While the Kelo case got nationwide attention and coverage (see post from earlier in the month), another case argued the same day got no attention and is far more important to land use issues.
Lingle v Chevron puts the "Agins" test squarely before the Court to determine whether it really means that the "substantial relation to a legitimate state interest" is a seperate takings test with seperate compensation requirements rather than some kind of bastard child of due process. The briefs can be read here.
The not-too-widely-discussed Del Monte Dunes case from a few years ago should have alerted everyone to the viability of this issue. That case ultimately turned on the question of whether a denial of a permit (in an administrative context) that was clearly not in fact related to the admittedly legitimate interests supported by the legislation and standards applied would create a taking - and the answer was yes at the District, Circuit and Supreme Court level. But that case had really eggregious facts - it was clear from the record that the local government was denying any application in order to preserve the property and perhaps to depress the value so that it could be bought. Those are not legitimate reasons for applying the legitimate environmental protection standards contained in the ordinance that the City was applying. Del Monte Dunes therefore stands for the proposition that where a local government inappropriately applies valid standards to deny development, and significant economic loss results, the "Agins" test means that there is a taking. That is, Nollan's application of Agins does not apply only to improper demands for "property" (easements or other exactions), but also to the destruction of property through permit denials. Two things were left unanswered - whether this applies to cases of less permanent and less total takings (here there was good evidence that the City wouldn't ever let them build ANYTHING), and whether the Agins test applies to legislative as well as administrative determinations.
In Lingle, the issue turns to legislation - and whether an Hawaiian act that limits the amount of rent that can be charged can create a taking if the "rent control" provision does not serve the intended and stated purpose of the legilsation. The question here is rent control applied to filling stations owned by gasoline wholesalers, supposedly to prevent certain kinds of predatory consumer pricing that too much vertical integration would allow. Chevron put on evidence that the statute would provide no impact on the legitimate stated interest of consumer protection from , and that it only shifted economic burdens as between Chevron and its lessees (to Chevron's detriment). The trial court found a taking as to the burden on Chevron from this scheme.
The briefs are predictable: Chevron stating that this is a long-considered aspect of the takings clause, articulating the "unfair burden" values that are part of the Penn Central balancing test (also articulated in Florida in the Estuary Properties case). This question examines whether the regulation unfairly puts public burdens on a private entity (say, providing public open space or parks - or in the case of Nollan, additional lateral beach access). Hawaii - and the APA and other entities - claim the end of the world and a return to Lochner-era substantive due process analysis if the claims are permitted. Interestingly, the US DoJ filed an amicus brief supporting Hawaii (here's the link to that).
I have no idea how this one is going to turn out, but I hope to see a serious shot across the bows of knee-jerk, grandstanding over-regulation. Since the federal courts have (inappropriately) made it much harder to bring section 1983 claims for the arbitrary denial of development permits and for arbitrary standards in ordinances, many, many local governments and agencies have been on an arrogant rampage of inappropriate and unfair regulation and regulatory actions - taking the "so sue me" response because they don't have anything to lose. ONLY the return of the threat of serious damages and attorney's fees will cause Commissioners to think twice and take their oath to uphold the constitution seriously - and their attorneys to be much more careful about what they "let" their Commissions do.
The better local government lawyers I know still worry about the constitutionality of their clients' actions and work hard to prevent them from adopting vague or illegal ordinances or taking arbitrary regulatory actions. But way, way too many take the view that their job is to defend the discretion of the Commission no matter what, and not to get in the way of them doing whatever it is that they want to do at the moment.