A regulatory taking is different from eminent domain because title to the property is not taken. Instead, the government regulation impacts the land so much that it eliminates all economically beneficial use or restricts use of the land to the extent that the landowner should receive compensation under the Fifth Amendment. If a landowner can show that all economically beneficial use has been eliminated*, then he is entitled to just compensation. This will be hard for a landowner to prove so a court is more likely to balance the government interest against the burden on the landowner to determine if the landowner is entitled to just compensation.
Penn Central Transportation Co. v. New York City (1978) is a seminal case in which the Court created an ad hoc test to determine whether a zoning law constituted a regulatory taking under the Fifth Amendment. The court will look at the particular circumstances of each case, make factual inquiries, and focus of these three major factors:
- The character of the government action
- The protection of reasonable, investment-backed expectations; and
- The economic impact of the regulation on the particular owner
If, after balancing these interests, a regulation is deemed an unconstitutional taking of property, the landowner is entitled to just compensation.
*This is deemed a categorical per se taking. Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). Government mandated permanent physical invasions are also deemed a per se taking.