Penn Central after 35 Years: A Three-Part Balancing Test or a One-Strike Rule?

Abstract

For nearly thirty-five years, the test laid out by the Supreme Court in Penn Central Transportation Co. v. City of New York has been the principal means for determining whether a land use regulation constitutes a taking under the Federal Constitution. During that time, a broad academic consensus has emerged that the standard set forth by Penn Central is a balancing test which considers three factors. Yet, despite this academic consensus, an examination of the case law reveals that no such consensus exists among the federal courts. A recent dissent in the Ninth Circuit, commenting upon the jurisprudential divide within the circuit, asked: Is Penn Central to be applied as a genuine three-factor balancing test, or does government escape liability for a taking if it can prevail on any one of those factors?

This article answers that question. More specifically, it answers whether the lower federal courts apply Penn Central as a true, three-factor balancing test, or a type of “one-strike you’re out” test, or something in between. It does so through a comprehensive, empirical analysis of all cases in the First, Ninth, and Federal Circuits which cite to Penn Central (nearly 500 cases). The review looked at how often the courts actually applied all three factors from the test, how often the courts applied the three factors as a genuine balancing test, and how often plaintiffs succeeded in their takings claim. The data indicates that the predominate practice of the federal courts is not to use Penn Central as a balancing test. Additionally, the article uses a case study of Guggenheim v. City of Goleta to demonstrate the divergent ways federal courts actually apply the Penn Central test.

Keywords: Penn Central, Regulatory Taking

JEL Classification: K00, K11, K19, K10