Amendment 5 — Regulatory Takings And Penn Central Framework

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Fifth Amendment :

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

In its 1978 decision, Penn Central Transportation Co. v. City of New York,[1](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn1amd5 " 438 U.S. 104 (1978). Justices William Rehnquist and John Paul Stevens and Chief Justice Warren Burger dissented. Id. at 138. ") the Court, while cautioning that regulatory takings cases require “essentially ad hoc, factual inquiries,” nonetheless provided general guidance for determining whether a regulatory taking had occurred. The Court emphasized that the degree to which a government action interfered with a property owner’s interest in his property—whether the interference amounted to a “physical invasion” or only reflected an “adjusting of benefits and burdens” —indicated whether a taking had occurred. The Court explained:

The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are . . . relevant considerations. So too, is the character of the governmental action. A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.[2](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn2amd5 " Id. at 124 (citations omitted). ")

Penn Central concerned New York City’s landmarks preservation law, pursuant to which the City denied approval to construct a fifty-three-story office building atop Grand Central Terminal. The Court denied Penn Central’s takings claim by applying the principles set forth above. Considering the economic impact on Penn Central, the Court noted that the company could still make a “reasonable return” on its investment by continuing to use the facility as a rail terminal with office rentals and concessions, and the City specifically permitted owners of landmark sites to transfer to other sites the right to develop those sites beyond the otherwise permissible zoning restrictions, a valuable right that mitigated the burden otherwise to be suffered by the owner. As for the character of the governmental regulation, the Court found the landmarks law to be an economic regulation rather than a governmental appropriation of property, the preservation of historic sites being a permissible goal and one that served the public interest.[3](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn3amd5 " Id. at 124–28, 135–38. ") Penn Central's economic impact standard also left room for Justice Oliver Wendell Holmes’s observation in Mahon that “[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every . . . change in the general law.” [4](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn4amd5 " Pa. Coal Co. v. Mahon, 260 U.S. 393, 413 (1922). ") Thus, the Court has held that a mere permit requirement does not amount to a taking,[5](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn5amd5 " United States v. Riverside Bayview Homes, 474 U.S. 121 (1985) (requirement that permit be obtained for filling privately-owned wetlands is not a taking, although permit denial resulting in prevention of economically viable use of land may be). ") nor does a simple recordation requirement.[6](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn6amd5 " Texaco v. Short, 454 U.S. 516 (1982) (state statute deeming mineral claims lapsed upon failure of putative owners to take prescribed steps is not a taking); United States v. Locke, 471 U.S. 84 (1985) (reasonable regulation of recordation of mining claim is not a taking). ")

Several times the Court has relied on the concept of “distinct [or, in later cases, ‘reasonable'] investment-backed expectations,” which it introduced in Penn Central, to analyze whether a taking had occurred. In Ruckelshaus v. Monsanto Co.,[7](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn7amd5 " 467 U.S. 986 (1984). ") the Court used this concept to determine whether the government’s disclosure of trade secret information submitted with applications for pesticide registrations resulted in a taking. The Court reasoned that disclosing data that had been submitted from 1972 to 1978, a period when the statute guaranteed confidentiality and thus “formed the basis of a distinct investment-backed expectation,” would have destroyed the property value of the trade secret and constituted a taking.[8](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn8amd5 " Id. at 1011. ") Following 1978 amendments setting forth conditions of data disclosure, applicants who voluntarily submitted data in exchange for the economic benefits of registration had no reasonable expectation of additional protections of confidentiality.[9](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn9amd5 " Id. at 1006–07. Similarly, disclosure of data submitted before the confidentiality guarantee was placed in the law did not frustrate reasonable expectations, the Trade Secrets Act merely protecting against “unauthorized” disclosure. Id. at 1008–10. ")

Rejecting an assertion that reasonable investment backed-expectations had been upset in Connolly v. Pension Benefit Guaranty Corp.,[10](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn10amd5 " 475 U.S. 211 (1986). Accord Concrete Pipe & Prods. v. Constr. Laborers Pension Tr., 508 U.S. 602, 645–46 (1993). See also Kaiser Aetna v. United States, 444 U.S. 164, 179 (1979) (involving frustration of “expectancies” developed through improvements to private land and governmental approval of permits); PruneYard Shopping Ctr. v. Robins, 447 U.S. 74, 84 (1980) (characterizing and distinguishing Kaiser Aetna as involving interference with “reasonable investment backed expectations” ). ") the Court upheld the government’s retroactive imposition of liability for pension plan withdrawals. The Court reasoned that employers had at least constructive notice that Congress might buttress the legislative scheme to accomplish its legislative aim that employees receive promised benefits. However, where a statute imposes severe and “substantially disproportionate” retroactive liability based on conduct several decades earlier, on parties that could not have anticipated the liability, a taking (or violation of due process) may occur. On this rationale, the Court in Eastern Enterprises v. Apfel[11](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn11amd5 " 524 U.S. 498 (1998). Although the plurality opinion announcing the judgment in Eastern Enterprises analyzed the case as a takings issue, five Justices in that case (one supporting the judgment and four dissenters) found substantive due process, not takings law, to provide the analytical framework where, as in Eastern Enterprises, the gravamen of the complaint is the unfairness and irrationality of the statute rather than its economic impact. ") enjoined applying the Coal Miner Retiree Health Benefit Act requirement that companies formerly engaged in mining pay certain miner retiree health benefits to a company that had spun off its mining operation in 1965, before collective bargaining agreements included an express promise of lifetime benefits. In 1998, the Court, however, sustained a federal ban on selling artifacts made from eagle feathers as applied to the existing inventory of a commercial dealer in such artifacts, while not directly addressing the ban’s interference with investment-backed expectations.[12](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn12amd5 " Andrus v. Allard, 444 U.S. 51 (1979). ") The Court merely noted that the ban served a substantial public purpose in protecting the eagle from extinction, that the owner still had viable economic uses for his holdings, such as displaying them in a museum and charging admission, and that he still had the value of possession.[13](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn13amd5 " The Court in Goldblatt had pointed out that the record contained no indication that the mining prohibition would reduce the value of the property in question. 369 U.S. 590, 594 (1962). Contrast Hodel v. Irving, 481 U.S. 704 (1987) (finding insufficient justification for a complete abrogation of the right to pass on to heirs interests in certain fractionated property). Note as well the differing views expressed in Irving as to whether that case limits Andrus v. Allard to its facts. Id. at 718 (Brennan, J., concurring), 719 (Scalia, J., concurring). See also Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1027–28 (1992) (suggesting that Allard may rest on a distinction between permissible regulation of personal property, on the one hand, and real property, on the other). ")

The Court has made plain that, in applying the economic impact and investment-backed expectations factors of Penn Central, courts should compare what the property owner has lost through the challenged government action with what the owner retains. Discharging this mandate requires a court to define the extent of plaintiff’s property—the “parcel as a whole” —that sets the scope of analysis.[14](https://www.law.cornell.edu/constitution-conan/amendment-5/regulatory-takings-and-penn-central-framework#fn14amd5 " The “parcel as a whole” analysis refers to the precept that takings law “does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated.” Penn Cent. Transp. Co. v. City of N.Y., 438 U.S. 104, 130 (1978); see also Concrete Pipe, 508 U.S. at 644; Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 497 (1987). In Tahoe-Sierra Pres. Council v. Tahoe Regional Planning Agency, the Court affirmed the established spatial dimension of the doctrine, under which the court must consider the entire relevant tract, as well as the functional dimension, under which the court must consider plaintiff’s full bundle of rights. See 535 U.S. 302, 327 (2002). The spatial dimension is perhaps best illustrated by t