Just Compensation Clause

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

 

Courts are currently divided as to which of two tests should be used to analyze a regulatory takings challenge to a rent control statute. One test analyzes the challenge under theTakings Clause, inquiring whether the statute substantially advances a legitimate state interest. The other test analyzes the challenge under the Due Process Clause, inquiring merely whether the legislature could have rationally believed that the statute would substantially advance a legitimate state interest -- a less stringent test. The Supreme Court will resolve the issue of which test is to be applied.

Questions as Framed for the Court by the Parties

Whether the Just Compensation Clause authorizes a court to invalidate state economic legislation on its face and enjoin enforcement of the law on the basis that the legislation does not substantially advance a legitimate state interest, without regard to whether the challenged law diminishes the economic value or usefulness of any property.
Whether a court, in determining under the Just Compensation Clause whether state economic legislation substantially advances a legitimate state interest, should apply a deferential standard of review equivalent to that traditionally applied to economic legislation under the Due Process and Equal Protection Clauses, or may instead substitute its judgment for that of the legislature by determining de novo, by a preponderance of the evidence at trial, whether the legislation will be effective in achieving its goals.

In 1997, the Hawaii Legislature enacted Act 257 in reaction to the high gasoline prices in the state. The act, an attempt to curb gas prices for consumers in Hawaii, controls the maximum rent that oil companies operating in the state can receive from dealers who lease company-owned service stations. The aim of the legislature was to have the lessee-dealers ultimately pass their lower operating costs on to consumers.

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