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Accusations that courts are "Lochner-izing" are
bandied about so casually these days that accusers risk sounding
like the boy who cried wolf. But how else should one describe
the recent ruling in Chevron USA Inc. v. Bronster,
363 F.3d 846 (9th Cir. 2004), in which the 9th U.S. Circuit
Court of Appeals enforced its own judgment regarding a key
economic policy issue, affording no deference to the state
Legislature? Judicial second-guessing of elected officials
about the wisdom of economic policy is the very essence of
Lochner-era jurisprudence. The wolf clearly is in the flock.
The Chevron case, pending before the U.S. Supreme Court
on a petition for certiorari, involves a challenge under the
Just Compensation Clause to a Hawaii law designed to promote
competition in the retail gasoline market. Because Hawaii
is geographically small and isolated, its economy is subject
to a high risk of oligopolistic concentration. To ensure continued
price competition at the pump, Hawaii lawmakers passed Act
257, which prohibits oil companies from converting independent
lessee gas stations into company-operated gas stations. The
law also places a ceiling on rents charged by oil companies
to prevent them from driving independent lessees out of business.
Chevron challenged Act 257 as an uncompensated taking of property
because, in Chevron's view, the rent cap fails to advance
a legitimate government purpose. Chevron presented testimony
that the law could lead to higher gasoline prices, while the
state of Hawaii called experts who testified that Act 257
is a reasonable way to avoid a price-gouging oligopoly in
the retail market.
The trial court gave no deference to the state's legislative
judgment and held that Act 257 works an unconstitutional taking
of property because it does not substantially advance a legitimate
public interest. It concluded that the law would not benefit
Hawaii consumers because, in the court's view, the economic
theories presented by Chevron were "more persuasive"
than the state's position. The 9th Circuit affirmed, applying
heightened scrutiny, rejecting the familiar rational-basis
test typically applied under the Due Process Clause, and giving
no deference to the views of the state Legislature regarding
the wisdom of the law.
Plain and simple, the 9th Circuit and trial court invalidated
Act 257 because they disagreed with the state's elected lawmakers
that the measure would advance the interests of Hawaii consumers.
The courts articulated a naked preference for Chevron's economic
views and rejected the state's legislative judgment on the
efficacy of Act 257, just as the Lochner court concluded
that New York's worker protection laws were unnecessary and
unwise. See Lochner v. New York, 198 U.S. 45 (1905).
And like Lochner, the 9th Circuit's ruling finds no plausible
basis in the text, structure or original understanding of
the Constitution. The U.S Supreme Court has recognized that
the Just Compensation Clause originally was understood as
applying only to physical appropriations of property. Lucas
v. South Carolina Coastal Council, 505 U.S. 1003 (1992).
Although the court has extended the clause to regulation that
constitutes the functional equivalent of an expropriation,
its text - "nor shall private property be taken for public
use, without just compensation" - cannot reasonably be
read as authorizing invalidation of economic regulation based
on a means-end inquiry into the law's efficacy.
In fact, the text and structure of the Just Compensation Clause
cut directly against the rulings below. The clause requires
that any taking be for a public use, a requirement that is
satisfied if the Legislature "rationally could have believed
that the [legislation] would promote its objective."
Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984).
And yet the 9th Circuit construes the clause as also requiring
a second means-end inquiry under heightened scrutiny to determine
whether a taking occurred. What possible justification could
there be for reading the clause as requiring the same inquiry
twice under two different standards?
The 9th Circuit's use of the Just Compensation Clause to invalidate
legislation further highlights the ruling's inherent dissonance.
The purpose of the clause is "to secure compensation
in the event of otherwise proper interference" with property.
First English Evangelical Lutheran Church v. County of
Los Angeles, 482 U.S. 304 (1987). Of course, if a court
were to award compensation on concluding that a law did not
advance the public interest, the result would be even more
bizarre. Any such law would be improper, because government
officials are authorized to act only in the public interest.
It makes no sense to say that an unauthorized law is cured
by the payment of compensation to affected property owners
or that the public should pay when laws provide no public
benefit. This anomaly in remedies shows that the Due Process
Clause, not the Just Compensation Clause, provides the appropriate
framework for evaluating whether a law adequately advances
a legitimate goal.
Under established precedent, a regulatory taking arises where
government action denies economically viable use of land or
compels a permanent physical occupation by a third party.
In Agins v. City of Tiburon, 447 U.S. 255 (1980), the
court stated that a taking also occurs where government action
does not substantially advance a legitimate purpose, but this
"substantially advance" test has been largely ignored
by lower courts and widely criticized by scholars for improperly
importing due-process analysis into takings jurisprudence.
Fortunately, five members of the U.S. Supreme Court agree.
In Eastern Enterprises v. Apfel, 524 U.S. 498 (1998),
four dissenting justices stated flat-out that the Just Compensation
Clause does not apply to challenges to the reasonableness
or efficacy of legislation, and a fifth justice concurring
in the judgment declared means-end inquiries to be in "uneasy
tension" with a proper understanding of the clause. All
five concluded instead that only the Due Process Clause governs
judicial examination into the reasonableness and efficacy
of the law at issue there.
Federal and state appellate courts are deeply split on whether
to apply any means-end inquiry under the Just Compensation
Clause and, if so, what level of scrutiny should apply. These
divergent rulings and conflicting signals from the Supreme
Court have prompted judges on both sides of the issue to call
out for clarification by this court. In Santa Monica Beach
Ltd. v. Superior Court, 19 Cal.4th 952 (1999), Justice
Joyce Kennard wrote that "only the high court can resolve
this question and, given the importance of this area of the
law, I respectfully suggest that it do so when the opportunity
next arises." In the same case, dissenting Justice Janice
Rogers Brown insisted, that if a heightened means-end inquiry
is inappropriate under the Just Compensation Clause, "the
high court ought to tell us so, preferably sooner rather than
later."
Hawaii is seeking review by the high court. The Chevron case
pits libertarians who push for individual freedom uber alles
against traditional legal conservatives who argue, in the
words of Federalist 78, that judges should exercise "neither
force nor will but merely judgment." To vindicate the
rule of law and preserve the proper role of judges in our
democracy, the U.S. Supreme Court should grant review, side
with traditional conservatives, and uphold the judgment of
Hawaii's elected representatives.
Timothy J. Dowling is chief counsel of Washington, D.C.-based
Community Rights Counsel, which filed an amicus brief on behalf
of a coalition of government officials in support of Hawaii's
petition for certiorari in Chevron.
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