Making Sense of Penn Central

Date01 June 2009
5-2009 NEWS & ANALYSIS 39 ELR 10471
Making Sense of Penn Central
by John D. Echeverria
Executive Director, Georgetown Environmental Law & Policy Institute, Georgetown University Law Center.
“[W]e have frequently observed that whether a pa rticular
restriction will be rendered inval id by the government’s fail-
ure to pay for any losses proximately caused by it depends
largely upon the particu lar circumstances [in that] case.”
438 U.S. 104, 124 (1978).
“[A] ‘totality of the circum stances’ analysis masks intellec-
tual bank ruptcy.”
72 C L . R. 61, 92 (1986).
In 1 the
U.S. Supreme Court famously observed that it had been
“unable to develop any ‘set formula’ for determining when
‘justice and fairness’ require” payment under the Takings
Clause, and that it was therefore compelled to rely on “essen-
tially ad hoc, factual inquiries.”2 In an apparent eort to
begin to give some content to regulatory takings analysis, the
Court identied three factors with “particular signicance”
in a takings case: (1) the “economic impact” of the govern-
ment action, (2) the extent to which the action “interferes
with distinct investment-backed expectations,” a nd (3) the
“character” of the action.3 Yet, over the following twenty-ve
years, the Court has provided little guidance on the meaning
and proper application of these three factors,4 perpetuating
1. 438 U.S. 104, 8 ELR 20528 (1978).
2. Id. at 124
3. Id. e Court’s statement that these three factors have “particular signicance”
might be read to suggest that other factors could be relevant as well. However,
the Court has never explicitly expanded upon this list of factors.
4. See Holly Doremus, Takings and Transition, 19 J. L U  E. L. 1, 7
(2003) (“e Court has many times repeated the list of Penn Central factors,
but has never rened the meaning of those factors, or explained how they
should be weighted.”).
the essentially ad hoc approach to takings analysis5 and con-
tributing to the widespread view that regulatory takings is an
especially confused eld of law.6 e Court’s failure to come
to grips with the meaning of Penn Central is especially strik-
ing in view of the substantial progress the Court has made
recently in resolving other questions about regulatory takings
doctrine.7 e next “big thing”—perhaps the last big t hing
—in regulatory tak ings law will be resolving the meaning of
the Penn Central factors.
At one point, the Court appeared poised to jettison the
Penn Central ana lysis altogether. During the 1980s and
1990s, as an antidote to the chronic vagueness of the Penn
Central framework, the Court attempted to develop a set
of alternative, bright line tests.8 In Lucas v. South Carolina
Coastal Council,9 the Court ruled that a regulation that denies
the owner “all economically viable use” of private property
represents a per se taking. And in Loretto v. Teleprompter
Manhattan CATV Corp.,10 the Court said that a regulation
resulting in a permanent physical occupation of private prop-
erty also represents a per se taking.11 From the perspective
of property rights advocates, this approach appeared to lead
reliably to ndings of takings liability, albeit in narrowly
5. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agen-
cy, 535 U.S. 302, 326, 32 ELR 20627 (2002), quoting Lucas v. South Carolina
Coastal Council, 505 U.S. 1003, 1015, 22 ELR 21104 (1992), in turn quot-
ing Penn Central, 438 U.S. at 124 (“In the decades following [Penn Central],
we have ‘generally eschewed’ any set formula for determining how far is too far,
choosing instead to engage in ‘essentially ad hoc, factual inquiries.”’).
6. See, e.g., D. Benjamin Barros, e Police Power and the Takings Clause, 58 U.
M L. R. 471, 471 & n.1 (2002) (bemoaning the “widespread confu-
sion” created by Supreme Court takings jurisprudence and citing numerous
prior articles making similar complaints).
7. See, e.g,. Lingle v. Chevron U.S.A., Inc., 125 S. Ct. 2074, 35 ELR 20106
(2005) (repudiating the “substantially advances” takings test); Tahoe-Sierra,
535 U.S. 302 (clarifying “temporary takings”).  John D. Echever-
ria,  35 ELR 10577
(2005); John D. Echeverria, 
Takings Decision, 32 ELR 11235 (2002).
8.  Molly McUsic,    
Problem of Takings, 92 N. U.L. R. 591 (1998) (describing the evolution of
the Supreme Court’s “bright line” takings tests).
9. 505 U.S. 1003, 22 ELR 21104 (1992).
10. 458 U.S. 419 (1982).
11. As the Court made clear in Lucas, these per se rules are subject to important
qualications, particularly when background principles of “property” or “nui-
sance” law bar a takings claimant from asserting a protected property right
to engage in activities in certain locations or with certain types of external
impacts. Id. at 1029-30 (explaining that regulations which prohibit an activity
that was always unlawful do not constitute takings). See also id. at 1028-29
(indicating that background principles can bar a taking claim based on the per
se physical occupation theory).
     UCLA J.
ENVTL. L. & POLY
  
dened circumstances. Even from the perspective of defend-
ers of government regulatory authority, this approach had the
potential benet of identifying actions that would be safely
immune from ta kings liability—assuming these per se tests
came to dene not only the grounds, but also the outer lim-
its, of takings liability.12
e eort to construct a more rule-based takings doctrine
has plainly fa ltered, returning Penn Central to the forefront.
In recent years, the Court has given t he Loretto per se r ule a
narrow interpretation, conning the test to a “relatively rare,
easily identied” set of actions.13 e Court ha s given the
Lucas per se rule an even narrower reading, characterizing
the Lucas test a s applying only to “the complete elimination
of a property’s value.”14 Few if a ny regulations have such a
drastic eect on property value, meaning that Lucas has been
converted to a precedent of largely symbolic signicance. At
the same time, the Court’s most recent regulatory ta kings
decisions have explicitly reasserted the centrality of t he Penn
Central framework. For example, in Tahoe-Sierra Preserva-
      15 the
Court said that “[o]ur polestar . . . remains the principles set
forth in Penn Central itself,” which call for a “careful exami-
nation and weighing of all the relevant circumstances.”16
e upshot is that t he law of regulatory takings today looks
remarkably similar to the law as it existed in 1978 after Penn
Central was decided.
e per se approach to regulatory takings failed in part
because it has proven very dicult to cabin the complex fair-
ness questions ra ised by takings claims with hard and fast
rules. For example, the physical invasion of private space
by third parties, in the abstract, represents a serious type of
invasion of private property rig hts. But the burden imposed
in the Loretto case by the requirement that Ms. Loretto
accept placement of telev ision equipment on the exterior
of her building was actually quite trivial compared to the
burden imposed by many restrictions on property use that
plainly do not rise to the level of tak ings.17 Inaddition, the
per se Lucas rule is potentially subject to artful manipula-
tionby clever investors who can structure land acquisitions
in order to manufacture apparent regu latory wipeouts and
create potential claims under that precedent.
Furthermore, the ideological middle of the Court, rep-
resented by Justice Anthony Kennedy and former Justice
Sandra Day O’Connor, consistently resisted the eort by the
12. See John D. Echeverria, 
, 52 L U L  Z D 3 ( Jan. 2000) (arguing that
the Court’s per se tests, viewed not as supplemental takings tests, but as a com-
plete reformulation of regulatory takings law, provided a potentially promising
foundation for a regulatory takings doctrine that would provide clear rules and
be quite respectful of government regulatory authority).
13. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agen-
cy, 535 U.S. 302, 324, 32 ELR 20627 (2002).
14. See Lingle v. Chevron U.S.A., Inc., 125 S. Ct. 2074, 2082, 35 ELR 20106
15. 535 U.S. at 326.
16. Id. at 326 n. 23, quoting Palazzolo v. Rhode Island, 533 U.S. 606, 633, 32
ELR 20516 (2001) (O’Connor J., concurring).
17. See Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S.
602, 645 (1992) (emphasizing that very severe economic impact is ordinarily
required to support a regulatory takings claim).
more conservative wing of the Court, led by Justice Anto-
nin Scalia, to develop a more rule-based approach to takings.
ey both preferred approaches that involved more nuanced
examination of the factua l circumstances of each case.18
Eventually their preferences prevai led, throwing the Court
back to the prior Penn Central analysis.
e upshot is that Penn Central now provides the only
plausible path to reform of regulatory takings doctrine. An
unsuccessful eort has been made to build a coherent, pre-
dictable law of regulatory takings by working around Penn
Central. Now, as a practical matter, Penn Central is here to
stay. us, the challenge ahead is guring out how to convert
Penn Central into the foundation for a manageable legal doc-
trine. To date, the ad hoc Penn Central analysis has appeared
to mask, if not intellectual bank ruptcy, to use Professor Mer-
rill’s provocative terminology, at lea st considerable uncer-
tainty about the fundamental parameters of takings law. If
the Penn Central test is to serve as more than lega l decora-
tion for judicial rulings based on intuition, it is imperative to
clarify the meaning of Penn Central.19
is article seeks to achieve a modest objective using rela-
tively modest analytic tools. Fundamental questions can, of
course, be ra ised about the legitimacy of the entire regu la-
tory tak ings enterprise.20 But this article takes the Supreme
Court’s apparent commitment to some type of regulatory
takings doctrine as a given. Moreover, a variety of competing
theories have been advanced to explain and rationalize reg u-
latory ta kings doctrine.21 Rather than focus on those theo-
ries, this article primarily uses the holdings and reasoning of
the Court’s major takings precedents as building blocks in
an eort to constrict a simpler, more predictable legal doc-
trine. A major theme of this article is that t he Court’s most
recent takings decisions,     22 in
particular, should resolve a good deal of the confusion that
has reigned in this eld of law.
18. For example, in Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 22
ELR 21104 (1992), Justice Kennedy joined in the judgment but led a con-
curring opinion objecting to the suggestion in the majority opinion authored
by Justice Scalia that a regulatory takings claim based on a regulation destroy-
ing all property value can only be defeated if the regulation parallels common
law “background principles.” Kennedy wrote, “Coastal property may present
such unique concerns for a fragile land system that the State can go further in
regulating its development and use than the common law of nuisance might
otherwise permit.” Id. at 1036. Similarly, in , Justice O’Connor dis-
agreed with Justice Scalia’s view that a claimant’s advance notice of a regula-
tory restriction should be completely irrelevant in regulatory takings analysis,
see 533 U.S. at 636-37 (Scalia, J., concurring), preferring instead to treat a
claimant’s advance notice of regulatory restrictions as a relevant but not neces-
sarily dispositive factor in takings analysis. See id. at 632-36 (O’Connor, J.,
19. For dierent perspectives on Penn Central, see, e.g., Marc R. Poirier, e Virtue
of Vagueness in Takings Doctrine, 24 C L. R. 93 (2002) (defending
the value of vagueness and uncertainty in the Penn Central analysis); Gary Law-
son, Katherine A. Ferguson, Guillermo A. Montero, “
 Mathews v. Eldridge and Penn Central
Frameworks,” 81 N D L. R. 1 (2005) (defending the Penn Central
analysis as reasonably successful in accomplishing a modest debate-framing
20. See, e.g., J. Peter Byrne, 
Doctrine, 22 E L.Q. 89 (1995).
21.  E  B, L U C, C  M
145-58 (2005) (surveying various legal policy justications for regulatory tak-
ings doctrine).
22. 125 S. Ct. 2074, 35 ELR 20106 (2005).

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