In the case of Agins et ux. v. City of Tiburon, 1979, the Supreme Court ruled in favor of the city's right to zone property for public use without compensating owners unless it was proven that they could not receive a reasonable return on their investment. The Agins owned five acres of unimproved land within city limits and sought to develop twenty residential units thereon. However, after purchasing the land, zoning laws were changed limiting development to between one and five single-family residences per acre depending upon topography and location. The Agins sued claiming this constituted an unconstitutional taking without just compensation under Fifth Amendment rights as well as violating Fourteenth Amendment due process rights by denying them economically viable use of their property. In its decision, however, the court held that preventing overdevelopment served legitimate public purposes including preserving open space areas within urban environments while also maintaining community character; thus no violation occurred so long as regulations did not deny an owner economically viable use which had yet been determined.

In the dissenting opinion for Agins et ux. v. City of Tiburon, Justice Powell argued that the majority's decision failed to adequately protect private property rights from government regulation. He contended that by allowing a city to restrict land use without compensating owners for potential lost profits, the court was essentially permitting a form of government-sanctioned theft. Furthermore, he criticized the majority's reliance on Penn Central Transportation Co. v New York City as precedent because it involved an entirely different type of regulatory action and did not provide clear guidance on how courts should evaluate regulatory takings claims in other contexts.