The United States Supreme Court Clarifies Law Of Regulatory Takings

If your community is involved in a regulatory taking claim it is imperative that you understand the opinion in Murr v. Wisconsin. This opinion  by the United States Supreme Court  is powerful, making it the definitive source for understanding regulatory takings law. 

Facts – The Murr family (Petitioners) owned two adjacent lots along the Lower St. Croix River.  Tourists and residents of the region have long extolled the picturesque grandeur of the river and surrounding area.

Under the Wild and Scenic Rivers Act, the river was designated for federal protection.  The States of Wisconsin and Minnesota then developed “a management and development program” for the river area in accordance with the Act.

Petitioners’ parents purchased Lots E and F separately in the 1960’s, and maintained them under separate ownership until transferring Lot E and F to Petitioners.  Both lots, because of their topography, had less than one acre suitable for development.  Lot E has a cabin on it while Lot F was undeveloped.  The transfer of the lots to the children of the Murr’s brought the two lots under one ownership thereby merging them by law under a local zoning regulation preventing Lots E and F from being “sold or developed as separate lots” because neither lot contained a sufficiently large area of buildable land (one acre or more).

Petitioners became interested in selling Lot E and moving the cabin on Lot E to Lot F as part of an improvement plan for the lots.  They sought variances from the St. Croix County Board of Adjustment, which denied the request.  The State Court of Appeals affirmed the Board’s findings, noting that the Petitioner’s had other options to enjoy and use their property, including eliminating the cabin and building a new residence on one lot or across both. The United States Supreme Court granted Petitioner’s petition for writ of certiorari to determine if the County regulations constituted a regulatory taking.

Argument – Petitioners argued that the regulations deprived them of all, or practically all, of the use of Lot E based on “…Petitioners’ appraisal of a unrebutted, estimated value of $40,000 as a undevelopable lot, on the counterfactual assumption that it could be sold as a separate property.” The regulations look more like a taking if you define “the property” as the metes and bounds description for each lot based on the principle that state law defines the “property” interest without consideration to the merger provision in the law.

Opinion: 

General Principles Of Regulatory Takings: The Court first established context by reviewing the history of Regulatory Takings Law.  This is very useful since it gets you out of the underbrush focusing on the big trees.  The Takings Clause of the Fifth Amendment provides that private property shall not be taken for public use without just compensation.  Guidelines established by the courts require that when a regulation is so onerous that it denies the owner of the property all economically reasonable beneficial productive use it constitutes a taking; except even when there is complete deprivation of use compensation is not required if the background principles of the State’s law of property and nuisance already place restrictions on the land.  In an earlier opinion the court recognized the relevance of state law and land use customs in determining if there was a taking.

Regulatory takings are characterized by “ad hoc, factual inquiries, designed to allow careful examination and weighing of all the relevant circumstances.”  “A central dynamic of the Court’s regulatory takings jurisprudence, then, is its flexibility,” allowing it to reconcile competing objectives (the individual’s right to retain the interests and exercise the freedoms at the core of private property ownership versus the government’s well- established power to “adjus[t] rights for the public good.”

 What Is the Proper Unit of Property To Measure Damages; In the Murr case, the critical question was a determination as to what was the proper unit of property against which to assess the effect of the challenge governmental action.  The majority opinion determined that the proper property unit was the value of the two lots as combined instead of each separate lot.  After all when the property was transferred to the current owners the county and state law provided that lots E and F were merged for development purposes.  The majority opinion concluded that the treatment of the land under state law would lead a landowner to anticipate that his holdings would be treated as one parcel, not, as separate tracts for development purposes. “The inquiry is objective, and the reasonable expectations at issue derive from background, customs and the whole of our legal tradition.”

Not only is the majority opinion well written and powerful the dissent authored by Chief Justice Roberts, joined by Justices Alito and Thomas is also insightful because it offers an understanding of the majority opinion and no doubt in my mind will be the basis in future cases for challenging a regulation as a taking.  I would expect that we would see these competing views of how to analyze regulatory takings play out in future challenges, particularly if there are changes in the court’s liberal/conservative composition.

You may be interested in an earlier Post  dealing with the lack of authority under Missouri law to condemn property. This Post can be viewed by clicking here.

Howard Wright © 2017

 

 

 

 

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