Today the US Supreme Court handed down their decision in Murr v. Wisconsin. In a 5-3 vote (Justice Kennedy writing for the majority, Justice Gorsuch not participating), the Court determined that there was no regulatory taking in this case.

In takings parlance, Murr v. Wisconsin what we refer to as a regulatory takings case. That is, it’s a case in which the title of the property remains in the hands of the owners (so no physical taking), but a regulation on the property may have changed the land’s uses in such a way that the owners no longer can find economic benefits in the land. In the case of the Murrs’ property, as already mentioned, the Supreme Court upheld an opinion in which there was no regulatory takings in this case. In doing so, they also reaffirmed several key regulatory takings cases, including Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency (535 US 302), Lucas v. South Carolina Coastal Commission (505 US 1003), and a takings case I’ve written a lot about, Palazzolo v. Rhode Island (533 US 606).

To better understand Murr, here are a few facts from the case (I’m simplifying here for brevity — I’ll do more detail in a future post):

Mr. and Mrs. Murr had purchased Lots E and F in a particular area along the St. Croix River in Wisconsin separately at two different times in the 1960s. They used the land for recreational/vacation purposes, and maintained the two lots under separate ownership for tax purposes until they transferred them to their children (Lot F in 1994 and Lot E in 1995). At that point, the two lots came under one ownership (with multiple individuals owning the land). Their children, who are the petitioners in this case, wanted to sell Lot E in order to pay for improvements to Lot F. They sought variances from the St. Croix County Board of Adjustments, but were denied the request. The Board said that because the lots had been unified in their ownership in the 1994/1995 transactions, they could no longer be sold separately under a local zoning regulation. The question for the Supreme Court, then, had much to do with whether a taking occurred when these owners were told that they could not sell Lot E without selling Lot F. The petitioners contended that the economic benefits of Lot E had been completely removed by the regulation and therefore they should be compensated for a regulatory taking.

Writing for the Court, Justice Kennedy argues that while it’s long been understood in regulatory takings jurisprudence that if a regulation goes too far it can be recognized as a taking, he explains that in this case there’s no regulatory taking because the land can still be used for economically beneficial purposes. Murr is an interesting case in part because it presented a question that is key to the analysis of regulatory takings: What is the proper unit of property against which to assess the effect of the challenged governmental action? In other words, can a part of a parcel be used in a regulatory takings analysis? Or does it have to be the parcel as a whole? Today’s decision says it’s the parcel as a whole, and how we know the whole parcel has to do with the zoning regulations of the locality.

The Court determined that a lower court decision had correctly determined that the petitioners could not have reasonably expected to sell the lots separately given the current zoning laws. The lower court had found that combining the lots lessened their value by less than 10%, which was not enough to declare a takings under Lucas and other regulatory takings cases. From the US Supreme Court’s perspective, the issue of which unit of property to use in a regulatory analysis was key to deciding the case. Since they agreed with the lower court that the appropriate unit was the entire parcel, and not the separate lots, they also found that the regulation had not decreased the economically beneficial uses of the land enough to work a regulatory takings.

The majority opinion is, of course, more complex than I’ve written here. I’ll be doing another post soon that will go into more detail, and will also take a closer look at the language around Palazzolo v. Rhode Island. There’s also a very interesting dissent that was filed by Chief Justice John Roberts, in which he argues that the majority’s opinion undermines regulatory takings jurisprudence in a way that will make it very difficult for any regulatory takings plaintiff to succeed in the future.  Logan will be taking a closer look at the dissent in an upcoming post. We agreed this morning that it deserves its own analysis partly because this decision was so close. Presumably, had Justice Gorsuch participated he would likely have agreed with the Chief Justice. That would have made the decision 5-4. That, to me, suggests that the next justice of the Supreme Court may be the deciding vote in moving regulatory takings jurisprudence onto a different course should we have another conservative justice appointed to the Court. On the other hand, if the next justice is a liberal, we’ll continue to see 5-4 and 6-3 splits on these cases.

Just by way of a reminder, when it comes to physical takings, the Court has been much more unified. We can see that in recent cases such as Arkansas Game and Fish v. US, in which a temporary physical takings was found when an area was repetitively flooded. That decision was unanimous, and written by Justice Ruth Bader Ginsburg, well known as one of the most liberal justices on the current court (some would say she’s the most liberal, but I suspect Justice Sotomayor may overtake her given time).