The Clause requires the government to pay “just compensation” any time it “takes” private property. In its 1978 decision in the Penn Central case, the Supreme Court ruled that whether regulatory restrictions on property rights amount to a taking depends on their impact on the “parcel as a whole.” If the regulation affects only a small part of the parcel or has little impact on its overall value and use, it probably will not be ruled a taking, and no compensation is required. In Murr, a Wisconsin court ruled that the relevant parcel includes not only the one actually impacted by the regulation, but contiguous property the owned by the same landowner. As we explain in our brief, this approach is at odds with the text and original meaning of the Takings Clause, and seriously endangers property rights. It also has no basis in Supreme Court precedent.
The main point at stake is summarized in this excerpt from our brief:
The text of the Takings Clause is simple. It forbids the “taking” of “private property” without “just compensation….” Nothing in the text indicates that the requirement of just compensation might be waived if the owner of the property at issue also happens to own other property nearby. What matters is whether property has been “taken,” not whether the owner still has the use of the lot next door. Any other approach makes a hash of the text, and diverts the regulatory takings analysis from the actual effect of the regulatory action on the actual piece of property at issue, to focusing on the identity of the landowner and other property he or she may happen to own.
As the brief explains in greater detail, extending the already dubious “parcel as a whole” principle to cover contiguous lots would create extensive opportunities for governments at all levels to abrogate property rights without paying compensation. Many homeowners, small businesses, and other organizations own contiguous lots, used for a variety of purposes. Under the lower court’s approach in Murr, the government could impose draconian restrictions on the use of Lot A, so long as the owner also possessed Lot B next door, which he or she remains free to use. This is exactly what happened to the Murr family, who are categorically barred by a local law from developing a vacant lot they own, and cannot get compensation for this near-total loss of the lot’s value because they also happen to own a contiguous lot which has a recreational cabin on it.
It is unusual for state governments to file a brief supporting limits on state and local regulatory authority, especially in a case opposing another state. But, as Part III of our brief explains, states have an important interest in protecting property rights here because allowing large-scale uncompensated takings undermines the effectiveness of regulatory and land-use policies, which benefit from the discipline of having to take account of the costs they inflict. As Jonathan Adler explains in an important article, uncompensated abrogations of property rights are particularly likely to undermine the effectiveness and efficiency of environmental regulation. In addition, expanding the parcel as a whole rule to cover contiguous lots also imperils the property rights of the states themselves, which would become far more vulnerable to uncompensated takings imposed by the federal government. This is a particular danger for Nevada and other western states, where the federal government has a massive presence and often seeks to restrict the use of state-owned lands that abut its own. The Arkansas Game and Fish Commission case, decided by the Court in 2013, is an example of the danger to state property that might arise if the federal government has a free hand to restrict and damage state property rights.
In addition to Nevada, the other states that have joined the brief are Alaska, Arizona, Arkansas, Kansas, Oklahoma, South Carolina, West Virginia, and Wyoming. I am grateful to Nevada Solicitor General Lawrence VanDyke for initiating this brief and spearheading our efforts, and to Assistant Solicitor General Jordan Smith for his excellent work coauthoring it.
NOTE: While the brief outlines the position of the nine state governments that joined it, this blog post is based on my own views and does not necessarily represent those of the states. The same is true of any future posts I might write about Murr.
UPDATE: For those interested, the Pacific Legal Foundation – the public interest law firm representing the Murrs pro bono, has more material about the case here.