Making Sense of <em>Penn Central</em>

Abstract

[W]e have frequently observed that whether a restriction will be rendered invalid by government's failure to pay for any losses proximately caused by it depends largely upon circumstances [in that] case.--Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 124 (1978). [A] 'totality of circumstances' analysis masks intellectual bankruptcy.--Thomas Merrill, Economics of Public Use, 72 Cornell L. Rev. 61, 92 (1986). INTRODUCTION In Penn Central Transportation Co. v. City of New York, (2) Supreme Court famously observed that it had been unable to develop any 'set formula' for determining when 'justice and fairness' require payment under Takings Clause, and that it was therefore compelled to rely on ad hoc, factual inquiries. (3) In an apparent effort to begin to give some content to regulatory takings analysis, Court three factors with particular significance in a takings case: (1) economic impact of government action, (2) extent to which action interferes with distinct investment-backed expectations, and (3) character of action. (4) Yet, over following twenty-five years, Court has provided little guidance on meaning and proper application of these three factors, (5) perpetuating essentially ad hoc approach to takings analysis (6) and contributing to widespread view that regulatory takings is an especially confused field of law. (7) The Court's failure to come to grips with meaning of Penn Central is especially striking in view of substantial progress Court has made recently in resolving other questions about regulatory takings doctrine. (8) The next thing--perhaps last big thing--in regulatory takings law will be resolving meaning of Penn Central factors. At one point, Court appeared poised to jettison Penn Central analysis altogether. During 1980's and 1990's, as an antidote to chronic vagueness of Penn Central framework, Court attempted to develop a set of alternative, bright line tests. (9) In Lucas v. South Carolina Coastal Council, (10) Court ruled that a regulation that denies owner economically viable use of private property represents a per se taking. And in Loretto v. Teleprompter Manhattan CATV Corp., (11) Court said that a regulation resulting in a permanent physical occupation of private property also represents a per se taking. (12) From perspective of property rights advocates, this approach appeared to lead reliably to findings of takings liability, albeit in narrowly defined circumstances. Even from perspective of defenders of government regulatory authority, this approach had potential benefit of identifying actions that would be safely immune from takings liability--assuming these per se tests came to define not only grounds, but also outer limits, of takings liability. (13) The effort to construct a more rule-based takings doctrine has plainly faltered, returning Penn Central to forefront. In recent years, Court has given Loretto per se rule a narrow interpretation, confining test to a relatively rare, easily identified set of actions. (14) The Court has given Lucas per se rule an even narrower reading, characterizing Lucas test as applying only to the complete elimination of a property's value. (15) Few if any regulations have such a drastic effect on property value, meaning that Lucas has been converted to a precedent of largely symbolic significance. At same time, Court's most recent regulatory takings decisions have explicitly reasserted centrality of Penn Central framework. For example, in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, (16) Court said that [o]ur polestar ... remains principles set forth in Penn Central itself, which call for a careful examination and weighing of all relevant circumstances. …