Supreme Court Limits Rights Of Property Owners

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Kevin Daley Supreme Court correspondent
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The Supreme Court constrained the rights of property owners Friday, establishing a test that favors government officials in assessing the loss of property value caused by government regulations.

Writing for a 5-3 court, Justice Anthony Kennedy explained that state and local officials can combine separate parcels of land in assessing whether local government has effectively seized private property through regulation, requiring compensation. Kennedy’s opinion was joined by Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. Chief Justice John Roberts filed a fiery dissent, joined by Justices Clarence Thomas and Samuel Alito.

The case concerned a Wisconsin family called the Murrs, who argued that the government has unconstitutionally taken their land by refusing to allow them to sell it.

“This is an unfortunate decision for the Murrs, and all property owners,” said John Groen, general counsel and vice president of the Pacific Legal Foundation, a public interest group that represented the family.  “We are disappointed that the Court did not recognize the fundamental unfairness to the Murrs of having their separate properties combined, simply to avoid the protection of the takings clause.”

The Murr family owns two pieces of property on the St. Croix River in Wisconsin. They attempted to sell one of their waterfront lots (called “Lot E”) to finance improvements to a cabin they own on the second plot (called “Lot F”). The value of Lot E had been assessed at $400,000. Environmental officials blocked the sale for violating conservation rules. A county board further declared that state law required the two lots be merged into a single piece of property that could not be broken up and sold in smaller parcels.

In effect, the Murr family argues, the government-mandated merger of their properties stripped them of nearly half a million dollars, as they are now unable sell Lot E. They claim that this constitutes a violation of the Constitution’s takings clause, which prohibits the government from seizing private property for public use without “just compensation.”

The “taking” of the sort that occurred here is not a taking in the usual sense — the government has not seized any of the Murrs’ land. Rather, the family was subjected to a “regulatory taking” in which a law or regulation has effectually stripped them of their property.

The Supreme Court has previously established that regulations of property which are too burdensome should be recognized as unconstitutional takings. However, the Court has also said that a taking only occurs when an owner’s entire property interest has been subjected to burdensome regulations.

This case, therefore, places the “denominator problem” of regulatory takings at issue — the justices had to explain how courts should determine what unit of property the government’s action should be judged against. Should the Murr’s loss be measured against the value of Lot E, or the combined value of Lots E AND F?

Kennedy, as he often does, explained that resolving the problem requires the application of a multiplicity of factors, all of which may not be exhaustively catalogued by the Court. He writes:

As the foregoing discussion makes clear, no single consideration can supply the exclusive test for determining the denominator. Instead, courts must consider a number of factors. These include the treatment of the land under state and local law; the physical characteristics of the land; and the prospective value of the regulated land. The endeavor should determine whether reasonable expectations about property ownership would lead a landowner to anticipate that his holdings would be treated as one parcel, or, instead, as separate tracts. The inquiry is objective, and the reasonable expectations at issue derive from background customs and the whole of our legal tradition.

Writing at the Volokh Conspiracy, Professor Ilya Somin of George Mason University Antonin Scalia Law School, called Kennedy’s remedy “a recipe for confusion.”

“The above list is a recipe for confusion, uncertainty, and constant litigation. All of the factors in the test are complicated and difficult to measure,” he wrote. “Often, which way they cut is in the eye of the beholder.”

Justice Neil Gorsuch did not participate in the case, as it was argued before he joined the Court.

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