A "regulatory taking" occurs when the government does not formally exercise its power of eminent domain, but enacts a law or undertakes an action that results in a de facto "taking" of property for which compensation is constitutionally mandated., The United States Supreme Court has struggled for decades to determine when a land use regulation is a valid exercise of the police power (and thus not subject to the compensation requirement of the Fifth Amendment to the United States Constitution) and when such a regulation goes "too far" and becomes a regulatory taking.
The Supreme Court has developed a number of tools to assist courts and legislatures in determining when a regulation crosses the critical line to become a compensable taking. The Court has carved out two categories of per se takings: those involving permanent physical occupation by the government and those involving deprivation of "all economically productive or beneficial uses of land," pro- vided the regulated use is not a nuisance-like activity prohibited or constrained at common law. Per se takings cases are relatively rare, however, and the Court has relied primarily upon ad hoc determinations, guided by notions of "justice and fairness." To aid in this complicated task of ad hoc decision making, the Court has created two "tests" or sets of factors to be considered. When considering "as applied" challenges to regulations, courts are to be guided by the three- factor test articulated in Penn Central Transportation Co. v. New York City, which examines "[t]he economic impact of the regulation on the claimant..., the extent to which the regulation has interfered with distinct investment-backed expectations, [and] the character of the governmental action." Facial challenges, on the other hand, are to be decided under the two-factor analysis laid out in Agins v. Tiburon, which maintains that a regulation results in a taking if the regulation fails to advance substantially a legitimate state interest or if it denies a property owner economically viable use of the property."
Lynda J. Oswald,
The Role of the "Harm/Benefit" and "Average Reciprocity of Advantage" Rules in a Comprehensive Takings Analysis,
50 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol50/iss6/2