Parcels, Takings, and Environmental Protection in Murr v. Wisconsin

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Earlier this year, the U.S. Supreme Court turned its attention to property boundaries in a case that adds to its corpus on the Takings Clause of the Constitution. In Murr v. Wisconsin, a family challenged a regulation that fused or "merged" its adjacent parcels of land, preventing them from being sold separately. The family claimed that the restriction amounted to a government "taking." (Murr, 137 S.Ct. 1933 (2017).)

The Fifth Amendment to the Constitution prohibits the government from taking "private property … for public use, without just compensation." Clear examples that require compensation are when the government occupies or appropriates land, as when it builds a road. But the Supreme Court has long held that even without such a "physical invasion," a law that effectively deprives owners of the use of their land could result in what is termed a regulatory taking.

Goes Too Far
In an early case on takings, Justice Holmes pronounced the rule that "if regulation goes too far it will be recognized as a taking" under the Constitution. (Pennsylvania Coal Company v. Mahon, 260 U.S. 393 (1922).) In that case, a state law required miners to leave in place enough underground pillars of coal to prevent the earth above from collapsing. This seemed a sensible matter of public safety to the dissenting Justice Brandeis, however the company owned the rights to all the subsurface coal.

Based on that property right, the Court said that if the state wished to intervene in the risk that extraction posed to the public, it should exercise eminent domain and pay the company for the coal it was being forced to leave behind. In subsequent cases the Court has explained that the purpose of the Takings Clause is "to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." (Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978).)

Mahon raises the question: when does a regulation go too far? If every restriction on property was considered a taking that required compensation, our environment would look very different. For example, the familiar suburban front yard reflects the aesthetic and environmental value we place on green space. Although towns create this pattern by restricting the use of private property for the common good, it is not a taking because of a concept called "the parcel as a whole."

Parcel as a Whole
The concept is illustrated by a plan to build a 55-story office tower on top of New York’s Grand Central Station. The tower was never built because in Penn Central the Supreme Court upheld the city’s historic landmarks law against a claim that the law interfered with the owner’s property right to build above the 1913 train terminal.

In affirming New York City’s power to protect its architectural gems, the Court established the rule that later would be key in Murr v. Wisconsin. The property owners in Penn Central had averred that the landmarks law resulted in a regulatory taking because it "deprived them of any gainful use" of valuable "air rights."

In response, the Court reasoned that this perspective saw only the deprivation, while ignoring the substantial value of the train station that remained unaffected by the law. Placing the restriction in context, the Court instead examined "the nature and extent of the interference with rights in the parcel as a whole."

If the effect is small in light of the whole, there may be no taking; whereas a regulation with a relatively great impact will be judged more severely.

In the extreme, the Court has followed a "categorical" rule: "[W]ith certain qualifications … a regulation which denies all economically beneficial or productive use of land will require compensation under the Takings Clause." (Palazzolo v. Rhode Island, quoting Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), emphasis added.)

The pivotal step of defining the "parcel as a whole" is often called the denominator question, in which the numerator of the fraction is the property right taken (e.g. developable air rights, front yard building restrictions), and the denominator is the total parcel. As in Penn Central, defining the denominator expansively will lessen the relative regulatory impact conclusion.

St. Croix National Scenic Riverway
The regulation challenged in Murr stemmed from the federal Wild and Scenic Rivers Act, which required the state to enact a management plan for the protection of the St. Croix River. (16 U.S. Code § 1274.) This led to parallel state and county laws designed to control the density of development along the river by establishing a minimum "one acre of net project area" for building sites. (Wis. Admin. Code, ch. NR 118.)

Lower density means fewer people and less impact on the environment. A "grandfather" clause allowed development of smaller lots that predated the 1976 law, but only if the lot was held "in separate ownership from abutting lands." A merger provision required combining "adjacent substandard lots in common ownership." (Id. § 118.08(4).)

The Lawsuit
The Murr family owned two adjacent lots along the St. Croix River border of Wisconsin, twelve miles north of its confluence with the Mississippi. Each lot was substandard in size under the law, and together they still comprised less than an acre of buildable area. Murr’s parents had originally purchased one lot in 1960 and built a cabin on it, then bought the neighboring lot which remained vacant. Years later the parents transferred the land to their children, who planned to sell the vacant lot. But by then, due to the merger, the two lots could only be sold or developed as a unified property.

After failing to obtain a variance from the restriction both administratively and judicially, Murr filed a lawsuit against the state and county. Reaching for the categorical rule from Lucas, Murr claimed that the merger resulted in a regulatory taking of property by depriving "all, or practically all, of the use of [the vacant lot] because [it] cannot be sold or developed as a separate lot."

The trial court granted summary judgment in favor of the government defendants. The Wisconsin Court of Appeals affirmed, and the state’s high court declined to hear the case. The U.S. Supreme Court, in a 5 to 3 decision written by Justice Anthony Kennedy, affirmed the state court’s ruling (the vote indicating that even a full bench of nine justices would likely not have changed the outcome).

"A Classic Way"
The "relevant question," the Court said, "is whether the property taken is all, or only a portion of, the parcel in question." Murr (supported by property rights advocates) argued it was all, since legally recognized boundaries should control, and the neighboring cabin parcel therefore should not be part of the equation.

Although the Court ultimately upheld the merger, it did not hand the government an easy win. Rather than accepting merger in all cases (per se aggregation), the Court said the denominator should be determined by factors that point to the reasonable expectations of landowners that their parcels would be treated either as separate or combined. The Court identified three such factors: state and local law, the effect of the merger on land value, and the "physical characteristics of the land."

With respect to the first factor, treatment of the property under the law, the Court dislodged any supremacy of lot lines by placing them on a par with merger, since both are "creatures of state law." The Court said, "In effect, petitioners ask this Court to credit the aspect of state law that favors their preferred result (lot lines) and ignore that which does not (merger provision)." The Court recognized parcel merger as a legitimate and accepted planning tool–"a classic way" of dealing with substandard lots to gradually achieve a community’s desired minimum lot size.*

Remaining Factors
As for land value, contrary to being a complete deprivation, the Court said that any constriction of rights was offset "by the benefits of using the property as an integrated whole." While the law prevented a second structure on the property, Murr could add onto the existing cabin or locate a replacement structure anywhere on the combined site. Larger lots meant less development and more privacy, which were beneficial in terms of both scenic and market value.

Regarding the physical landscape, one can imagine features that might foster an impression that parcels would be considered distinct, such as unrelated contours or a dividing ravine. But Murr’s parcels shared a low-lying floodplain at one end and a bluff top at the other, with nothing heeding the lot line shown on maps.

Chief Justice Roberts’ dissenting opinion rejected the majority’s multifactor approach without disputing either the merger or the Court’s conclusion that there was no taking, because the owner "can still make good use of both lots." Roberts believed that the denominator was for the lower courts to decide under "stable state law rules" and should not be confused with the final takings analysis, where the Court has traditionally looked to economics and owner expectations.

But the dissent’s distinction may be more theoretical than practical. Merger, denominator, and potential taking were intertwined in Murr, so recognition of the merger took the air out of the takings argument. Rather than simply endorsing the state’s law on merger, the ruling makes it just one factor in determining the relevant parcel, in addition to "other indicia of reasonable expectations about property."

The Effect of Murr
The filing of numerous amicus curiae ("friend of the court") briefs in support of each side indicated great interest in the issue. In upholding the regulation in Murr, the Court furthered the purposes of those federal and state environmental laws designed to protect the river by limiting development along its banks. As to the fate of parcel merger as a planning tool, however, the ruling is a mixed bag. Both in general and with these facts, the Court held that merger was a reasonable land use regulation and a legitimate exercise of the government’s police power. But looking ahead, this may not be the conclusion in every case.

Murr introduces a structural vulnerability to parcel merger. When challenged, courts must now decide whether merger, as applied to a particular property, has resulted in a regulatory taking based in part on the reasonable expectations of the owner. Cities and counties, therefore, should review their ordinances in light of the factors described in Murr.

The Murr decision comes at a time when the designation of national monuments and government regulation are political battlegrounds. Some feel that the surveying profession’s interdependence with land development aligns it with property rights advocates. But the contrary is also true because surveyors tend to hold dear the land and recognize the need to protect it.

Surveyors have special experience to contribute as we pursue understanding of stewardship of land and respectfully debate the role of government. But just as surveyors are impartial arbiters between neighbors, our profession as a group should remain neutral in this debate. Because the boundary, whether defining public or private land, regulated or unregulated, is still the boundary.*

* For more on merger ordinances, see my article, "When Two Become One–A Look at the Law of Merger of Adjoining Parcels" in The American Surveyor, Vol. 7 No. 4 (2010).

† I recommend the PBS documentary "American Patriot: Inside the Armed Uprising Against the Federal Government" (May 2017) on FRONTLINE.

Lloyd Pilchen is a municipal and environmental lawyer with Olivarez Madruga Lemieux O’Neill llp in Los Angeles, assistant city attorney for City of Ridgecrest, and a California and Illinois surveyor.

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