischief cannot be prevented by the political process alone
because it will always be politically popular to impose the
costs of the many on the few.

The last 25 years have shown that, with the substantial
advancement test, this Court struck the appropriate balance
between protecting property rights and allowing sufficient
latitude for governmental regulation of property. Since Agins,

8

there has been no flood of substantial advancement litigation,
let alone a flood of judgments for plaintiffs. Indeed, the
substantial advancement test is sufficiently difficult to meet
that it takes a regulation as extreme as rent control for
gasoline stations to satisfy the test.

Even in the few cases in which regulations have gone too
far, the substantial advancement test presents no serious
conflict between the courts and legislators. A decision under
the Takings Clause does not require the courts to invalidate
legislation as in Lochner. It requires only that the costs of the
legislation be borne by taxpayers, rather than by property
owners who are singled out because they can be forced to
pay. Even when a court rules that legislation is a taking, its
ruling will not prevent any legislature from acting in the name
of the public good. The legislature may proceed as long as it
pays the cost of its legislation.

Hawaii’s predictions of legislative ruin caused by this case
are unwarranted. An affirmance in this Case will not ruin any
legislature, but may ruin the careers of individual legislators
who are willing to disregard their constitutional oaths. In
virtually every city and state, legislators will not be reelected
if their constituents are required to pay for all that they were
promised. For those legislators, the “solution” is increasingly
to force the few to pay for the many, whether by
constitutionally permissible means or not. Here, the lower
courts followed this Court’s decisions and rejected that
“solution.”

For the same pragmatic reasons, this Court should reject
Hawaii's contention that the political process is sufficiently
robust to protect property owners from oppression by the
majority. Pet. Mer. Brf. at 37-42. While that might be true
of Chevron because it has enough resources to do battle in the

9

political arena, it is not true of most property owners. Amici,
for example, do not have Chevron’s resources. SPOSF’s
members typically own 2-6 unit buildings and the members of
SFAA and CAA typically own 5-100 unit buildings. In
jurisdictions like San Francisco, where 65% of the voters are
tenants, the minority of property owners cannot protect
themselves from the political process. Justice Holmes’
prediction that, “the natural tendency of human nature” is to
expand the police power until “private property
disappear[ed],” Pennsylvania Coal, 260 U.S. at 415, has
proven true: “private property . . . is now extinct in San
Francisco[, which] has implemented a neo-feudal regime
where the nominal owner of property must use that property
according to the preferences of the majorit[y]”. San Remo
Hotel v. San Francisco, 27 Cal.4th 643, 692 (2002) (Brown,
dissenting). If property owners are protected at all, it will be
through the courts.

In sum, Hawaii has chosen to make a small case involving
a few gasoline stations into a reason to overrule this Court’s
decisions and give cities and states free rein to violate the
Takings Clause. In the process, Hawaii has shown that the
substantial advancement test is even more vital now than it
was 25 years ago when Agins was decided.

A. The Takings Clause Does Not Prohibit Government
Action; It Ensures that No Group is Singled Out to
Bear the Cost of a Public Burden

The Takings Clause is perhaps the most disarming of the
Bill of Right’s protections of the few against the tyranny of
the many. Unlike the other provisions of the Bill of Rights,
the Takings Clause does not prohibit government action.
Instead, it requires only that government pay just
compensation for its actions, thereby spreading the cost of its

10 an

actions benefitting the public to all taxpayers. As this Court
explained in First English Evangelical Lutheran Church v.
Los Angeles, 482 U.S. 304, 315 (1987):

The basic understanding of the [Fifth] Amendment
makes clear that it is designed not to limit the
governmental interference with property rights per se,
but rather to secure compensation in the event of
otherwise proper interference amounting to a taking.

In the end, the Takings Clause requires only what the
legislators should know is right. When the courts enforce this
constitutional right, they merely “bar Government from
forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a
whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).

Hawaii hopes to transform this Takings Clause case into
an enormous conflict between the courts and legislatures.
According to Hawaii, the substantial advancement test under
the Takings Clause has revived (or will revive) the Lochner
era by allowing unelected judges to second-guess the wisdom
of politically-popular economic regulations. Pet. Mer. Brf.
at 39.

Even as a doctrinal matter, Hawaii’s argument makes no
sense at all. The Takings Clause does not prohibit
government regulations, it simply requires the government to
use tax dollars to accomplish its purpose rather than forcing
a few to pay the cost. First English, 482 U.S. at 315;
Armstrong, 364 U.S. at 49. By contrast, when a government
regulation is found to violate the Due Process Clause, the
government may not continue to enforce the regulation - even
if the government were willing to pay the costs imposed by
the regulation.

11

~- In the Lochner era, judges did use the Due Process Clause
to second-guess legislative decisions and impose their own
economic views. One reason that this Court ultimately
overruled Lochner was to enable each state to try novel (and
thus untested) solutions to economic problems. New State Ice
Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis,
dissenting) (“It is one of the happy incidents of the federal
system that a single courageous state may, if its citizens
choose, serve as a laboratory; and try novel social and
economic experiments without risk to the rest of the
country.”). But, the Takings Clause does not call for judges
to impose their economic views and thereby prevent economic
regulations that are novel. The only issue for the courts under
the Takings Clause is who pays for the novel or experimental
solutions.’ Thus, Hawaii’s point fails at the threshold. Under
the Takings Clause, the courts cannot second-guess legislative
judgments or usurp legislative power. At most, the courts can
direct the state to pay for the cost of their own legislation.
That is, unless -- as in this case -- the government refuses to

pay.

B. Even If Invalidation Were the Wrong Remedy in
this Case, That Does Not Affect the Issue of
Whether Heightened Scrutiny Is Required by the
Fifth Amendment

The State makes much of the fact that the remedy chosen
by the lower courts in this case was to invalidate Hawaii’s
rent control law. The State argues that the invalidation

? Of course, a different issue is presented when a governmental
taking of property is challenged on the ground that it is not for a
public use. In that case, the proper remedy is not compensation,
it is an injunction. This Court is considering the scope of the
public use requirement in Kelo v. New London, No. 04-108.

12

remedy shows that the substantial advancement test is really
a substantive due process test. The State’s underlying premise
is correct: the courts may not unilaterally order invalidation
as the remedy for a taking. Instead, the courts are required to
give the government the option of either paying just
compensation or accepting invalidation of the regulation and
paying temporary takings damages for the time that the
regulation was in effect. First English, 482 U.S. at 321
(“Once a court determines that a taking has occurred, the
government retains the whole range of options already
available - amendment of the regulation, withdrawal of the
invalidated regulation, or exercise of eminent domain.”).

However, it is often quite obvious that the government has
no desire or intention to pay just compensation. In those
cases, this Court has not hesitated to invalidate a regulation
once it was found to be a taking. E.g., Babbitt v. Youpee,
519 U.S. 234, 243-245 (1997).

In this case, Hawaii’s rent control law does not provide
for compensation, nor did the State argue in the lower courts
that the right remedy was an order requiring it to provide
compensation to Chevron. As this Court explained in First
English, “a governmental body may acquiesce in a judicial
declaration that one of its ordinances has effected an
unconstitutional taking of property; the landowner has no
right under the Just Compensation Clause to insist that a
‘temporary’ taking be deemed a permanent taking.” First
English, 482 U.S. at 317. In other words, a government, like
Hawaii, may choose not to contest the remedy of invalidation
because it is simply not willing to pay just compensation.
Apparently, some legislative experiments - like Hawaii’s

id

gasoline station rent control - are only worth trying if
someone else pays the price.’

Ultimately, whether the remedy of invalidation is the
proper remedy in this case is irrelevant to the real issue raised
by the State: should this Court overrule its prior precedents
establishing that there is a different standard of review under
the substantial advancement test of the Takings Clause than
the rational basis test of the Due Process Clause. The
legislature’s ability to advance the public good (according to
its own views of social and economic policy) is unaffected by
the Takings Clause. Nollan, 483 U.S. at 841-842
(“California is free to advance its ‘comprehensive program,’
if it wishes, by using its power of eminent domain for this
‘public purpose,’ [; but . . .] it must pay for it.”).

This case proves the point. Whether Hawaii (explicitly or
implicitly) acquiesced in the lower courts’ remedy invalidating
its legislation is completely irrelevant to the issue of the
correct standard of review. If the incorrect remedy is the
linch-pin of the State’s position as its merits brief seems to
indicate, there is a simple solution: remand the case with a
direction that the lower courts order the State to choose
between paying just compensation or accepting the
invalidation of its legislation.‘

> Senator Russell Long explained a similar difficulty in adopting
tax reform, most voters subscribe to the philosophy of “Don’t tax
you, don’t tax me, tax that fellow behind the tree.” Fred R.
Shapiro, The Oxford Dictionary of American Legal Quotations 401
(Oxford Univ. Press 1993), quoting Forbes, Dec, 15, 1976.

* One solution to the problem posed by the dispute over the
remedy in this case and avoid a fact question about whether the
government silently acquiesced to the invalidation remedy is for the

14

Il. HEIGHTENED SCRUTINY IS NECESSARY TO
INSURE THAT PUBLIC COSTS ARE NOT SHIFTED
TO PARTICULAR PROPERTY OWNERS UNDER
THE GUISE OF ORDINARY ECONOMIC
REGULATIONS

The regulatory takings doctrine has its modern roots in a
seminal opinion by Justice Oliver Wendell Holmes, who
explained:

The 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... .. . We are
in danger of forgetting 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.

Pennsylvania Coal, 260 U.S. at 415-416.

In that opinion, the Court discussed rent control that was
imposed during World War I and concluded that while it was
“to the verge of the law”, it was not a taking because of the
exigeacies of the war-time “emergency”. /d. at 416, citing
Block v. Hirsh, 256 U.S. 135 (1921). Hawaii’s legislation is,
of course, not justified by any emergency, and is not even
near the verge of a constitutional measure. Its rent control

trial courts to routinely require defendants in takings cases to
explicitly elect between just compensation and invalidation plus
temporary takings damages before trial. In addition to insuring that
the government's right to select the remedy is observed, that
practice would help both the parties and the courts manage the trial
of takings cases: the issues at trial will be quite different depending
on which remedy the government selects.

15

regulation for a few gasoline station operators plainly goes
“too far” and requires just compensation under the Takings
Clause. But, Hawaii asks for more than just this Court’s
approval of this piece of legislation. Hawaii asks that this
Court abandon the very doctrine that allows the courts to
determine whether legislation has gone too far.

The substantial advancement test should be protected, not
abandoned, because it enables the courts to distinguish
between regulations that adjust the ordinary benefits and
burdens of economic relations from regulations that impose an
unfair burden on a few property owners. Nollan, 483 U.S. at
834-837 (substantial advancement test distinguishes an
ordinary economic regulation from “‘an out-and-out plan of
extortion’”); cf. Lucas, 505 U.S. at 1017-1018 (economically
viable use test distinguishes ordinary economic regulations
that adjust the “benefits and burdens of economic life” from
regulations that “carry with them a heightened risk that
private property is being pressed into some form of public
service under the guise of mitigating serous public harm.”).
The substantial advancement test protects property owners
from the significant danger that the government has used the
opportunity created by the immobility of real property to
single out a few owners (in this case, two oil companies) and
unfairly impose the cost of a public good on those property
owners.

Hawaii’s regulation poses precisely the same danger that
was identified in Nollan and Dolan. Chevron alleged that the
State leveraged its power to regulate property in order to
impose the cost of public burdens on property owners.”

> In this case, the State regulated particular pieces of real property,
i.e., the land under gasoline stations. Thus, the State’s reliance on
Justice Kennedy’s concurrence in Eastern Enterprises is irrelevant

16

While Hawaii admits that heightened scrutiny under the
substantial advancement test was appropriate in Nollan and
Dolan, it asks the courts to abandon that test in this case and
preclude the courts from determining whether Chevron’s
allegation was true. Hawaii argues that the courts should only
apply heightened scrutiny to review exactions imposed on a
single property owner in an administrative proceeding. Pet.
Mer. Brf. at 33-35.

If that were the only way that governments could violate
the Takings Clause, that might be a viable argument. But
there are many ways for governments to transfer wealth, and
to violate the Constitution. In this case, Chevron’s rights are
equally violated by this legislative regulation requiring it to
subsidize Hawaiian gasoline distributors as they would be by
an administrative regulation exacting payments to Hawaii to
fund the subsidy. In either case, Hawaii has leveraged its
police power to compel Chevron to pay for this legislation in
the name of the “public good.”°

because the issue in that concurrence was whether the Takings
Clause should apply to economic regulations that do not operate on
particular pieces of real property. Eastern Enterprises v. Apfel,
524 U.S. 498, 540-542 (1998).

* Even if this Court were to decide that legislation imposing an
economic regulation is only subject to deferential scrutiny , it should
not reach the issue of whether the same level of scrutiny is
applicable to legislation imposing exactions. While the
consequences to the property owner are the same, the dangers of
governmental leveraging are obviously greater when the
government requires real property owners to give their property (in
cash or fee title) directly to the government. Town of Flower
Mound v. Stafford Estates, Ltd., 135 S.W.3d 620 (2004).

17

Moreover, the State’s administrative/legislative distinction
is indefensible. “A city council can take property just as well
as a planning commission can.” Parking Ass'n of Georgia,
Inc. v. City of Atlanta, 515 U.S. 1116, 1117-1118 (1995)
(Justices Thomas and O’Connor, dissenting from denial of
certiorari). The fact that the State chose to impose this
regulation by legislation on the two oil companies that leased
gasoline stations, rather than by administrative action, should
hardly make a constitutional difference.’ Constitutional rights
should not turn on whether the cities and states choose to ask
their legislators to act unconstitutionally or ask their
administrators to do so.

Nollan provides an apt example. While creating an
easement for public beach access was a legitimate government
purpose, the State of California could have taken the easement
by legislation just as easily as it did in the administrative
process. In any event, California chose not to pay for the

” It is true that legislative procedures and administrative procedures
are different. Thus, it may make sense to treat regulations imposed
by an administrative agency somewhat differently than those
imposed by a legislature. For example, under Nollan and Dolan,
the government bears the burden of proving that the administrative
action substantially advances a legitimate government purpose.
That burden is justified because the administrative agency has a
quasi-judicial procedure to gather admissible evidence and must
base its decision on that evidence. By contrast, the legislative
process is usually not based on admissible evidence gathered before
the law is adopted. As a result, it may be appropriate to place the
burden of proof on the property owner to establish that a legislative
regulation fails the substantial advancement test. Ehrlich v. Culver
City, 12 Cal.4th 854, 906 (1996) (Kennard and Baxter,
concurring). Other than that, there is no justification for treating
legislation and administrative actions differently under the
substantial advancement test.

18

easement. Nollan, 483 U.S. at 841-842 (“California is free to
advance its ‘comprehensive program,’ if it wishes, by using
its power of eminent domain for this ‘public purpose,’ [; but
. . .] it must pay for it.”). The problem faced by California
was that it did not have a good reason to require the Nollans
to provide the easement by legislative or administrative
regulation: the Nollans did not cause the lack of access. The
only problem that they caused was a lack of visual access, and
that problem could not be solved by requiring them to provide
an easement for public beach access.

Dolan provides another example. In Dolan, the city took
title to land instead of requiring flood control measures, i.e.,
took more than was needed to satisfy its ostensible purpose.
Again, the substantial advancement test enabled the courts to
determine whether the city’s proffered purpose was advanced
by the regulation. If not, the purpose of the economic
regulation must have been to shift the cost of the public good
to the regulated property owners. Dolan, 512 U.S. at 387-
388, 392-395.

Here, when Hawaii adopted gasoline station rent control,
its proffered purpose was to lower gasoline prices. But, the
lower courts properly determined that was not the true
purpose because the law will not actually lower gasoline
prices. The only result that was absolutely certain from the
legislation was that Chevron would subsidize gasoline station
operators by reducing their costs. While that subsidy may not
be unconstitutional under the Takings Clause, Hawaii was
required to pay the cost of the subsidy, rather than impose the
cost on Chevron.

The courts could not have made that determination without
the substantial advancement test. If that test were abandoned,
as Hawaii urges, the courts would be completely precluded

19

from making any significant inquiry into the critical question
under the Takings Clause: whether the government is forcing
“some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a
whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).

In sum, the lower courts followed this Court’s prior
holdings under the Takings Clause and, if those holdings are
abandoned, state and local governments will be free to ignore
the Takings Clause in their future legislation and
administrative decisions.

CONCLUSION

More than two decades ago, this Court held that
legislatures may take private property only to substantially
advance a public purpose. That holding has been followed by
the courts and has not prevented legislators from acting within
their constitutional limits. If affirmed, this case will be no
exception.

Respectfully Submitted,

PAUL F. UTRECHT
Counsel of Record
LAW OFFICES OF PAUL F. UTRECHT
235 Montgomery Street, Suite 1130
San Francisco, CA 94104
(415) 956-8100

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0032%3A27. Public record. Not legal advice.