Summary and Analysis of Lingle — No Sign of Lochner Revividus
Justice O’Connor’s wonderful opening line in her opinion for a unanimous Court today in No. 04-163, Lingle v. Chevron U.S.A. Inc., speaks volumes: “On occasion, a would-be doctrinal rule or test finds its way into our case law through simple repetition of a phrase—however fortuitously coined.” This is a case in which a declared “doctrinal rule,” not-so-”fortuitously” coined (for another unanimous Court) by Justice Powell in 1980 in Agins v. City of Tiburon, resulted in a quarter-century of confusion and mischief, countless law-review articles, and a powerful arrow in the quiver of property-rights proponents.
The Court finally cleared the deck this morning, acknowledging that its dictum in Agins was unfortunate and should play no role under the Just Compensation Clause of the Fifth Amendment.
As I noted back in December, Lingle was a very important case for the following reasons: In recent decades, the Court has adopted the multifactor Penn Central balancing test for determining when a regulation of private property is tantamount to a “taking” of property for which the state owes compensation. In a dictum in its 1980 Agins case, however, the Court suggested a different test—namely, 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.” Some defenders of strong property rights have read this sentence to indicate that a government must provide compensation for a regulation of property unless it is able to prove that the regulation will substantially advance legitimate government interests—without regard to the other factors that a court ordinarily would weigh under the Penn Central test, such as the burden on the particular property owner and “reasonable expectations.” And recently, the U.S. Court of Appeals for the Ninth Circuit has gone even further, in three cases dealing with rent-control ordinances: Richardson v. City of County of Honolulu, 124 F.3d 1150 (9th Cir. 1997); Chevron USA, Inc. v. Bronster, 363 F.3d 846 (9th Cir. 2004); and Cashman v. City of Cotati, 374 F.3d 887 (9th Cir. 2004). In each of those cases, the court of appeals held that the governments in question had failed to demonstrate that the laws “substantially advance” the purported government objectives—and furthermore, instead of merely requiring payment of compensation (as even the strongest reading of the Agins dictum would suggest), the court of appeals went so far as to “facially” invalidate the rent-control ordinances themselves. [As the topside briefs in Lingle explained,] the Ninth Circuit’s use of the “substantially advances” test as a grounds of invalidating rent-control ordinances threatens a de facto revival of the Lochner regime, in which the plaintiff property owners complaining of property regulations would be able to avoid the post-Lochner judicial deference that would apply under the Due Process and Equal Protection Clauses by simply reframing their complaints as claims under the Just Compensation Clause.
The Court today confirmed that it is the multi-factored Penn Central test, rather than a “substantially advances” means/ends test, that generally governs the question whether a regulation of property requires just compensation. The Agins “formula,” Justice O’Connor explained, was “regretably imprecise”; it “prescribes an inquiry in the nature of a due process, not a takings, test, and . . . it has no proper place in our takings jurisprudence.” “Instead of addressing a challenged regulation’s effect on private property,” said the Court, “the ’substantially advances’ inquiry probes the regulation’s underlying validity. But such an inquiry is logically prior to and distinct from the questionw hether a regulation effects a taking, for the Takings Clause presupposes that the government has acted in pursuit of a valid public purpose.”
And, the Court explained, once the test of a regulation’s efficacy in advancing the government’s objectives is properly located in the due process framework, it is plain that it must be an exceedingly deferential test, because otherwise the entire edifice of the Court’s post-Lochner jurisprudence would be implicated: “The Agins formula can be read to demand heightened means-ends review of virtually any regulation of private property. If so interpreted, it would require courts to scrutinize the efficacy of a vast array of state and federal regulations—a task for which courts are not well suited. Moreover, it would empower—and might often require—courts to substitute their predictive judgments for those of elected legislatures and expert agencies. Although the instant case is only the tip of the proverbial iceberg, it foreshadows the hazards of placing courts in this role. . . . We find the proceedings below remarkable, to say the least, given that we have long eschewed such heightened scrutiny when addressing substantive due process challenges to government regulation. The reasons for deference to legislative judgments about the need for, and likely effectiveness of, regulatory actions are by now well established, and we think they are no less applicable here.”
One other important development of note that could affect another significant question that has divided the lower courts: In her discussion of the Nollan/Dolan “exactions” doctrine (involving cases in which a state has required the creation of an easement as a condition of a development license), Justice O’Connor explained that the Court applied a heightened “means/ends” proportionality review in those cases because the exaction in question (an easement) would have been a “per se physical taking” if imposed directly. This indicates (properly, in my humble opinion), that the Nollan and Dolan tests should not apply when the condition imposed is the mere assessment of a monetary fee, or tax, as a condition of development — because taxes and fees, standing alone, are not “per se” takings at all, let alone “per se physical takings.”
Perhaps foreshadowing its decision in the Kelo case, the most significant of all of this year’s takings cases, the Court in Lingle said as follows: “If a government action is found to be impermissible– for instance because it fails to meet the ‘public use’ requirement or is so arbitrary as to violate due process– that is the end of the inquiry. No amount of compensation can authorize such action.” This is precisely the issue in Kelo, i.e. whether the government’s action authorizing the taking was for a legitimate public use. You can say you heard it here first, I think the Supreme Court is telling us it will reverse or modify Berman v. Parker and Midkiff when it rules on Kelo as early as tomorrow.
Comment by Joel Burcat — May 23, 2005 @ 6:01 pm
I disagree. Yes, the issue in Kelo is whether a particular taking satisfies the so-called “public-use requirement.” But nothing in Lingle hints at how the Court is planning to address that issue in Kelo. The fact that the Court mentioned the public-use test is entirely unremarkable — it would have been odd had the Court not mentioned the test in the Lingle context. One of the state’s principal points in Lingle was that the “substantially advances” test employed by the Ninth Circuit itself threatened to undo Midkiff (another Hawaii case). The Court was simply agreeing with the state that it’s the public-use test (which is parallel to the due-process rationality test, per Midkiff/Berman), rather than a “substantially advances” test, that determines whether the action is impermissible without regard to compensation.
My prediction of a 9-0 vote in Lingle held; and I’m sticking to my prediction that the plaintiff in Kelo will secure at most three votes. In any event, we won’t know until, at the earliest, a week from tomorrow (and probably not until June).
Comment by Marty Lederman — May 23, 2005 @ 6:21 pm
Kelo Forecast is Bleak
Today the Court delivered Lingle v. Chevron, No. 04-163 (U.S. May 23, 2005).
Comment by Crime — May 23, 2005 @ 6:42 pm
You may be correct that the Court ultimately will rule that the Nollan/Dolan rule does not apply to monetary exactions imposed as a condition for obtaining a development permit. But I disagree that Lingle supports that conclusion. Government appropriation of personal property (including money)is just as much a “per se physical taking” as is government appropriation of real property. Of course, it is possible that the monetary exaction qualifies as a tax or a fee that is reasonably related to services rendered by the government — in which case the Takings Clause is inapplicable. But when (as, for example, in Webb’s Fabulous Pharmacies or Brown v. Legal Foundation of Washington) the monetary exaction does not qualify as a fee or a tax, then what reason would there be for not applying the Nollan/Dolan rule? If, instead of requiring Mr. Nollan to grant an easement across his land, the California Coastal Commission had required him (as a condition for his permit) to pay an equivalent fee into a fund to be used to provide the public with greater access to beaches, why wouldn’t the result have been the same? And what language in Lingle suggests that the result would be different?
Comment by Richard Samp — May 24, 2005 @ 11:23 am
Thanks for your very thoughtful response, Richard. It sounds as if we probably agree on some important assumptions—principally, that whether the Nollan/Dolan nexus standards apply should turn not on the nature of the government action (legislation v. adjudication, etc.), but instead on the question whether it would be a taking if the state took or demanded the property in question outright (rather than as a condition of development). We also appear to agree that Lingle supports this basic view, and that Lingle is fairly silent on the question of what this construct means for monetary exactions (although it seems to me odd to think of a monetary assessment as what Justice O’Connor calls a “per se physical taking,” akin to an easement).
Where we appear to diverge is in your assumption that the state effects a “per se” taking whenever it demands a property owner to transfer a tax or fee or amount of money to the state or to another private party—except, you suggest, where the tax or fee “is reasonably related to services rendered by the government.” That position—most often associated with Richard Epstein—would effectively call into question most of the redistributive welfare state, at least since the enactment of the Sixteenth Amendment (which confirmed the constitutionality of progressive income taxes).
Not surprisingly, then, the Court has never come close to holding any such thing. Although “[n]othing is more familiar in taxation than the imposition of a tax upon a class or upon individuals who enjoy no direct benefit from its expenditure, and who are not responsible for the condition to be remedied,” Carmichael, 301 U.S. at 521-22, the Court has consistently indicated that taxation is not a taking, even where a discrete group bears a disproportionate tax burden for the public good (such as with an earmarked tax), and even where the tax is assessed on real property. See, e.g., City of Pittsburgh v. ALCO Parking Corp., 417 U.S. 369 (1974); French v. Barber Asphalt Paving Co., 181 U.S. 324, 343-44 (1901); see also Legal Tender Cases, 79 U.S. (12 Wall.) at 551; see generally Eduardo Penalver, Regulatory Taxings, 104 Colum. L. Rev. 2182 (2004). As the Court noted in Keystone, 480 U.S. at 491 n.21, “[n]ot every individual gets a full dollar return in benefits for the taxes he or she pays; yet, no one suggests that an individual has a right to compensation for the difference between taxes paid and the dollar value of benefits received.” Similarly with respect to user fees: The Court has rejected the notion that such fees are “per se” takings because “[I]t is artificial to view deductions of a percentage of a monetary award as physical appropriations of property. Unlike real or personal property, money is fungible.” Sperry Corp., 493 U.S. at 62.
In light of all these precedents, even Justice Scalia concedes, without qualification, that taxes and user fees “are not takings,” let alone per se takings. Brown, 538 U.S. at 243 n.3. (Webb’s and Brown itself are distinguishable in that they involved a requirement to disgorge discrete financial assets—what Justice Breyer has called a “specific, separately identifiable fund of money,” Phillips, 524 U.S. at 555—rather than a simple financial obligation. Whether or not one thinks the “per se takings” holdings in cases such as Brown are correct (I don’t), they certainly do not apply whenever the state assesses a fee, tax or “exaction.”)
The same is true for obligations to transfer money to another private party. In cases such as Concrete Pipe and Connolly, the Court has not applied a “per se” test. No Justice in Eastern Enterprises suggested such a test; and a majority of the Justices in that case (Justice Kennedy and the dissenters) actually held that a financial liability is not “property” for purposes of the Just Compensation Clause at all. See also Commonwealth Edison Co. v. United States, 271 F.3d 1327, 1340 (Fed. Cir. 2001) (the “mere imposition of an obligation to pay money . . . does not give rise to a claim under the Takings Clause of the Fifth Amendment”).
So, if a monetary exaction could simply be assessed outright—as in a property tax—without triggering a right to compensation (let alone a “per se” right), then the Nollan/Dolan tests should not apply when the state takes the lesser step of simply making the monetary fee a condition of property development.
Comment by Marty Lederman — May 24, 2005 @ 12:54 pm
We actually have two petitions pending at the Court right now that raise precisely the question of when a law imposing, altering, or seizing a monetary obligation can be a per se Taking. See Adams et al. v. United States, Nos. 04-1225 and 1226, both of which challenge a statute that effectively confiscated back overtime that the federal government owed to its own employees by retroactively shortening their statute of limitations.
Certainly you’re right that taxes or user fees are not Takings. But that does not mean that money and monetary obligations cannot be property. The Court has held quite clearly that they are. Take a look at Lynch v. United States and Perry v. United States, both Depression-era cases in which the United States tried to abrogate its own monetary debts. The Court held that that would be a per se Taking. Every single member of the Court cited those precedents with approval in Winstar. Also take a look at US v. Larionoff, where the Court invoked constitutional doubt to avoid deciding whether the federal government could retroactively reduce the statutory pay owing to military personnel. All of these were simple financial obligations. Furthermore the property “taken” in Webb’s and Phillips was nothing but an ordinary obligation to pay money. The bank account in Phillips was, after all, nothing more than an ordinary monetary debt from the bank to its depositor. Same with the interpleader fund in Webb’s—just a “fungible” monetary debt owed by the court to whoever ended up winning a lawsuit. Nonetheless the Court had no difficulty finding a per se Taking.
So it’s wrong, I think, to take that dicta from Justice Breyer and Justice Kennedy in Eastern Enterprises (suggesting that Webb’s and Phillips involved a “specific, separately identifiable fund of money”) to suggest a serious holding that there is a difference between ordinary monetary obligations and discrete “funds of money.” There is no workable or coherent distinction there, so it can’t become the basis for a stable jurisprudence. I think the Federal Circuit’s recent case law illustrates what a blind alley that is — after reading Commonwealth Edison and Adams one wonders whether the Federal Circuit understands that banks do not hoard deposits in individual vaults, like the wizards’ bank in Harry Potter!
Here is, I think, a better reading of Eastern Enterprises. What Justice Breyer and Justice Kennedy were really saying in Eastern Enterprises is that, on the facts of that case, there was no reason to talk about the Takings Clause at all. The law in question (the Coal Act) imposed an obligation on one private party to pay money to another private party, because of some relationship between the two of them. Such laws are constitutional under the Due Process Clause only if the party who is ordered to pay can be fairly said to be responsible for some harm that has befallen the recipient. If not, the law will fail Due Process review. If so, the law could not possibly have the “character” of a regulatory Taking under the Penn Central test because its “character” is more like ordinary tort law than a Taking. It’s not a Taking to make someone pay for harm they have caused. So the Takings Clause is simply redundant in such cases. Justices Breyer and Kennedy explain that at length in their opinions. The “specific, separately identifiable fund of money” language is an unfortunate aside that in my view makes no sense and just can’t be elaborated into a “test” of some kind. And extending the Breyer/Kennedy reasoning to cover laws imposing obligations to pay money to the government (as the Federal Circuit did in Commonwealth Edison) or laws abrogating the government’s own monetary obligations (as the Federal Circuit did in Adams) is, I think, wrong—and flatly inconsistent with Lynch and Perry. Both Justices Kennedy and Breyer stressed in Eastern Enterprises that the government was not keeping anything for itself.
Anyway, I agree that Nollan and Dolan shouldn’t apply when the state could legitimately impose what it wants as a tax or user fee. They are unconstitutional conditions cases, and the whole point is preventing the state from doing indirectly what it cannot do directly. But there are limits on those powers. Of course you’re right that taxes don’t have to be rigidly justified by value received, for example, but they cannot be targeted on specific individuals. A law specifically requiring Bob Smith to pay $10,000 to the state of California would probably violate Due Process, and perhaps the Takings Clause and maybe even the Bill of Attainder Clause too depending on the circumstances. And of course remember that the plaintiffs won in Eastern Enterprises itself. Certainly you could have called the obligations imposed by the Coal Act a “tax,” but the Court held that it was unconstitutional even though five Justices could not agree on any single rationale.
Comment by Scott Ballenger — May 25, 2005 @ 9:19 am
I don’t believe that the Takings Clause can ever be applied to monetary exactions, and that Webb’s Fabulous Pharmacies and Phillips were wrongly decided (or rightly decided for the wrong reason). I think Lingle makes this clearer.
It makes no sense to talk about enjoining a taking. The only appropriate takings-clause remedy is the substitutionary remedy of money damages, after the government has already validly taken property. But when the thing taken is itself money, the taking-clause remedy makes no sense, and is no different than a specific remedy of getting my property back. Assuming a “public use” is established, then I can’t, under the Takings Clause, enjoin the taking of my property or get an injunction compelling the return of my property. That’s the wrong remedy under the Takings Clause. I don’t believe it can be any different when the property supposedly taken is money.
If I am right, then all so-called “takings” of money should be constitutionally analyzed as a fee or a tax, possibly subject to invalidation under “substantive due process.” Kennedy has made that point in both Lingle and Eastern Airlines. If the plaintiff seeks to invalidate the monetary exaction, the plaintiff may not use the Takings Clause. That’s my two cents, as someone who once tied his brain up in knots trying to figure out a takings-clause challenge to a governmental monetary exaction. Hatfield v. Scott, 306 F.3d 223, 230 (5th Cir. 2002).
Comment by Charlie Eldred — May 31, 2005 @ 12:56 am
Summary and Analysis of Lingle – No Sign of Lochner Revividus
Summary and Analysis o…
Comment by Summary and Analysis of Lingle - No Sign of Lochner Revividus — June 7, 2005 @ 2:51 am