Regulatory Takings Law:  Exceptions to the Penn Central Approach [No. 86]
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Regulatory Takings Law: Exceptions to the Penn Central Approach [No. 86]

Ever since Penn Central, regulatory takings
law is construed in a way that gives state and local governments some deference or some benefit of the doubt. Penn Central is the dominant approach, and the Penn Central test instructs courts to balance three factors. The first factor is to look at the impact
of the economic effect of the restriction on the owner and his use of his property. The second factor looks at the effect of the
regulation on the reasonable investment-backed expectation the owner has, and the third factor
looks at the justification of the government action. In most cases, courts construe the first factor
and the second factor, telling the owner, “Be happy with what you can do. Don’t complain too much about the things
you can’t do.” But in two limited situations, courts take
those two same factors and say those factors work in favor of the owner. If a regulation has the effect of ordering
a touching of the property, then the person who suffers the touching can claim that he
suffered a taking automatically. Loretto v. Teleprompter Cable arose after
New York City enacted an ordinance that allowed for cable line to be laid down throughout
all of New York City. The New York ordinance ordered all apartment
owners in New York City to let cable companies come in and install cable boxes in every single
apartment, everywhere in the building. Loretto said, “I would have liked the opportunity
to bargain for myself with the cable company, and if I could have bargained with the cable
company, I would have asked for a share of the royalties the cable company is going to
get.” The cable company wanted to say no taking
occurred. “You still have title to your apartment
building, and you have property in every single one of the apartment units in it, and we’re
doing you a favor.” The court held that even a small cable box
is inflicting a physical touching on the property, and that’s a taking. Lucas was a developer and he bought a beachfront
lot on the South Carolina coast, and a few years after he bought that lot, South Carolina’s
legislature enacted a Beachfront Management Act. The Beachfront Management Act declared that
it was the policy of South Carolina to be worried that big storms in the Atlantic were
going to erode the coastline, and to stop erosion, the South Carolina legislature ordered
no further, no new construction on the Atlantic Coast. Lucas was expecting to build the beachfront
house on that property, and after the act was enacted, he can’t build anything on
the property. The court held that under Penn Central’s
first prong, the landowner had suffered 100% loss of all interest, because he couldn’t
build anything, and under the Penn Central second prong, the owner had an investment-backed
expectation in building something, and his investment-backed expectations were frustrated. The two situations in which the owner wins
are, first, a situation in which a land use restriction orders the owner to allow a physical
thing or person to come onto the property that she doesn’t want. And the second situation arises when the land
use restriction orders the person to stop doing anything beneficial with the land.

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