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The Supreme Court 5/23/05 unanimously repudiated its prior statements that government regulation of private property effects a taking if it does not substantially advance legitimate state interests. The Court held that the standards set forth in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978), govern regulatory takings challenges unless the regulation requires an owner to suffer a permanent physical invasion of her property, deprives an owner of all economically viable use of her property, or is connected to a land-use exaction. Under Penn Central, the Court emphasized, the existence of taking "turns in large part, albeit not exclusively, upon the magnitude of a regulation's economic impact and the degree to which it interferes with legitimate property interests," and the "character of the governmental action" also "may be relevant." The Court held that the "substantially advances" formula is not "a stand-alone regulatory takings test that is wholly independent of Penn Central." The "substantially advances" test, the Court reasoned, "suggests a means-ends" test that "has some logic in the context of a due process challenge" but "does not help to identify those regulations whose effects are functionally comparable to government appropriation or invasion of private property." This case is important to any business that is subject to a regulation that might be deemed a compensable taking of property.

Decision below: 363 F.3d 846 (9th Cir. 2004).