Penn Central Transportation Co. v. New York City holds a secure position in the architecture of the regulatory takings doctrine. That doctrine is at bottom a tool for distinguishing between different governmental powers; in particular, between the power of eminent domain and the police power. Because eminent domain requires that compensation be paid, whereas the police power does not, it is necessary to draw a line between these powers. Conceivably we could simply take the legislature at its word as to which power it is exercising. But at least since Pennsylvania Coal Co. v. Mahon, the Supreme Court has insisted independent judicial review is required to assure that when the government purports to be exercising the police power (or the power to tax) it is not in fact exercising the power of eminent domain. Hence the regulatory takings doctrine, which is designed to identify those exercises of governmental power that are functionally equivalent to eminent domain and therefore require the payment of just compensation.
As described in recent decisions, most prominently Lingle v. Chevron U.S.A. Inc., the Court appears to understand the power of eminent domain and the police power to be arrayed along a spectrum. At one end we have clear cases of eminent domain, as where the government condemns and takes title to private property for some public project. At the other end, we have clear cases of the police power, as where the government makes it a crime to discharge toxic wastes into the city water supply. The task in contested cases is to determine whether the challenged action resides closer to the eminent domain end of the spectrum, where compensation is required, or to the police power end of the spectrum, where it is not.
Thomas W. Merrill,
The Character of the Governmental Action,
Vt. L. Rev
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