The Season of Private Property Law


The Supreme Court's season could be a milestone for extending (or, of course, further restricting) property rights against government action. The Court announced that it will hear a case that, if the 9th Circuit is upheld, could severely damage government's ability to impose rent control. What's at issue, from The New York Times report:

The case is an appeal by the state government of Hawaii, where a federal court ruled unconstitutional a law limiting the rent that oil companies can charge to independent dealers who lease its service stations. The district court in Honolulu, in a decision upheld by the United States Court of Appeals for the Ninth Circuit, in San Francisco, held that expert testimony on the economic effect of the regulation had failed to prove that it would "substantially advance a legitimate state interest."
The importance of this issue to government officials was underscored in briefs filed on Hawaii's behalf by New York, California, Connecticut and 16 other states….It has implications not only for rent-control laws like Hawaii's, but for environmental, health and safety rules as well as for the zoning and land-use regulations that have been the focus of the courts' concerns about the Fifth Amendment's "takings" clause.

The Fifth Amendment provides that private property shall not be "taken for public use without just compensation." In the case the Supreme Court accepted late last month, Kelo v. City of New London, No. 04-108, the question is whether private economic development that will add to the city's tax base is an appropriate "public use" for which a city can exercise its power of eminent domain to condemn property of lower economic value.

The new case, Lingle v. Chevron U.S.A. Inc., No. 04-163, presents a related but distinct question: whether the challenged rent regulation is a taking in the first place. The Supreme Court's precedents make clear that the government does not have to physically acquire property in order to "take" it and incur the obligation to pay for it. A regulation can be a taking if it strips the property of much of its economic use.

The whole story, which lays out the arguments Chevron and Hawaii made in arguing over this law, is worth reading.