land use « Disasters, Property, and Politics

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).

In an 8 to 1 decision this morning, the US Supreme Court decided that the government has no reversionary interest in the right of way at issue in Brandt Revocable Trust v. US. The slip opinion can be found at the Supreme Court website, and of course, a summary of the issues in the case are up at Oyez as well as the Scotusblog. The case is a major victory for property rights advocates.

As I mentioned in my previous summary of the case, Brandt contended that the right of way granted in an Act in 1875 was an easement, and that once the railroad abandoned their tracks, the underlying land became unburdened by the easement. The Government contended that the right of way granted in the 1875 Act was more than an easement, and reserved “an implied reversionary interest” to the United States in the event that the land, granted to the railroad, was needed in the future. In the opinion for the Court, Chief Justice Roberts points out that the Government lost their case this time largely because they had, in 1942, argued the opposite of their position and had set a precedent that governed the current situation. In Great Northern Railway Co. v. US (315 US 262, 1942) the Government convinced the Court that the 1875 Act granted only an easement. What happens to an easement when it is abandoned, said today’s Court, is well settled in property law: “the easement disappears, and the landowner resumes his full and unencumbered interest in the land” (Majority Opinion, p. 11).

Chief Justice Roberts ends his decision pointing out that the Government’s argument represented a “stark change of position” and then suggests that the importance of settled expectations of the owners of private property motivates at least some of the majority’s thinking today:

More than 70 years ago, the Government argued before this Court that a right of way granted under the 1875 Act was a simple easement. The Court was persuaded, and so ruled. Now the Government argues that such a right of way is tantamount to a limited fee with an implied reversionary interest. We decline to endorse such a stark change of position, especially given ‘the special need for certainty and predictability where land titles are concerned.’” (Majority Opinion, p. 17)

The lone dissent was filed by Justice Sotomayor who reads Great Northern a little differently. She argues that there were cases in 1903 and 1915 that the Court failed to take into account but are an important part of the context in which Great Northern occurred, and that “in the context of railroad rights of way, traditional property terms like ‘fee’ and ‘easement’ do not neatly track common-law definition.” In fact, she says, if you look at the past understandings of railway lands more broadly, it becomes clear that the Court’s interpretation of Great Northern applies an understanding of easement that developed in a dispute in which the question was quite specific and very different from what is presented in Brandt, i.e., whether the right of way granted in the 1875 act allowed the grantee the right to mine for subsurface minerals (oil, in this case). The Great Northern court said no, that the only right conveyed in the act was a right to use the surface of the land because the right of way was an easement. That finding, Justice Sotomayor says, is about a very different issue than whether the right of way granted a reversionary interest, which, of course, is the issue raised in Brandt. Justice Sotomayor also argues that, with regard to land grants for the railroads such as the one created in the 1875 legislation, ambiguity “is to be resolved favorably to a sovereign grantor.” This principle, she says, also comes out of Great Northern.

Her final point goes to the impact the decision will have on contemporary public policy. Justice Sotomayor points out that the decision made today “undermines the legality of thousands of miles of former rights of way that the public now enjoys as means of transportation and recreation. And lawsuits challenging the conversion of former rails to recreational trails alone may well cost American taxpayers hundreds of millions of dollars. I do not believe the law requires this result…” (Dissent, p. 7).

Both Justice Sotomayor and Chief Justice Roberts are correct: this decision should stabilize property title in situations where abandoned railroad tracks cross private property and an easement was granted through the 1875 Act; it will also mean that in those cases, land will have to be purchased, or a new easements will have to be sought for recreational trails through these areas. More litigation may well occur as a result.

For me, I continue to be interested in what all this means for the nature of an easement or a right of way granted through federal legislation. What I am wondering is whether this case suggests that easements and right of ways will be judged according to the specific intent and the extent of the servitude the legislation intended to place upon the land at the time the legislation was drafted. If, in subsequent decades, the federal government interprets the servitude differently from how it was understood at the time of enactment, will such a new interpretation be understood as an over-reach that tries to grant more of a right of way (i.e., a broader right to use) than was intended by the framers of the law? I think this Court will be open to taking a closer look at situations that raise that particular question.