438 U.S. 104 (1978)
The 'Penn Central Transportation Co. v.
Does New York City's application of its landmarks law to the Grand Central Terminal constitute a 'taking' under the Fifth Amendment, requiring just compensation?
A regulatory action that affects property use does not constitute a 'taking' per se under the Fifth Amendment unless it denies the owner of 'all economically viable use' of the property. The determination involves considering the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the governmental action.
The Supreme Court held that New York City's landmark preservation law, as applied to the Grand Central Terminal, did not constitute a 'taking' under the Fifth Amendment. The regulation did not prevent Penn Central from engaging in any viable economic use of the terminal.
The Penn Central decision is a cornerstone in takings jurisprudence, establishing a flexible balancing test to analyze when regulatory actions constitute a taking. The Penn Central test has been a critical framework applied in later cases to determine whether a regulation goes 'too far.' It illustrates the difficulty in drawing the line between permissible government regulation and compensable takings, a question that continues to challenge courts. Understanding this case is crucial for law students as it highlights the complexity of balancing private property rights and the public interest in land use planning and historic preservation.