Supreme Court Ruling Affects Landowners and Builders

WASHINGTON, DC-The US Supreme Court has made a decision in the case of Lingle, Governor of Hawaii v. Chevron USA Inc., and has ruled against plaintiff Chevron, a move that has implications for landowners and builders. The case involved the question of whether the state’s law limiting leasing fees imposed by Chevron on the gasoline station owners who lease their properties from Chevron constituted an unfair “taking” of Chevron’s property–and profits.

Hawaii’s rationale for imposing these monetary restrictions stemmed from the state’s desire to control retail gas prices; an act Hawaii defined as being in the state’s interest and, therefore, a legal and legitimate reason for its actions. Chevron opposed the notion under the Fifth Amendment, which stipulates that owners of seized private property as an act in the state’s best interest must be adequately compensated. And the Supreme Court had previously stipulated that the taking of a property must “substantially advance a state’s interest.” Chevron contended that its property was, in essence, being seized through the seizure of profits that came as a result of the leasing fee limitations imposed by Hawaii and that this action did not meet the “substantially advances” requirement.

The Supreme Court, however, rejected Chevron’s argument, saying that the company’s reliance on the stipulation that takings must substantially advance a state’s interest was no longer applicable when analyzing the legitimacy of a taking; a change in the court’s previous guidelines. “Today we correct course,” Justice Sandra Day O’Connor wrote in the opinion reflecting a unanimous view of the court. “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.” Addressing Chevron’s claim specifically, she court concluded that, “Because Chevron argued only a ‘substantially advances’ theory in support of its takings claim, it was not entitled to summary judgment on that claim.”