---
title: "Regulatory Takings (Penn Central)"
type: Legal Rule
source: https://casebriefly.com/legal-rules/regulatory-takings-penn-central
---

# Regulatory Takings (Penn Central)

Under Penn Central, a regulation that does not physically appropriate property or eliminate all economic value may still constitute a taking. Courts balance the economic impact on the owner, interference with investment-backed expectations, and the character of the government action.

## Definition

The Penn Central regulatory takings framework, established in Penn Central Transportation Co. v. New York City (1978), governs cases where a government regulation does not constitute a physical taking or completely eliminate all economically beneficial use of property but nonetheless imposes sufficiently severe burdens on property rights to require compensation. Unlike per se takings (physical appropriation or total economic destruction), Penn Central takings require a fact-specific, ad hoc balancing inquiry.

The Penn Central test considers three primary factors: (1) the economic impact of the regulation on the claimant, particularly the extent to which the regulation diminishes the value of the property; (2) the extent to which the regulation interferes with distinct investment-backed expectations -- that is, whether the owner had reasonable expectations about how the property could be used that the regulation frustrates; and (3) the character of the governmental action -- whether the regulation resembles a physical invasion (weighing toward a taking) or instead adjusts the benefits and burdens of economic life to promote the common good (weighing against a taking).

No single factor is dispositive, and the analysis is inherently case-specific. Courts consider the severity of the economic burden, whether the owner retains some economically viable use, whether the regulatory regime was foreseeable, and whether the regulation targets a narrow class of property owners or applies broadly. The Penn Central framework has been criticized for its unpredictability, but it remains the default test for regulatory takings claims that do not fall into per se categories. The relevant parcel concept (how to define the unit of property affected) is also important, as a regulation's economic impact varies depending on the denominator used.

## Elements

- The economic impact of the regulation on the property owner
- The extent of interference with the owner's distinct investment-backed expectations
- The character of the government action (physical invasion vs. public program adjusting benefits and burdens)
- The analysis is a fact-specific, ad hoc balancing inquiry -- no single factor is dispositive
- The relevant parcel of property must be identified to assess economic impact

## Key Case

Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978)

## Landmark Cases

| Name | Citation | Significance |
| --- | --- | --- |
| Penn Central Transportation Co. v. New York City | 438 U.S. 104 (1978) | Established the three-factor balancing test for regulatory takings claims: economic impact, investment-backed expectations, and character of government action |
| Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency | 535 U.S. 302 (2002) | Applied Penn Central to temporary development moratoria, holding that temporary restrictions are generally analyzed under Penn Central rather than as per se total takings |
| Murr v. Wisconsin | 582 U.S. 383 (2017) | Addressed the relevant parcel question, holding that courts should consider multiple factors including treatment under state and local law |
| Lingle v. Chevron U.S.A. Inc. | 544 U.S. 528 (2005) | Clarified that the Penn Central test is the default framework for regulatory takings claims and eliminated the substantially advances test as a standalone takings theory |

## Exam Tips

- Apply Penn Central when the regulation does not involve a physical taking or total economic destruction -- it is the default regulatory takings test
- Address all three factors systematically: economic impact, investment-backed expectations, and character of government action
- Pay attention to the relevant parcel issue -- the economic impact analysis depends on how the affected property is defined
- Remember that Penn Central is a balancing test, so no single factor controls -- argue both sides on each factor

## Common Mistakes

- Treating Penn Central as a rigid test with clear outcomes rather than the flexible, ad hoc balancing inquiry that it is
- Ignoring the investment-backed expectations factor, which is often the most contested element in exam hypotheticals
- Failing to define the relevant parcel of property, which can dramatically alter the economic impact analysis

## Mnemonic Or Memory Aid

Penn Central's EIC: Economic impact, Investment-backed expectations, Character of government action

## Related Rules

- takings-clause-eminent-domain
- per-se-takings-lucas
- due-process-clause-substantive

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Source: [Regulatory Takings (Penn Central) — CaseBriefly](https://casebriefly.com/legal-rules/regulatory-takings-penn-central)