Chapter 12 - Regulating Economic Behavior Flashcards
Name the 4 primary tools for regulating economic behavior
- **Licenses **
- Inspections and Adminstrative searches
- Nuisance abatements
- Direct regulation of use or operation
Licenses
- what they do
What they do:
- set standards for entry
- set standards for monitoring activity
Nuisance Abatements
- what they do
What they do:
- prohibit hazardous activities (pollution, dangerous construction, places that encourage risky behavior)
Administrative searches/inspections
- what they do
What they do:
- Identify and respond to unsanitary conditions, unsafe environments, impure products
Economic Liberty and PH
- past and present
Past:
- Lochner era - limited PH powers due to freedom to contract
Present:
- Post-Lochner - courts have presumed police power regulation to be valid, even in economic sphere
- Some constitution limitations on power of state to interfere with private contracts
- Standard of review = permissive (similar to rational basis test)
RUI Corp. v. City of Berkeley (2004)
- Facts, holding, importance
Facts: 9th cir upheld local living wage law
Holding: no infringement of contracts.
- the power to regulate wages and employment conditions lies clearly within a state’s of municipality’s police power
- legislative bodies have broad authority to exercise such power
Imortance: This case gives us a 3 part test for determining whether government inringement on economic liberty/contract is valid.
Takings
- traditional taking v. “per se” taking v. regulatory taking
Traditional definition: when govt takes possession of property for public purpose, it must compensate owner (5th amdmt).
Per Se Takings - when governmnt: possession, invasion, and/or loss of all economic benefit
- The difference between traditional and other takings is that for per se takings, the government does not have to literally take the property… and regulatory takings specifically refer to takings in which the government imposes such strong regulations that the property is effectively taken.
Cases explaining Regulatory Takings
Penn. Central Transportation Company v. City of New York (1978)
Lucas v. South Carolina Coastal Council (1992)
Palazzolo v. Rhode Island (2001)
Kelo v. City of New London, Connecticut (2005)
Lingle v. Chevron (2005)
Penn. Central Transportation Company v. City of New York (SCOTUS, 1978)
Facts: owner of Grand Central Terminal wanted to build above it, but it had been designated as a landmark. Owner asserted that the restriction on their use rights amounted to a taking.
Holding: In deciding whether a particular government action has affected a taking, the court should focus on the character of the action and the extent of the interference with rights in the parcel as a whole, using 3 factors.
Lucas v. South Carolina Coastal Council (1992)
Facts: Lucas bought two beachfront properties for 975k, and an Act later passed rendered the property useless.
Holding: the denial of all economically viable use is a taking (100% diminution in value)
- Note however that it is very hard to get land considered valueless.
- required compensation for regulation that “denies all economically beneficial uses of real property… unless activity/use was a common law nuisance” (key = expectations at time of purchase)
Palazzolo v. Rhode Island (2001)
- *Facts:** plaintiff wanted to build a beach club on his property. When he bought it, most of it was designated as wetlands that could not be built on.
- *Holding:** The case failed the penn central test
- *Rule:** If you buy the property once the regulation is already on it, then you can’t argue that there is a total diminuation of value (like in Lucas) because you could not have had the investment-backed expecatation of being able to use the land.
Kelo v. City of New London, Connecticut (SCOTUS, 2005)
Facts: New London Development Corp planned and received state funds to exercise eminent domain to get properties in New London and then build a private waterfront development.
Holding: Extends public use to include “public purpose”; the exercise of eminent domain does not have to actually be used by the public as long as it is intended to benefit the public.
**Rule: **The government taking private property from one owner and giving it to another private owner for furtherance of economic development constitutes “public use” because it satisfies a public purpose.
Effect
- widened the definition of public use to include urban renewal largely by private developer
- Courts split on scope of “takings doctrine”
Normative Value of Economic Liberty
- What is/should be the scope of government authority to regulate economic activity in the name of PH? (No answer, just more questions)
- Should PH authorities have broad discretion to regulate economic activity?
- Similar to scope of restrictions on civil liberties?
- Or should regulations that restrict “economic rights” be subject to higher level of scrutiny?
Licenses
3 issues with them
Problems:
- Social and economic fairness
- procedural fairness - need a warrant, but lower standard than criminal; is waivable
- constitutional issues - does a license requirement burden a right?
RUI Corp. v. City of Berkeley
3 Part test
3 part test for determining whether govt infringement on right to contract/economic liberty is valid.
- Is there a substantial impairment of a contractual relationship?
- If yes, does it serve a significant and legitimate public purpose?
- Is it reasonably related to achieving the goal (public purpose)?
