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Federal Circuit's Economic Failings Undo the <i>Penn Central</i> Test

September 2010

Citation: 40 ELR 10914

Issue: 9

Author: William W. Wade, Ph.D.

Editors' Summary


Faulty understanding of standard economic and financial analysis within regulatory takings cases continues to set this jurisprudence apart from standard tort cases, where state of the art economic methods typically are applied within both liability and damages phases of the trial. Clear examples of economic nonsense can be found in three recent decisions by the U.S. Court of Appeals for the Federal Circuit that ignored competent economic evidence within the Penn Central test to overturn temporary takings decisions. The Federal Circuit's flip-flop between its 2003 decision in Cienega Garden VIII and its more recent decisions in Cienega Gardens X, Rose Acre Farms, and CCA reveals both misapplication of "parcel as a temporal whole" from Tahoe Sierra, a Lucas case, to Penn Central cases and faulty use of valuation methods appropriate for real property to evaluate the severity of economic impact of temporary business income losses. Confused legal theories cannot be shoehorned into standard economic methods essential to evaluate the Penn Central test.

William W. Wade is a resource economist with the firm Energy and Water Economics, Columbia, Tennessee.

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