Substantive due process resurrected through the takings clause: Nollan, Dolan, and Ehrlich.

As a practitioner in the planning law field, I have been asked to deal with the practical effects of Dolan v. City of Tigard(1) on local planning practice. That question is laden with speculation. Dolan is the latest in a series of cases from our Supreme Court which tend to be hostile to regulation, sympathetic to property owners, and skeptical of non-traditional land use techniques. The case cannot be viewed in isolation, nor limited to its facts. Lawyers and academics are called on not only to analyze Dolan in particular, but also to review the future of land use regulation in general as portended by Dolan.

Dolan represents a resurrection of the substantive due process line of cases which had been largely defunct since the 1930s. That resurrection is not under the Due Process Clause(2) (for that would require direct confrontation with settled case law), but rather through an interesting reading of the Takings Clause of the Fifth Amendment,(3) as applied through the Fourteenth Amendment.(4) A more sophisticated form of Lochner v. New York(5) is upon us and, in combination with the predominance of a certain ideology in the judiciary, results in the same difficulties presented in the Lochner era. The ideology is hostile to regulation and uses the convenient instrumentality of vaguely worded tests to make value judgments on the necessity and wisdom of legislation. This paper will briefly touch upon the line of substantive due process cases, takings cases, and the impact of the revisionist view of the Takings Clause on planning law.

Most students of American legal history are familiar with substantive due process, which began in the late 1880s and was largely finished by 1940. The era was characterized by growth, expansion, imperialism, chauvinism, social Darwinism, and a laissez faire view of economics and government. Lawyers and judges were shaped by these and other forces. The last part of that era witnessed a sharp expansion in federal involvement with domestic matters. This governmental activism contrasted sharply with federal absence from domestic affairs which marked the late nineteenth century and early twentieth century, beginning with the withdrawal of federal troops from the post-Civil War South. It was a time when hard work was seen as the key to success, Horatio Alger was a national icon, and people were cynical about Congress and government in general.

During this period, much of the focus on the limits of government arose out of challenges to state regulation. Before the Civil War, there were few federal constitutional limits on the states. It was only following the Civil War with the Slaughter-House Cases,(6) that the Court attempted to discern the meaning behind those broad phrases of the Fourteenth Amendment--"privileges and immunities," "equal protection," and "due process"--and limits began to emerge. Creative lawyers used these clauses as a battering ram for their clients, who were generally not the poor and dispossessed. Their arguments supported the dominant ideologic al paradigm of the individual and his (but not her) natural rights. While that paradigm did acknowledge the theoretical equality of the races, it was far easier to discuss the theoretical basis of the freedom to contract among unequals than it was to explain how separate but equal facilities operated.

Mugler v. Kansas(7) is often seen as marking the beginning of the substantive due process line of cases. In upholding state prohibition against the property claims of a brewery owner, the Court declared its willingness to review the legitimacy of state actions taken under the police power. The Court's test in Mugler required "a real and substantial relation" between the prohibition on the manufacture of alcohol and the public morals, health, and safety.(8)

The first time the Supreme Court actually struck down a state regulation because it violated substantive due process occurred three years later in the Chicago, Milwaukie & St. Paul Railway v. Minnesota(9) case which dealt with fixed railroad rates. Although Lochner was not decided until 1905, the Supreme Court had long before then assumed the task of scrutinizing the objectives and instrumentalities of local legislation under the Fourteenth Amendment to ferret out "illegitimate" ends and means in state legislation.(10)

It was in the 1920s that the first four land use cases were decided by the Supreme Court.(11) During this period, substantive due process claims commanded a solid majority in the Supreme Court. In a case not directly involving planning regulations, Justice Holmes (the otherwise "great dissenter" whose powerful words in Lochner helped to end substantive due process) gave the intersection of property rights and regulation a unique analysis: "The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."(12)

The two principal land use cases of that era demonstrate the difficulties of the substantive due process analysis as embodied in these vaguely worded tests. In Village of Euclid v. Ambler Realty,(13) Ambler Realty argued that the Village's comprehensive zoning ordinance, which established use, height, and area (minimum lot size) restrictions, was unconstitutional because the ordinance was unreasonable, confiscatory, and a deprivation of liberty and property without due process of law.(14) The Court applied the Mugler test and required that the ordinance bear a substantial relation to the public health, safety, morals, or general welfare.(15) Given Ambler Realty's broad attack on the ordinance, which was a facial challenge to the mere existence of the ordinance, the Court found "comprehensive zoning," in principle at least, to be a facially constitutional exercise of the police power.(16) In Nectow v. Cambridge,(17) which challenged the application of Cambridge's zoning ordinance to a portion of Nectow's land, the Supreme Court ruled in favor of the property owner and held that, because of the industrial character of the existing neighborhood, the residential use restriction of the plaintiff's property bore no substantial relation to public health, safety, morals, or general welfare.(18)

Unfortunately, there were no land use cases before the Supreme Court between 1928 and 1974. Lower federal and the state courts looked to the two principal cases of the 1920S (Euclid and Nectow) which were caught in the substantive due process time warp. That is, although those cases were decided under the principles of substantive due process, when that framework fell away, as it did in the late 1930s and 1940s, that theory lived on when those cases were applied. Land use regulation could survive judicial scrutiny, as it did in the six to three decision in Euclid, or it might be struck down, as it was unanimously in Nectow; however, the outcome depended as much on the quality of argument ("Brandeis Briefs" became popular during the substantive due process era) as the merits of the case. When courts wished to uphold regulation, they cited EUclid.(19) On the other hand, when courts wished to strike down regulation, they cited Nectow.(20)

Substantive due process did fall away beginning in the 1930S. Three cases illustrate the change in the Supreme Court's views. The first is West Coast Hotel v. Parrish,(21) in which Chief Justice Hughes recognized that the community might direct its law-making power to correct the abuses which sprang "from a selfish disregard of the public interest."(22) The decision was a distinct rejection of previous Courts, limits on legislative action.

The following year in United States v. Carolene Products Co.,(23) the Supreme Court abandoned the requirement for a "real and substantial relation" between economic regulation and legitimate state objectives. Justice Stone's majority opinion declared a new and more deferential "rational basis" review under the due process clause.(24)

A further rejection of Lochnerian jurisprudence came from Justice Douglas in Williamson v. Lee Optical(25) when he said,

The day is gone when this Court uses the Due Process Clause of the Fourteenth

Amendment to strike down state laws, regulatory of business and industrial

conditions, because they may be unwise, improvident, or out of harmony

with a particular school of thought.(26)

Similar deference to local regulations was given in Goldblatt v. Town of Hempstead, which upheld stringent quarry regulation based on public safety concerns.(27)

Just how far the Court had come was also illustrated in a field allied to land use, that of urban renewal, in 1954 in the sweeping opinion of Justice Douglas in Berman v. Parker.(28) Here the Court found aesthetics to be a valid basis for acquisition and regulation of land, and the judgment of the legislature prevailed.(29) Many do not agree with Justice Douglas, decision in 1974 to uphold a restrictive definition of "family" in Village of Belle Terre v. Boraas(30) on similar grounds; however, others find no constitutional right to be free of dumb laws.(31)

While substantive due process was generally seen to be finished, there was a rare appearance of the doctrine in another Supreme Court case relating to land use, Moore v. City of East Cleveland,(32) in which another municipal definition of "family" was struck down at the request of a grandmother who would otherwise be unable to live with two grandchildren of different parents. That decision could have been based on other grounds, however.

The Reagan-Bush Court had built upon cases evincing a growing distrust of regulation of land, beginning with the narrow victory for regulators in Penn Central Transportation Co. v. New York City(33) and Keystone Bituminous Coal Ass,n v. DeBenedictis,(34) prior to Nollan v. California Coastal Commission(35) and Dolan. However, Nollan heralded a new test to scrutinize conditions and exactions attached to development permits. That test requires an "essential nexus" between the condition and the original purpose for the restriction on the property.(36) Nollan constructed a two part test to determine whether a regulation effected a taking based on Agins v. Tiburon.(37) The takings analysis outlined in Agins is jurisprudence founded on the substantive due process cases of Mugler, Euclid, and Nectow. Quoting Agins, the Nollan Court said that "land-use regulation does not effect a taking of property if it substantially advances a legitimate state interest and does not deny an owner economically viable use of the owner's-land."(38)

Dolan followed this analysis. Additionally, it focused upon the proportionality of the state's interest and did not question the basis of the test.(39) The legitimacy of the role of the Court in testing the wisdom of the City's planning system was not discussed but was instead accepted as gospel under the Agins analysis. This role should be reexamined and rethought.

It is important to know that most of the regulatory takings cases of the last fifteen years use the two part test of Agins as a battering ram against regulation almost as a mantra What is distressing is that the mantra is unexamined, particularly in that the test is dicta to the result. Agins involved a challenge to the City's open space plan and regulations and was found not to be ripe, as there was no building permit requested.40 Even more distressing is the lineage of the test, which is from the line of substantive due process cases from the 1920s discussed above. As support for t;he first part of its test, Justice Powell's unanimous opinion in Agins relied primarily on Nectow and Euclid.(41) Thus, we have come full circle with the regulatory takings analysis as an outgrowth of substantive due process, whose dead hand appears to rule nowhere else but in land use law. The dead hands of Euclid and Nectow have ruled long after the demise of their rationale. The more things change, the more they remain the same.

Moreover, many have overlooked the remand of another case for which certiorari was requested, Ehrlich v. City of Culver.(42) That case involved the use of a fee to offset the loss of a private sports facility. The fee was compelled as a condition of approval of a development project. The California Court of Appeals upheld the fee and the California Supreme Court denied review. But the interesting thing about the Court of Appeals decision was the distinction drawn between the "physical invasion" type conditions like those imposed in Dolan and Nollan and monetary exactions, which the Court of Appeals held need only be rationally related to a legitimate government purpose.(43) Three days after Dolan was decided, the Supreme Court vacated the judgment upholding the fee and remanded the case for reconsideration in the light of Dolan.(44)

The consequences of Dolan--the invalidation of a land use regulation--demonstrate that substantive due process is not dead. What other effects will Dolan bring? It is probable that in the vast majority of cases l;he effect will not be too great. Developers are more anxious to develop, rather than to litigate. In closer cases where the stakes are great and nontraditional exactions are requested (such as for parks or open space), Dolan will make a difference. The case will also be used to intimidate planners and public officials. For those of us who are planning lawyers, the work will be unending.

(1) 114 S. Ct. 2309 (1994). (2) The Due Process Clause provides that "[n]o person shall be deprived of life, liberty, or property, without due process of law." U.S. Const. amend. V. (3) The Takings Clause provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const. amend. V. (4) See Chicago, B. & Q.R.R. v. Chicago, 166 U.S. 226, 239 (1897) (the Takings Clause of the Fifth Amendment of the Constitution applies to the states through the Fourteenth Amendment). (5) 198 u.s. 45 (1905). (6) In re Slaughter-House Cases, 83 u.s. 36 (16 Wall.) (1872). (7) 123 u.s. 623 (1887). (8) Id. at 661. (9) 134 U.S. 418 (1890). (10) Id. at 458. (11) See Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116 (1928); Nectow v. City of Cambridge, 277 U.S. 183 (1928); Zahn v. Board of Public Works, 274 U.S. 325 (1927); Village of Euclid v. Ambler Realty Co., 272 U.S 365 (1926). (12) Pennsylvania Coal Co. v Mahon, 260 U.S. 393, 415 (1922). (13) 272 U.S. 365 (1926). (14) Id. at 395. (15) Id. (16) Id. at 397 (17) 277 U.S. 183 (1928). (18) Id. at 188. (19) 272 U.S. 365. (20) 277 U.S. 183. (21) 300 U.S. 379 (1937) (22) Id. at 400. (23) 304 U.S. 144 (1938). (24) Id. at 152-53 (25) 348 U.S. 483 (1955). (26) Id. at 488. (27) 369 U.S. 590, 596 (1961). (28) 348 U.S. 26 (1954). (29) Id. at 33. (30) 416 U.S. 1 (1974). (31) Id. at 7. (32) 431 U.S. 494 (1977). (33) 438 U.S. 104 (1978). (34) 480 U.S. 470 (1987). (35) 483 U.S. 825 (1987) (36) Id. at 837. (37) 447 U.S. 255 (1980). (38) Nollan, 483 U.S. at 834 (quoting Agins v. City of Tiburon, 447 U.S. at 260). (39) Dolan, 114 S. Ct. at 2319. (40) 447 U.S. at 255. (41) Id. at 260. (42) 19 Cal. Rptr. 2d 468 (Cal. Ct. App. 1993), vacated and remanded, 114 S. Ct. 2731 (1994) (43) Id. at 474. (44) Id. at 483. The Supreme Court later vacated an Oregon appellate decision. Altimus v. Oregon Dep't of Transp., 862 P.2d 109 (Or. Ct. App. 1993), rev. denied, 871 P.2d 122 (Or.), vacated, 115 S. Ct. 44 (1994). The Oregon Court of Appeals had ascribed very little value to a strip of land which was planned for eventual acquisition by the Oregon Department of Transportation as well as by the local governments having land use jurisdiction. Id. at 110, 112. In vacating and remanding for reconsideration in the light of Dolan, the Supreme Court did not elaborate on its rationale. However, in applying Dolan, it may be assumed that the highest and best use value of that strip may be reduced only if there is a rough proportionality between a dedication requirement for the strip and the highest and best use of the entire parcel of which the strip forms a part. That determination cannot be assumed from a plan provision asserting a need for additional road width, but must follow from an "individualized determination" that the asserted dedication bears a "rough proportionality" with that highest and best use, a determination to be made by the trier of fact. Dolan, 114 S. Ct. at 2319-20; see also Schultz v. City of Grants Pass, 131 Or. App. 220 (1994) (detailing the findings requirement for such individualized determinations).

Edward J. Sullivan (*) Attorney, Preston, Thorgrimson, Shidler, Gates & Ellis; Adjunct Professor, Northwestern School of Law of Lewis and Clark College. LL.M. 1978, University College, London; Urban Studies Certificate 1974, M.A. 1974, Portland State University; J.D. 1969, Willamette University; B.A. 1966, St.