The Other Supreme Court Property Case
All libertarian eyes are focused on the pending Supreme Court case Kelo v. New London, where the Court will address the issue of just what “public use” means with respect to the Fifth Amendment’s Takings Clause.
But there’s another important Takings Clause case being considered by the Court, Lingle v. Chevron, which gives the Court the opportunity to end another travesty against property rights: rent control.
Professor Vikram David Amar summarizes the facts of the case over at FindLaw’s Writ:
Worried about the high retail price of gasoline in the Hawaiian islands, the state legislature passed a law that offers a creative solution: rent control. The statute places a ceiling on the maximum rent that oil companies can charge gas station operators who lease oil-company-owned service stations. Subject to some small adjustments, the law limits the rent that an oil company can charge to 15% of the dealer’s profit derived from gas sales and 15% of the dealer’s gross sales on products other than gasoline.
Chevron (i.e., the landlord) is suing, claiming that the rent control constitutes an unconstitutional taking of their property (i.e., the gas stations that it rents to dealers).
Now, there are several different issues bouncing around in this case, not all of which are necessarily of interest to libertarians per se (e.g., What is the proper standard of review for economic regulation? How far should courts go in second-guessing studies used by the legislature in enacting laws?). Stuff that typically put me to sleep in my Statutory Interpretation class in law school.
Still, the case, at its core, is about rent control and the Fifth Amendment. The constitutional argument goes something like this: It’s one thing to restrict property use (e.g., by zoning), even if it diminishes the property’s value. But if the restriction creates a permanent transfer of wealth from the property owner to another private party (i.e., the tenant), then the regulation becomes an impermissible taking prohibited by the Fifth Amendment. Framed that way, the case begins to look a lot like Kelo! Perhaps the Court will decide the two cases together and hand down linked decisions like they did last year in the Michigan affirmative action cases.
The Hawaii ordinance arguably created such a permanent transfer and is being challenged on those grounds, among others (compare and contrast: even New York City’s monstrous rent regulations are, at least nominally, temporary and do not create an overt wealth transfer from landlord to tenant).
Still, wouldn’t it be delicious if the Court decided not only to wipe the slate clean regarding private versus public takings but also to use Lingle as an opportunity to revisit the whole concept of regulatory takings — declaring all rent control, or even all restrictive use laws, as “takings” requiring “just compensation”?
Hey, a guy can dream, can’t he?
Related Posts:
Will the Supreme Court Extend the Poletown Reversal?
“Kill Poletown, Vol. 2″
But What About “Reverse-Poletown”?
How to Read the Constitution
(Cross-linked at Outside the Beltway.)
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