In April, the state of Nevada filed an amicus brief that I coauthored on behalf of Nevada itself and eight other state governments in Murr v. Wisconsin, a major property rights case currently before the Supreme Court. The case addresses an important question about when property owners are entitled to compensation under the Takings Clause of the Fifth Amendment: whether a regulation that might otherwise be a taking might cease to be one merely because the owner of the affected lot also happens to own other property contiguous to it. Our brief is an unusual example of state governments standing up for property rights in the Supreme Court.
Recently, a group of nine other states, led by California, filed an amicus brief supporting the other side in the case, and in part responding to ours (pp. 23-26). While I am grateful to California for focusing on our arguments, I think their attempted rebuttal does more to highlight the weaknesses in Wisconsin’s position than to bolster it.
The issue in Murr may seem narrowly technical, but actually has major implications for constitutional property rights. The Takings Clause of the Fifth Amendment requires the government to pay “just compensation” any time it “takes” private property. Supreme Court precedent states 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 – a risk well-illustrated by the story of the Murr family.
The California brief offers three responses to our arguments. First, California contends that, because the original understanding of the Fifth Amendment did not contemplate compensation for regulatory takings, the Framers did not have “any view regarding the definition of the relevant property parcels” in such cases. Therefore, the brief suggests that the text and original meaning imposes no constraints on state manipulation of parcel boundaries in order to avoid paying compensation. This argument ignores the actual text of the Fifth Amendment, which simply states that “just compensation” must be paid whenever private property is “taken” by the government, without making any distinction between different types of takings. It also ignores the scholarship we cite in our brief indicating that regulatory takings were in fact contemplated by the Founding Fathers, and by early court decisions, as part of the then-dominant “natural law” understanding of property rights (4-5). Whatever was true when the Fifth Amendment was first enacted in 1791, regulatory takings were a well-understood and widely accepted concept by the time it became applicable to the states as a result of the adoption of the Fourteenth Amendment in 1868. And most regulatory takings (including the one in this case) are initiated by state and local governments.
California also completely ignores the extensive early case law we cited indicating that takings compensation should follow parcel boundaries (6-9). Even if regulatory takings were not specifically contemplated at the time of the Founding, that does not mean the Supreme Court should just disregard the original understanding of the importance of individual parcels in American takings law.
If there is anything here that lacks a basis in text and original meaning, it is California’s position that the boundaries of the relevant parcel should be determined by “a wide-ranging inquiry, responsive to the facts of the particular case,” with no clear rules indicating which facts are relevant and how they should be weighed against each other. This approach creates an extremely vague standard that gives little protection to property owners, and little effective guidance for lower courts. The resulting uncertainty is likely to undermine the security of property rights, and make it difficult for both property owners and regulators to figure out in advance whether a given regulation qualifies as a taking or not.
The California brief asserts that states and localities have “a vital interest” in the productive use of land. Therefore, they suggest we are wrong to worry that the ability to evade compensation will lead to overregulation. This answer overlooks the whole point of our argument. We agree that states as a whole have an interest in the efficient use of land. But that interest often gets ignored by individual localities and regulators when they don’t have to pay for the costs they impose on landowners.
California’s position is similar to saying that we don’t need to worry about state and local overregulation of speech because state governments have an interest in promoting a robust marketplace of ideas. States do indeed have such an interest. But individual officials will often ignore that interest when it conflicts with their desire to suppress their critics, or to censor speech that is disliked by politically influential constituencies. Similarly, state and local officials often enact inefficient land-use restrictions when it is in their narrow self-interest to do so, or when it benefits politically powerful groups. This is particularly likely to happen if state authorities are not required to pay the cost of the regulations they adopt, but can instead impose them on landowners who lack political influence. If we skew economic incentives by allowing governments to shift the costs of their regulations to others, the “vital interest” in efficient land use will often get lost in the shuffle.
Lastly, California criticizes our argument that aggregation of contiguous parcels would make state land vulnerable to uncompensated takings by the federal government, and suggests that our position would “hamstring States” in their regulatory efforts. They contend that there is no risk of federal overreach because, supposedly, the federal government has not engaged in such mischief so far.
Up to this point, some forms of aggressive federal action against state and private property might well have been deterred by fear that they will have to pay compensation. For reasons we cover in our brief (25-28), allowing aggregation of contiguous parcels would greatly diminish that risk, and incentivize federal overreaching. As we also note in the brief, similar overreaching has already occurred in such cases as Arkansas Game and Fish Commission v. United States, where the federal government inflicted massive recurring flood damage on state-owned land, and hoped to get away with paying no compensation by claiming that the flooding did not amount to a taking. If the feds are willing to engage in such shenanigans even when it comes to “physical invasion” takings (where judicial doctrine is more protective of property rights than in the case of regulatory takings), they are unlikely to avoid the temptation to do so in regulatory takings cases, if given the opportunity.
As for “hamstringing” the states, our position only does so in as much as it requires them to pay compensation for the property they take, regardless of whether the owner happens to own other lots nearby. If the benefits of the states’ regulations are worth the cost they impose, they can still go ahead with them. As discussed at greater length in our brief, the requirement of compensation actually improves the quality of state and local regulation by deterring impositions that create more costs than benefits (21-25).
NOTE: Some of the points made in this post were suggested by Nevada Solicitor General Lawrence VanDyke and Assistant Solicitor General Jordan Smith. However, the post ultimately represents only my own opinion, and does not necessarily reflect the position of the state of Nevada, or the other states that joined our brief.