The US Supreme Court today issued its latest pronouncement on regulatory takings, Murr et. al, v. Wisconsin, et al. Justice Kennedy wrote for the Court, joined by Justices Ginsburg, Breyer, Sotomayor and Kagan. The issue was whether two adjacent lots that had “merged” in common ownership by operation of state law, should be considered individually, or as a single parcel, for purposes of determining whether the inability to develop the lots separately resulted in a taking.
The Court upheld the Wisconsin state court determination that the relevant parcel for purposes of the takings analysis was the two merged lots combined, and not each considered separately. In doing so, the Court declined to adopt either of the “formalistic” state law-focused approaches urged by the parties. The property owners had advocated for a presumption that lot lines determined under state property law define the relevant parcel. The state urged the Court to let the state regulations (in this case the challenged merger rules) determine the relevant parcel.
The Court instead identified “a number of factors” that courts must consider in order to define the relevant parcel. It identified these as: “First, . . . the treatment of the land, in particular how it is bounded or divided, under state and local law”; “Second, . . . the physical characteristics of” the property, including the relationship between “distinguishable tracts” as well as “topography and the surrounding human and ecological environment;” and “Third, . . . the value of the property under the challenged regulation, with special attention to the effect of the burdened land on the value of other holdings.” Applying these standards, the Court concluded that the state court correctly considered the effect of the regulations on the merged lots as a whole. It further upheld the determination that no taking occurred because the owners were not deprived of all economically beneficial use under the Lucas categorical takings test and the effect of the regulations did not amount to a taking under the “more general” Penn Central test.
Justice Roberts penned a dissent joined by Justices Alito and Thomas. The Roberts dissent would have remanded the case to have the state courts apply “general state law principles of property law.” As the owners had urged, the dissenters would have applied the regulatory takings analysis to each lot separately if they were “legally distinct” as a matter of property law. Justice Thomas, in a separate dissent, expressed the view that the Court should reconsider its regulatory takings jurisprudence because it is not grounded “in the constitution as it was originally understood.”