Lingle v. Chevron U.S.A. Inc.

In Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005), the U.S. Supreme Court developed a more complex test for determining if a price-control regulation constitutes a "taking" requiring compensation under the Fifth Amendment.

Justice Sandra Day O'Connor wrote the opinion for a nearly unanimous Court, with only Justice Anthony Kennedy concurring separately. Justice O'Connor held that:

In the case before us, the lower courts applied Agins' "substantially advances" formula to strike down a Hawaii statute that limits the rent that oil companies may charge to dealers who lease service stations owned by the companies. The lower courts held that the rent cap effects an uncompensated taking of private property in violation of the Fifth and Fourteenth Amendments because it does not substantially advance Hawaii's asserted interest in controlling retail gasoline prices. This case requires us to decide whether the "substantially advances" formula announced in Agins is an appropriate test for determining whether a regulation effects a Fifth Amendment taking. We conclude that it is not.

Justice O'Connor complained about how:

a would-be doctrinal rule or test finds its way into our case law through simple repetition of a phrase -- however fortuitously coined. A quarter century ago, in Agins v. City of Tiburon, 447 U.S. 255, 65 L. Ed. 2d 106, 100 S. Ct. 2138 (1980), the Court declared that government regulation of private property "effects a taking if [such regulation] does not substantially advance legitimate state interests ...." 447 U.S., at 260, 65 L. Ed. 2d 106, 100 S. Ct. 2138. Through reiteration in a half dozen or so decisions since Agins, this language has been ensconced in our Fifth Amendment takings jurisprudence. See Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 704, 143 L. Ed. 2d 882, 119 S. Ct. 1624 (1999) (citing cases)."

Justice O'Connor then essentially overturned the Agins decision:

Twenty-five years ago, the Court posited that a regulation of private property "effects a taking if [it] does not substantially advance [a] legitimate state interest." Agins, supra, 447 U.S., at 260, 65 L. Ed. 2d 106, 100 S. Ct. 2138. The lower courts in this case took that statement to its logical conclusion, and in so doing, revealed its imprecision. Today we correct course. We hold that the "substantially advances" formula is not a valid takings test, and indeed conclude that it has no proper place in our takings jurisprudence. In so doing, we reaffirm that a plaintiff seeking to challenge a government regulation as an uncompensated taking of private property may proceed under one of the other theories discussed above -- by alleging a "physical" taking, a Lucas-type "total regulatory taking," a Penn Central taking, or a land-use exaction violating the standards set forth in Nollan and Dolan. Because Chevron argued only a "substantially advances" theory in support of its takings claim, it was not entitled to summary judgment on that claim. Accordingly, we reverse the judgment of the Ninth Circuit and remand the case for further proceedings consistent with this opinion.