City of Eastlake v. Forest City Enterprises, Inc. , 96 S. Ct. 2358 ( 1976 )

Me. Chief Justice Burger

delivered the opinion of the Court.

The question in this case is whether a city charter provision requiring proposed land use changes to be ratified by 55% of the votes cast violates the due process rights of a landowner who applies for a zoning change.

The city of Eastlake, Ohio, a suburb of Cleveland, has a comprehensive zoning plan codified in a municipal ordinance. Respondent, a real estate developer, acquired an eight-acre parcel of real estate in Eastlake zoned for “light industrial” uses at the time of purchase.

In May 1971, respondent applied to the City Planning Commission for a zoning change to permit construction of a multifamily, high-rise apartment building. The Planning Commission recommended the proposed change to the City Council, which under Eastlake's procedures could either accept or reject the Planning Commission's recommendation. Meanwhile, by popular vote, the voters of Eastlake amended the city charter to require that any changes in land use agreed to by the Council be approved by a 55% vote in a referendum.¹ The City Council approved the Planning Commission’s recommendation for reclassification of respondent’s property to permit the proposed project. Respondent then applied to the Planning Commission for “parking and yard” approval for the proposed building. The Commission rejected the application, on the ground that the City Council's rezoning action had not yet been submitted to the voters for ratification.

Respondent then filed an action in state court, seeking a judgment declaring the charter provision invalid as an unconstitutional delegation of legislative power to the people.² While the case was pending, the City Council’s action was submitted to a referendum, but the proposed zoning change was not approved by the requisite 55% margin. Following the election, the Court of Common Pleas and the Ohio Court of Appeals sustained the charter provision.³

The Ohio Supreme Court reversed. 41 Ohio St. 2d 187, 324 N. E. 2d 740 (1975). Concluding that enactment of zoning and rezoning provisions is a legislative function, the court held that a popular referendum requirement, lacking standards to guide the decision of the voters, permitted the police power to be exercised in a standardless, hence arbitrary and capricious manner. Relying on this Court’s decisions in Washington ex rel. Seattle Trust Co. v. Roberge, 278 U. S. 116 (1928), Thomas Cusack Co. v. Chicago, 242 U. S. 626 (1917), and Eubank v. Richmond, 226 U. S. 137 (1912), but distinguishing James v. Valtierra, 402 U. S. 137 (1971), the court concluded that the referendum provision constituted an unlawful delegation of legislative power.⁴

We reverse.

I

The conclusion that Eastlake’s procedure violates federal constitutional guarantees rests upon the proposition that a zoning referendum involves a delegation of legislative power. A referendum cannot, however, be characterized as a delegation of power. Under our constitutional assumptions, all power derives from the people, who can delegate it to representative instruments which they create. See, e. g., The Federalist No. 39 (J. Madison) . In establishing legislative bodies, the people can reserve to themselves power to deal directly with matters which might otherwise be assigned to the legislature. Hunter v. Erickson, 393 U. S. 385, 392 (1969).⁵

The reservation of such power is the basis for the town meeting, a tradition which continues to this day in some States as both a practical and symbolic part of our democratic processes.⁶ The referendum, similarly, is a means for direct political participation, allowing the people the final decision, amounting to a veto power, over enactments of representative bodies. The practice is designed to “give citizens a voice on questions of public policy.” James v. Valtierra, supra, at 141.

In framing a state constitution, the people of Ohio specifically reserved the power of referendum to the people of each municipality within the State.

“The initiative and referendum powers are hereby reserved to the people of each municipality on all questions which such municipalities may now or hereafter be authorized by law to control by legislative action Ohio Const., Art. II, § If.

To be subject to Ohio’s referendum procedure, the question must be one within the scope of legislative power. The Ohio Supreme Court expressly found that the City Council’s action in rezoning respondent’s eight acres from light industrial to high-density residential use was legislative in, nature.⁷ Distinguishing between administrative and legislative acts, the court separated the power to zone or rezone, by passage or amendment of a zoning ordinance, from the power to grant relief from unnecessary hardship.⁸ The former function was found to be legislative in nature.⁹ Accord, Denney v. Duluth, 295 Minn. 22, 28-29, 202 N. W. 2d 892, 895-896 (1972); Smith v. Township of Livingston, 106 N. J. Super. 444, 454, 256 A. 2d 85, 90 (1969); Wollen v. Borough of Fort Lee, 27 N. J. 408, 422, 142 A. 2d 881, 888-889 (1958); Johnston v. City of Claremont, 49 Cal. 2d 826, 835-836, 323 P. 2d 71, 76-77 (1958); Dwyer v. City Council, 200 Cal. 505, 515, 253 P. 932, 935-936 (1927); Hilltop Realty, Inc. v. City of South Euclid, 110 Ohio App. 535, 164 N. E. 2d 180 (1960). Compare Kelley v. John, 162 Neb. 319, 75 N. W. 2d 713 (1956), with In re Frank, 183 Neb. 722, 723, 164 N. W. 2d 215, 216 (1969).

II

The Ohio Supreme Court further concluded that the amendment to the city charter constituted a “delegation” of power violative of federal constitutional guarantees because the voters were given no standards to guide their decision. Under Eastlake’s procedure, the Ohio Supreme Court reasoned, no mechanism existed, nor indeed could exist, to assure that the voters would act rationally in passing upon a proposed zoning change. This meant that “appropriate legislative action [would] be made dependent upon the potentially arbitrary and unreasonable whims of the voting public.” 41 Ohio St. 2d, at 195, 324 N. E. 2d, at 746. The potential for arbitrariness in the process, the court concluded, violated due process.

Courts have frequently held in other contexts that a congressional delegation of power to a regulatory entity must be accompanied by discernible standards, so that the delegatee's action can be measured for its fidelity to the legislative will. See, e. g., Yakus v. United States, 321 U. S. 414 (1944); Amalgamated Meat Cutters v. Connally, 337 F. Supp. 737 (DC 1971). Cf. FEA v. Algonquin SNG, ante, p. 548. See generally 8 E. McQuillan, Municipal Corporations § 25.161, pp. 521-522 (3d ed. 1965); Note, 1972 Duke L. J. 122. Assuming, arguendo, their relevance to state governmental functions, these cases involved a delegation of power by the legislature to regulatory bodies, which are not directly responsible to the people; this doctrine is inapplicable where, as here, rather than dealing with a delegation of power, we deal with a power reserved by the people to themselves.¹⁰

In basing its claim on federal due process requirements, respondent also invokes Euclid v. Ambler Realty Co., 272 U. S. 365 (1926), but it does not rely on the direct teaching of that case. Under Euclid, a property owner can challenge a zoning restriction if the measure is “clearly arbitrary and unreasonable, having no substantial relation to the public health, safety, morals, or general welfare.” Id., at 395. If the substantive result of the referendum is arbitrary and capricious, bearing no relation to the police power, then the fact that the voters of Eastlake wish it so would not save the restriction. As this Court held in invalidating a charter amendment enacted by referendum:

“The sovereignty of the people is itself subject to those constitutional limitations which have been duly adopted and remain unrepealed.” Hunter v. Erickson, 393 U. S., at 392.

See also Lucas v. Colorado Gen. Assembly, 377 U. S. 713, 736-737 (1964); West Virginia State Bd. of Educ. v. Barnette, 319 U. S. 624, 638 (1943).

But no challenge of the sort contemplated in Euclid v. Ambler Realty is before us. The Ohio Supreme Court did not hold, and respondent does not argue, that the present zoning classification under Eastlake’s comprehensive ordinance violates the principles established in Euclid v. Ambler Realty. If respondent considers the referendum result itself to be unreasonable, the zoning restriction is open to challenge in state court, where the scope of the state remedy available to respondent would be determined as a matter of state law, as well as under Fourteenth Amendment standards. That being so, nothing more is required by the Constitution.¹¹

Nothing in our cases is inconsistent with this conclusion. Two decisions of this Court were relied on by the Ohio Supreme Court in invalidating Eastlake’s procedure. The thread common to both decisions is the delegation of legislative power, originally given by the people to a legislative body, and in turn delegated by the legislature to a narrow segment of the community, not to the people at large. In Eubank v. Richmond, 226 U. S. 137 (1912), the Court invalidated a city ordinance which conferred the power to establish building setback lines upon the owners of two-thirds of the property abutting any street. Similarly, in Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U. S. 116 (1928), the Court struck down an ordinance which permitted the establishment of philanthropic homes for the aged in residential areas, but only upon the written consent of the owners of two-thirds of the property within 400 feet of the proposed facility.¹²

Neither Eubank nor Roberge involved a referendum procedure such as we have in this case; the standardless delegation of power to a limited group of property owners condemned by the Court in Eubank and Roberge is not to be equated with decisionmaking by the people through the referendum process. The Court of Appeals for the Ninth Circuit put it this way:

“A referendum, however, is far more than an expression of ambiguously founded neighborhood preference. It is the city itself legislating through its voters — an exercise by the voters of their traditional right through direct legislation to override the views of their elected representatives as to what serves the public interest.” Southern Alameda Spanish Speaking Organization v. Union City, California, 424 F. 2d 291, 294 (1970).

Our decision in James v. Valtierra, upholding California’s mandatory referendum requirement, confirms this view. Mr. Justice Black, speaking for the Court in that case, said:

“This procedure ensures that all the people of a community will have a voice in a decision which may lead to large expenditures of local governmental funds for increased public services . . . 402 U. S., at 143 (emphasis added).

Mr. Justice Black went on to say that a referendum procedure, such as the one at issue here, is a classic demonstration of “devotion to democracy . . . .” Id., at 141. As a basic instrument of democratic government, the referendum process does not, in itself, violate the'Due Process Clause of the Fourteenth Amendment when applied to a rezoning ordinance.¹³ Since the rezoning decision in this case was properly reserved to the people of Eastlake under the Ohio Constitution, the Ohio Supreme Court erred in holding invalid, on federal constitutional grounds, the charter amendment permitting the voters to decide whether the zoned use of respondent’s property could be altered.

The judgment of the Ohio Supreme Court is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

1 As adopted by the voters, Art. VIH, § 3, of the Eastlake City Charter provides in pertinent part:

“That any change to the existing land uses or any change whatsoever to any ordinance . . . cannot be approved unless and until it shall have been submitted to the Planning Commission, for approval or disapproval. That in the event the city council should approve any of the preceding changes, or enactments, whether approved or disapproved by the Planning Commission it shall not be approved or passed by the declaration of an emergency, and it shall not be effective, but it shall be mandatory that the same be approved by a 55% favorable vote of all votes cast of the qualified electors of the City of Eastlake at the next regular municipal election, if one shall occur not less than sixty (60) or more than one hundred and twenty (120) days after its passage, otherwise at a special election falling on the generally established day of the primary election. . . .”

2 Respondent also contended that the charter amendment could not apply to its rezoning application since the application was pending at the time the amendment was adopted. The Court of Common Pleas rejected the argument. Respondent neither appealed this point nor argued it in the Court of Appeals or the Ohio Supreme Court; the issue is therefore not before us.

3 The Court of Common Pleas, however, invalidated the charter provision requiring assessment of election costs against the affected property owner. In affirming, the Court of Appeals also upheld that portion of the trial court’s judgment. No appeal was taken to the Ohio Supreme Court on this issue. The question was, accordingly, not passed on by the State Supreme Court, and is therefore not before us.

4 Respondent did not challenge the 55%-aiBrmative requirement as such. Instead, respondent contended that any mandatory referendum provision, regardless of the requisite margin for approval, violated due process as applied to its rezoning application.

5 The people of Ohio, in establishing the general assembly, provided:

“The legislative power of the state shall be vested in a General Assembly . . . but the people reserve to themselves the power to propose to the General Assembly laws and amendments to the constitution, and to adopt or reject the same at the polls on a referendum vote . . . .” Ohio Const., Art. II, § 1.

6 In Massachusetts, for example, the inhabitants could convene a town meeting for the purpose of regulating nuisances. A. De Wolf, The Town Meeting: A Manual of Massachusetts Law 136 (1890). See generally Bryan, Town Meeting Government Still Supported in Vermont, 61 Nat. Civic R. 348 (1972).

7 The land use change requested by respondent would likely entail the provision of additional city services, such as schools and police and fire protection. Cf. James v. Valtierra, 402 U. S. 137, 143 n. 4 (1971). The change would also diminish the land area available for industrial purposes, thereby affecting Eastlake’s potential economic development.

8 By its nature, zoning “interferes” significantly with owners’ uses of property. It is hornbook law that “[m]ere diminution of market value or interference with the property owner’s personal plans and desires relative to his property is insufficient to invalidate a zoning ordinance or to entitle him to a variance or rezoning.” 8 E. Mc-Quillan, Municipal Corporations §25.44, p. Ill (3d ed., 1965). There is, of course, no contention in this case that the existing zoning classification renders respondent’s property valueless or otherwise diminishes its value below the value when respondent acquired it.

9 The power of initiative or referendum may be reserved or conferred “with respect to any matter, legislative or administrative, within the realm of local affairs . . . .” 5 E. McQuillan, Municipal Corporations §16.54, p. 208 (3d ed., 1969). However, the Ohio Supreme Court concluded that only land use changes granted by the City Council when acting in a legislative capacity were subject to the referendum process. Under the court’s binding interpretation of state law, a property owner seeking relief from unnecessary hardship occasioned by zoning restrictions would not be subject to Eastlake’s referendum procedure. For example, if unforeseeable future changes give rise to hardship on the owner, the holding of the Ohio Supreme Court provides avenues of administrative relief not subject to the referendum process.

10 The Ohio Supreme Court’s analysis of the requirements for standards flowing from the Fourteenth Amendment also sweeps too broadly. Except as a legislative history informs an analysis of legislative action, there is no more advance assurance that a legislative body will act by conscientiously applying consistent standards than there is with respect to voters. For example, there is no certainty that the City Council in this case would act on the basis of “standards” explicit or otherwise in Eastlake’s comprehensive zoning ordinance. Nor is there any assurance that townspeople assembling in a town meeting, as the people of East-lake could do, Hunter v. Erickson, 393 U. S. 385, 392 (1969), will act according to consistent standards. The critical constitutional inquiry, rather, is whether the zoning restriction produces arbitrary or capricious results.

11 The Supreme Court of Ohio rested its decision solely on the Due Process Clause of the Fourteenth Amendment. See 41 Ohio St. 2d 187, 196, 324 N. E. 2d 740, 746 (1975). The only questions presented to this Court in the petition for certiorari concern the validity of that due process holding. Pet. for Cert. 2. Accordingly, we confine ourselves to considering whether due process is denied by the challenged charter amendment.

12 The Ohio Supreme Court also considered this Court's decision in Thomas Cusack Co. v. Chicago, 242 U. S. 526 (1917). In contrast to Eubank and Roberge, the Cusack Court upheld a neighborhood consent provision which permitted property owners to waive a municipal restriction prohibiting the construction of billboards. This Court in Cusack distinguished Eubank in the following way:

“[The ordinance in Eubank] left the establishment of the building line untouched until the lot owners should act and then . . . gave to it the effect of law. The ordinance in the case at bar absolutely prohibits the erection of any billboards . . . but permits this prohibition to be modified with the consent of the persons who are to be most affected by such modification.” 242 U. S., at 531.

Since the property owners could simply waive an otherwise applicable legislative limitation, the Court in Cusack determined that the provision did not delegate legislative power at all. Ibid.

13 The fears expressed in dissent rest on the proposition that the procedure at issue here is “fundamentally unfair” to landowners ; this fails to take into account the mechanisms for relief potentially available to property owners whose desired land use changes are rejected by the voters. First, if hardship is occasioned by zoning restrictions, administrative relief is potentially available. Indeed, the very purpose of “variances” allowed by zoning officials is to avoid “practical difficulties and unnecessary hardship.” 8 E. McQuillan, Municipal Corporations §25.159, p. 511 (3d ed. 1965). As we noted, supra, at 677, remedies remain available under the Ohio Supreme Court’s holding and provide a means to challenge unreasonable or arbitrary action. Euclid v. Ambler Realty Co., 272 U. S. 365 (1926).

The situation presented in this case is not one of a zoning action denigrating the use or depreciating the value of land; instead, it involves an effort to change a reasonable zoning restriction. No existing rights are being impaired; new use rights are being sought from the City Council. Thus, this ease involves an owner’s seeking approval of a new use free from the restrictions attached to the land when it was acquired.