Thanks to the folks at the Environmental Law Institute, who have allowed us to reprint an article from a recent Environmental Law Reporter by William W. Wade, Ph.D., a resource economist with the firm Energy and Water Economics (Columbia, Tennessee). Bill is a frequent author and speaker on the Penn Central issue, and he’s brought much needed clarification to an often confusing issue.
In Sources of Regulatory Takings Economic Confusion Subsequent to Penn Central, Mr. Wade writes:
The Federal Circuit Cienega X decision imposes insufficient financial analysis of Penn Central’s two economic prongs to satisfy either economic practice or the Penn Central test. The decision’s imposed change in value measurement evaluates only one prong of the Penn Central test. Change in value satisfies the economic impact prong but does not establish severity of the economic impact vis-à-vis frustration of distinct investment-backed expectations (DIBE). Mere diminution is well-known to be inadequate to reveal whether economic viability has been destroyed by the regulatory prohibition. This must be determined with reference to the second economic prong of Penn Central—frustration of DIBE, a simple and definitive financial calculation. Progeny of Cienega X discussed in this Article do not include a complete analysis of the three-pronged Penn Central test.
A must-read for anyone who deals with Penn Central (this means you!). Download the complete article here.