Land development, the Graham doctrine, and the extinction of economic substantive due process.

• Author: Ashbrook, Robert
• Position: Regulatory takings

INTRODUCTION

A developer seeks to build low-income housing in a middle-class suburb. She complies with the local zoning ordinance and all the permit regulations, but a citizens' group protests because it fears the subdivision will lower property values. The local government accedes and uses a pretext to reject the subdivision plan. Consequently, the developer loses her financing and her shirt. To avoid the expense and delay of an inverse condemnation suit for a regulatory taking in state court, she brings instead a substantive due process claim in federal court. This Comment concerns whether her substantive due process claim should lie.

As government's exercise of its police powers has grown over the last century, so too have those powers' conflicts with private property rights, particularly land development rights. (1) Zoning regulations, and later environmental regulations, became important legal weapons used by government to influence or limit private land development.

Initially, developers lacked potent constitutional protections against such regulation. Traditional takings doctrine only protected against physical occupations of land; it did not apply to land use regulation. Later, landowners used two new doctrinal weapons--substantive due process and regulatory takings--to defend private property rights against government control.

In every other economic context, substantive due process and the legacy of Lochner v. New York (2) has been discredited and extirpated. (3) Thus it is strange that, until recently, federal courts have allowed economic substantive due process--an endangered species of constitutional doctrine--to escape extinction (and in some instances even to flourish) within the ecosystem that is land development law. (4) Moreover, substantive due process survives despite its protections having been incorporated into regulatory takings doctrine, which might seem to vitiate the need for substantive due process. (5) Substantive due process lives on largely because it retains one important evolutionary advantage over the takings doctrine: it provides a quick avenue into federal court for plaintiffs who would be delayed or discouraged by the strict ripeness requirements of regulatory takings claims.

While the Supreme Court has avoided this issue time and again, (6) several circuits have applied a concept from constitutional criminal law, the "Graham doctrine," (7) invalidating substantive due process claims by land developers challenging zoning and other regulations. The circuit courts of appeals are split on this issue, (8) perhaps because it makes strange bedfellows of conservative supporters of private property rights and liberal supporters of unenumerated constitutional rights.

This Comment argues that the Graham doctrine should forbid substantive due process claims from supplementing or supplanting regulatory takings claims by land developer plaintiffs. Part I outlines substantive due process and regulatory takings. Part II describes the Supreme Court's Graham doctrine and the split of authority, in which some circuits apply the Graham doctrine to forbid substantive due process claims in regulatory takings cases and others do not. Part III compares three broad aspects of substantive due process claims and regulatory takings claims: procedural, substantive, and remedial. It also discusses how the Supreme Court has muddled the historical differences between the two claims. Finally, Part IV discusses the reasons why the Graham doctrine should be used to disallow all substantive due process claims where a regulatory takings claim is colorable against government regulation of land development.

1. CONSTITUTIONAL PROTECTIONS OF LAND DEVELOPMENT RIGHTS

   1. Substantive Due Process Claims

      Despite the end of the Lochner era early in the last century, substantive due process claims continue to succeed in land development cases. (9) Such claims are generally brought under § 1983 (10) for deprivations of property under the Fourteenth Amendment's Due Process Clause. (11)

      The Fourteenth Amendment, however, does not protect all putative property interests, nor all would-be development rights. Vested rights, those granted irrevocably, warrant protection. (12) Alternatively, a plaintiff developer must often show she is entitled to the use sought. (13) Under an entitlement test, if government enjoys discretion in regulating development, a due process challenge will not lie. (14) This is often a considerable hurdle for a plaintiff to cross.

      Assuming a protectible property interest, a few courts (15) and commentators (16) have distinguished two types of substantive due process claims. The older are "arbitrary and capricious substantive due process" claims ("arbitrary and capricious SDP" claims), which allege irrational or ill-motivated government action. More recently, developers have asserted "substantive due process takings" claims ("SDP takings" claims), which are identical to takings claims, but which bypass the most difficult ripeness requirement of takings claims. It is sometimes difficult to distinguish between these two subspecies of substantive due process claims.

      1. "Arbitrary and Capricious Substantive Due Process" Claims

         Arbitrary and capricious SDP claims allege that government actions are not rationally related to legitimate objectives. These claims are descendants of the Lochner era, and they challenge regulation that is arbitrary or capricious.

         The precise level of substantive protection land developers could expect from arbitrary and capricious SDP claims has not always been clear. In 1926, the seminal zoning case of Village of Euclid v. Ambler Realty Co. defined unconstitutional regulation as "clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare." (17) This "substantial relationship" test allowed zoning regulation generally, as in Euclid, but sometimes invalidated individual zoning decisions. (18)

         Since the 1930s, however, only "fundamental rights" have warranted serious scrutiny under substantive due process. (19) Nevertheless, many courts of appeals continue to allow land developer plaintiffs to invoke arbitrary and capricious SDP claims. The precise legal standard varies by circuit. The District of Columbia Circuit merely requires a showing of "grave unfairness." (20) More commonly, however, courts require some variation on arbitrariness and/or capriciousness. (21) Such standards indicate when a regulation fails a minimal means-ends test; that is, when the regulation is "not rationally related to a legitimate public purpose." (22)

      2. "Substantive Due Process Takings" Claims

         An SDP takings claim results when a regulation "goes too far and destroys the value of [one's] property to such an extent that it amounts to a taking by eminent domain without due process of law." (23) Such a claim relies upon the theory that all takings without just compensation do not just violate the Takings Clause; they are also a deprivation of property that necessarily must violate the Due Process Clause. The elements of such a claim are identical to those of a regulatory takings claim, but an SDP takings claim conveniently avoids certain ripeness requirements needed to bring regulatory takings claims. (24)

         An SDP takings claim may be difficult to distinguish from an arbitrary and capricious SDP claim because both must allege failures of similar means-ends tests. The arbitrary and capricious SDP test (rationally related to a legitimate government purpose, often called "arbitrary and capricious") is quite similar to the SDP takings test borrowed from takings doctrine (substantially related to a legitimate government purpose). (25) Because the arbitrary and capricious SDP test is more stringent than the SDP takings test, (26) arbitrary and capricious SDP violations are (substantively) necessarily both takings and SDP takings.

   2. Regulatory Takings Claims

      The Fifth Amendment guarantees, "nor shall private property be taken for public use, without just compensation." (27) Its application to government regulation is a relatively recent aspect of constitutional jurisprudence, although it is generally considered to date from the 1922 decision of the Supreme Court in Pennsylvania Coal Co. v. Mahon: "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." (28) Nevertheless, Mahon was decided in the Lochner era, and the Supreme Court at that time upheld land use regulation by applying the Fourteenth Amendment, not the Fifth. (29)

      Regulatory takings came into their own in 1978 when Penn Central Transportation Co. v. New York City defined three factors in determining what was "too far": "the character of the governmental action," "the extent to which the regulation has interfered with distinct investment-backed expectations," and "the economic impact of the regulation on the claimant." (30) Later, the Supreme Court identified two per se regulatory takings ("physical occupations" (31) and the "prohibit[ion of] all economically beneficial use of land" (32)) and clarified exactions, (33) all of which are beyond the scope of this Comment.

      Euclid and other early cases upholding zoning regulations were based upon Lochneresque heightened scrutiny. It was not until 1980, in Agins v. City of Tiburon, (34) that the Supreme Court took the opportunity to recharacterize its justification for upholding zoning generally. However, that recharacterization seemed to come out of left field: (35) rather than change the 1920s substantive due process test, the Court merely cut the "substantial relationship" language from Euclid (36) and pasted it into takings jurisprudence. Thus did Euclid and Nectow magically change from Fourteenth Amendment substantive due process cases into Fifth Amendment takings cases, (37) and thus did a means-ends test enter into regulatory takings analysis.

      The "substantial...