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2010] Derailing Penn Central 871 only to have them rejected as seriously flawed. 5 Nevertheless, this Note argues that the Court’s current method of regulatory takings analysis is fraught with so many issues that one cannot help but believe that a better, sounder, approach must exist. To illustrate the problems created by the Court’s current approach to regulatory takings, this Note examines a hypothetical situation. After years of carefully saving, John decided to invest in a small business and purchase a popular trailer park for $400,000. He rented out each lot, and the steady flow of rent payments promised to provide John with a profit. All indications were that John had made a wise investment. However, John was notified that the town had enacted a zoning ordinance prohibiting trailer homes. 6 The town believed that such properties were an eyesore and that new residents would be attracted to the area now that the trailer parks were gone. Unfortunately, the regulation did not coincide with John’s interests. He had invested his hard-earned life savings in the park, and although John could sell the property, the zoning ordinance had caused the property’s value to plummet to $100,000. The economic deprivation, caused directly by government action, seemed manifestly unfair to John, and he promptly brought an inverse condemnation suit, claiming that the regulation constituted an unconstitutional taking of his property. He argued that the Fifth Amendment required that he be given just compensation for the government’s taking of his land. Unfortunately, John faces a difficult task and must overcome the complex, unclear, and often burdensome law of regulatory takings. 5 See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 333–34 (2002) (rejecting a proposed rule for land use restrictions, advanced by the Institute of Justice as amicus curiae, that would replace Penn Central). 6 It is understood that, in practice, the zoning ordinance would likely include an amortization period to protect against a compensable taking. Some states permit the discontinuation of nonconforming uses without compensation after the owners have had a reasonable time to enjoy the fruits of the uses and, in effect, a reasonable opportunity to recoup their investments. Amortization constitutes a form of transition relief; it is a form of delayed implementation of a new legal regime. Jonathan Remy Nash & Richard L. Revesz, Grandfathering and Environmental Regulation: The Law and Economics of New Source Review, 101 NW. U. L. REV. 1677, 1731–32 (2007) (footnotes omitted). It is possible, however, that the town would choose not to include an amortization period because it prefers the immediate removal of the trailer parks. This example is provided to explore what would happen under current takings law to property owners like John should a town opt not to include an amortization period.
872 The George Washington Law Review [Vol. 78:870 The Fifth Amendment’s Takings Clause prohibits the taking of private property for public use “without just compensation.” 7 The Supreme Court has long interpreted the Takings Clause as encompassing not only physical confiscations of property, but also certain scenarios where a government regulation detrimentally affects privately owned property. 8 The Justices of the Supreme Court, along with other legal scholars, have debated whether regulatory takings doctrine should take the form of an ad hoc balancing test, an exclusive set of strict per se rules, or a combination of both, as is currently the case. 9 The primary test for determining whether regulation effects a Fifth Amendment taking is the Penn Central ad hoc balancing test, which examines three factors: the regulation’s economic impact, the claimant’s distinct investment-backed expectations, and the character of the governmental action. 10 In addition to the Penn Central balancing test, the current takings doctrine includes the per se rules of Lucas and Loretto. Lucas holds that a taking ordinarily occurs 11 if the “regulation denies all economically beneficial or productive use of the land.” 12 Loretto holds that a taking ordinarily occurs 13 if the regulation causes a permanent physical occupation on the land. 14 Alongside this confusing structure existed yet another per se test that held that a taking occurred if the regulation did not substantially advance a legiti- 7 U.S. CONST. amend. V. 8 See infra text accompanying notes 20–22. 9 See infra pp. 106–08. 10 Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). It can be argued, however, that the Penn Central balancing test examines only two factors. In Penn Central, the Court explained that “[t]he economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations.” Id. This may suggest that the test only consists of two factors: (1) the economic impact, in light of the distinct investment-backed expectations, and (2) the character of the governmental action. See Gary Lawson, Katharine Ferguson & Guillermo A. Montero, “Oh Lord, Please Don’t Let Me Be Misunderstood!”: Rediscovering the Mathews v. Eldridge and Penn Central Frameworks, 81 NOTRE DAME L. REV. 1, 32 (2005). 11 Although a taking ordinarily occurs if the per se rule is satisfied, it is not always the case, as the regulation may fall within the nuisance exception. Under this exception, compensation is not due if the prohibited use is impermissible under the “background principles” of the common law. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1029 (1992). The Court has been hesitant “to find a taking when the State merely restrains uses of property that are tantamount to public nuisances.” Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 491 (1987). It may be argued that the nuisance exception is actually a third per se rule, in that it acts as a categorical exemption. There is thus automatically no taking and no just compensation awarded if the nuisance exception applies. See DAVID A. DANA & THOMAS W. MERRILL, PROP- ERTY: TAKINGS 111 (2002). 12 Lucas, 505 U.S. at 1015. 13 See DANA & MERRILL, supra note 11, at 95. 14 See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982).
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