JOSEPH P. MURR, ET AL., PETITIONERS
WISCONSIN, ET AL.
March 20, 2017
OF CERTIORARI TO THE COURT OF APPEALS OF WISCONSIN, DISTRICT
St. Croix River, which forms part of the boundary between
Wisconsin and Minnesota, is protected under federal, state,
and local law. Petitioners own two adjacent lots-Lot E and
Lot F-along the lower portion of the river in the town of
Troy, Wisconsin. For the area where petitioners'
property is located, state and local regulations prevent
the use or sale of adjacent lots under common ownership as
separate building sites unless they have at least one acre
of land suitable for development. A grandfather clause
relaxes this restriction for substandard lots which were in
separate ownership from adjacent lands on January 1, 1976,
the regulation's effective date.
parents purchased Lots E and F separately in the
1960's, and maintained them under separate ownership
until transferring Lot F to petitioners in 1994 and Lot E
to petitioners in 1995. Both lots are over one acre in
size, but because of their topography they each have less
than one acre suitable for development. The unification of
the lots under common ownership therefore implicated the
rules barring their separate sale or development.
Petitioners became interested in selling Lot E as part of
an improvement plan for the lots, and sought variances from
the St. Croix County Board of Adjustment. The Board denied
the request, and the state courts affirmed in relevant
part. In particular, the State Court of Appeals found that
the local ordinance effectively merged the lots, so
petitioners could only sell or build on the single combined
filed suit, alleging that the regulations worked a
regulatory taking that deprived them of all, or practically
all, of the use of Lot E. The County Circuit Court granted
summary judgment to the State, explaining that petitioners
had other options to enjoy and use their property,
including eliminating the cabin and building a new
residence on either lot or across both. The court also
found that petitioners had not been deprived of all
economic value of their property, because the decrease in
market value of the unified lots was less than 10 percent.
The State Court of Appeals affirmed, holding that the
takings analysis properly focused on Lots E and F together
and that, using that framework, the merger regulations did
not effect a taking.
The State Court of Appeals was correct to analyze
petitioners' property as a single unit in assessing the
effect of the challenged governmental action. Pp. 6-20.
(a) The Court's Takings Clause jurisprudence informs the
analysis of this issue. Pp. 6-11.
(1) Regulatory takings jurisprudence recognizes that if a
"regulation goes too far it will be recognized as a
taking." Pennsylvania Coal Co. v. Mahon, 260
U.S. 393, 415. This area of the law is characterized by
"ad hoc, factual inquiries, designed to allow careful
examination and weighing of all the relevant
circumstances." Tahoe-Sierra Preservation Council,
Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302,
322 (citation and internal quotation marks omitted).
The Court has, however, identified two guidelines relevant
for determining when a government regulation constitutes a
taking. First, "with 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, 533
U.S. 606, 617 (quoting Lucas v. South Carolina Coastal
Council, 505 U.S. 1003, 1015). Second, a taking may be
found based on "a complex of factors, " including
(1) the economic impact of the regulation on the claimant;
(2) the extent to which the regulation has interfered with
distinct investment-backed expectations; and (3) the
character of the governmental action. Palazzolo,
supra, at 617 (citing Penn Central Transp. Co. v.
New York City, 438 U.S. 104, 124). Yet even the complete
deprivation of use under Lucas will not require
compensation if the challenged limitations "inhere ...
in the restrictions that background principles of the
State's law of property and nuisance already placed upon
land ownership." Lucas, 505 U.S., at 1029.
A central dynamic of the Court's regulatory takings
jurisprudence thus is its flexibility. This is a means to
reconcile two competing objectives central to regulatory
takings doctrine: the individual's right to retain the
interests and exercise the freedoms at the core of private
property ownership, cf. id., at 1027, and the
government's power to "adjusft] rights for the
public good, " Andrus v. Allard, 444 U.S. 51,
65. Pp. 6-9.
(2) This case presents a critical question in determining
whether a regulatory taking has occurred: What is the proper
unit of property against which to assess the effect of the
challenged governmental action? The Court has not set forth
specific guidance on how to identify the relevant parcel.
However, it has declined to artificially limit the parcel to
the portion of property targeted by the challenged
regulation, and has cautioned against viewing property rights
under the Takings Clause as coextensive with those under
state law. Pp. 9-11.
(b) Courts must consider a number of factors in determining
the proper denominator of the takings inquiry. Pp. 11-17.
(1) The inquiry is objective and should determine whether
reasonable expectations about property ownership would lead a
landowner to anticipate that his holdings would be treated as
one parcel or as separate tracts. First, courts should give
substantial weight to the property's treatment, in
particular how it is bounded or divided, under state and
local law. Second, courts must look to the property's
physical characteristics, including the physical relationship
of any distinguishable tracts, topography, and the
surrounding human and ecological environment. Third, courts
should assess the property's value under the challenged
regulation, with special attention to the effect of burdened
land on the value of other holdings. Pp. 11-14.
(2) The formalistic rules for which the State of Wisconsin
and petitioners advocate do not capture the central legal and
factual principles informing reasonable expectations about
property interests. Wisconsin would tie the definition of the
parcel to state law, but it is also necessary to weigh
whether the state enactments at issue accord with other
indicia of reasonable expectations about property.
Petitioners urge the Court to adopt a presumption that lot
lines control, but lot lines are creatures of state law,
which can be overridden by the State in the reasonable
exercise of its power to regulate land. The merger provision
here is such a legitimate exercise of state power, as
reflected by its consistency with a long history of merger
regulations and with the many merger provisions that exist
nationwide today. Pp. 14-17.
(c) Under the appropriate multifactor standard, it follows
that petitioners' property should be evaluated as a
single parcel consisting of Lots E and F together. First, as
to the property's treatment under state and local law,
the valid merger of the lots under state law informs the
reasonable expectation that the lots will be treated as a
single property. Second, turning to the property's
physical characteristics, the lots are contiguous. Their
terrain and shape make it reasonable to expect their range of
potential uses might be limited; and petitioners could have
anticipated regulation of the property due to its location
along the river, which was regulated by federal, state, and
local law long before they acquired the land. Third, Lot E
brings prospective value to Lot F. The restriction on using
the individual lots is mitigated by the benefits of using the
property as an integrated whole, allowing increased privacy
and recreational space, plus an optimal location for any
improvements. This relationship is evident in the lots'
combined valuation. The Court of Appeals was thus correct to
treat the contiguous properties as one parcel.
Considering petitioners' property as a whole, the state
court was correct to conclude that petitioners cannot
establish a compensable taking. They have not suffered a
taking under Lucas, as they have not been deprived
of all economically beneficial use of their property. See 505
U.S., at 1019. Nor have they suffered a taking under the more
general test of Penn Central, supra, at 124. Pp.
2015 WI.App. 13, 359 Wis.2d 675, 859 N.W.2d 628, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which
GINSBURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined. ROBERTS,
C. J., filed a dissenting opinion, in which THOMAS and ALITO,
JJ., joined. THOMAS, J., filed a dissenting opinion. GORSUCH,
J., took no part in the consideration or decision of the
classic example of a property taking by the government is
when the property has been occupied or otherwise seized. In
the case now before the Court, petitioners contend that
governmental entities took their real property-an undeveloped
residential lot-not by some physical occupation but instead
by enacting burdensome regulations that forbid its
improvement or separate sale because it is classified as
substandard in size. The relevant governmental entities are
the background justifications for the challenged
restrictions, respondents contend there is no regulatory
taking because petitioners own an adjacent lot. The
regulations, in effecting a merger of the property, permit
the continued residential use of the property including for a
single improvement to extend over both lots. This retained
right of the landowner, respondents urge, is of sufficient
offsetting value that the regulation is not severe enough to
be a regulatory taking. To resolve the issue whether the
landowners can insist on confining the analysis just to the
lot in question, without regard to their ownership of the
adjacent lot, it is necessary to discuss the background
principles that define regulatory takings.
Croix River originates in northwest Wisconsin and flows
approximately 170 miles until it joins the Mississippi River,
forming the boundary between Minnesota and Wisconsin for much
of its length. The lower portion of the river slows and
widens to create a natural water area known as Lake St.
Croix. Tourists and residents of the region have long
extolled the picturesque grandeur of the river and
surrounding area. E.g., E. Ellett, Summer Rambles in
the West 136-137 (1853).
the Wild and Scenic Rivers Act, the river was designated, by
1972, for federal protection. §3(a)(6), 82 Stat. 908, 16
U.S.C. § 1274(a)(6) (designating Upper St. Croix River);
Lower Saint Croix River Act of 1972, §2, 86 Stat. 1174,
16 U.S.C. § 1274(a)(9) (adding Lower St. Croix River).
The law required the States of Wisconsin and Minnesota to
develop "a management and development program" for
the river area. 41 Fed. Reg. 26237 (1976). In compliance,
Wisconsin authorized the State Department of Natural
Resources to promulgate rules limiting development in order
to "guarantee the protection of the wild, scenic and
recreational qualities of the river for present and future
generations." Wis.Stat. §30.27(1) (1973).
are two sisters and two brothers in the Murr family.
Petitioners' parents arranged for them to receive
ownership of two lots the family used for recreation along
the Lower St. Croix River in the town of Troy, Wisconsin. The
lots are adjacent, but the parents purchased them separately,
put the title of one in the name of the family business, and
later arranged for transfer of the two lots, on different
dates, to petitioners. The lots, which are referred to in
this litigation as Lots E and F, are described in more detail
area where petitioners' property is located, the
Wisconsin rules prevent the use of lots as separate building
sites unless they have at least one acre of land suitable for
development. Wis. Admin. Code §§ NR 118.04(4),
118.03(27), 118.06(1)(a)(2)(a), 118.06(1)(b) (2017). A
grandfather clause relaxes this restriction for substandard
lots which were "in separate ownership from abutting
lands" on January 1, 1976, the effective date of the
regulation. § NR 118.08(4)(a)(1). The clause permits the
use of qualifying lots as separate building sites. The rules
also include a merger provision, however, which provides that
adjacent lots under common ownership may not be "sold or
developed as separate lots" if they do not meet the size
requirement. § NR 118.08(4)(a)(2). The Wisconsin rules
require localities to adopt parallel provisions, see §
NR 118.02(3), so the St. Croix County zoning ordinance
contains identical restrictions, see St. Croix County, Wis.,
Ordinance §17.361.4.a (2005). The Wisconsin rules also
authorize the local zoning authority to grant variances from
the regulations where enforcement would create
"unnecessary hardship." § NR 118.09(4)(b); St.
Croix County Ordinance §17.09.232.
parents purchased Lot F in 1960 and built a small
recreational cabin on it. In 1961, they transferred title to
Lot F to the family plumbing company. In 1963, they purchased
neighboring Lot E, which they held in their own names.
lots have the same topography. A steep bluff cuts through the
middle of each, with level land suitable for development
above the bluff and next to the water below it. The line
dividing Lot E from Lot F runs from the riverfront to the far
end of the property, crossing the blufftop along the way. Lot
E has approximately 60 feet of river frontage, and Lot F has
approximately 100 feet. Though each lot is approximately 1.25
acres in size, because of the waterline and the steep bank
they each have less than one acre of land suitable for
development. Even when combined, the lots' buildable land
area is only 0.98 acres due to the steep terrain.
lots remained under separate ownership, with Lot F owned by
the plumbing company and Lot E owned by petitioners'
parents, until transfers to petitioners. Lot F was conveyed
to them in 1994, and Lot E was conveyed to them in 1995.
Murr v. St. Croix County Bd. of Adjustment, 2011
WI.App. 29, 332 Wis.2d 172, 177-178, 184-185, 796 N.W.2d 837,
841, 844 (2011); 2015 WI.App. 13, 359 Wis.2d 675, 859 N.W.2d
628 (unpublished opinion), App. to Pet. for Cert. A-3, If If
4-5. (There are certain ambiguities in the record concerning
whether the lots had merged earlier, but the parties and the
courts below appear to have assumed the merger occurred upon
transfer to petitioners.)
decade later, petitioners became interested in moving the
cabin on Lot F to a different portion of the lot and selling
Lot E to fund the project. The unification of the lots under
common ownership, however, had implicated the state and local
rules barring their separate sale or development. Petitioners
then sought variances from the St. Croix County Board of
Adjustment to enable their building and improvement plan,
including a variance to allow the separate sale or use of the
lots. The Board denied the requests, and the state courts
affirmed in relevant part. In particular, the Wisconsin Court
of Appeals agreed with the Board's interpretation that
the local ordinance "effectively merged" Lots E and
F, so petitioners "could only sell or build on the
single larger lot." Murr, supra, at 184, 796
N.W. 2d, at 844.
filed the present action in state court, alleging that the
state and county regulations worked a regulatory taking by
depriving them of "all, or practically all, of the use
of Lot E because the lot cannot be sold or developed as a
separate lot." App. 9. The parties each submitted
appraisal numbers to the trial court. Respondents'
appraisal included values of $698, 300 for the lots together
as regulated; $771, 000 for the lots as two distinct
build-able properties; and $373, 000 for Lot F as a single
lot with improvements. Record 17-55, 17-56. Petitioners'
appraisal included an unrebutted, estimated value of $40, 000
for Lot E as an undevelopable lot, based on the
counterfactual assumption that it could be sold as a separate
property. Id., at 22-188.
Circuit Court of St. Croix County granted summary judgment to
the State, explaining that petitioners retained "several
available options for the use and enjoyment of their
property." Case No. 12-CV-258 (Oct. 31, 2013), App. to
Pet. for Cert. B-9. For example, they could preserve the
existing cabin, relocate the cabin, or eliminate the cabin
and build a new residence on Lot E, on Lot F, or across both
lots. The court also found petitioners had not been deprived
of all economic value of their property. Considering the
valuation of the property as a single lot versus two separate
lots, the court found the market value of the property was
not significantly affected by the regulations because the
decrease in value was less than 10 percent. Ibid.
Wisconsin Court of Appeals affirmed. The court explained that
the regulatory takings inquiry required it to
"'first determine what, precisely, is the property
at issue.'" Id., at A-9, 117. Relying on
Wisconsin Supreme Court precedent in Zealy v.
Waukesha, 201 Wis.2d 365, 548 N.W.2d 528 (1996), the
Court of Appeals rejected petitioners' request to analyze
the effect of the regulations on Lot E only. Instead, the
court held the takings analysis "properly focused"
on the regulations' effect "on the Murrs'
property as a whole"-that is, Lots E and F together.
App. to Pet. for Cert. A-12, 122.
this framework, the Court of Appeals concluded the merger
regulations did not effect a taking. In particular, the court
explained that petitioners could not reasonably have expected
to use the lots separately because they were
"'charged with knowledge of the existing zoning
laws'" when they acquired the property.
Ibid, (quoting Murr, supra, at 184, 796
N.W. 2d, at 844). Thus, "even if [petitioners] did
intend to develop or sell Lot E separately, that expectation
of separate treatment became unreasonable when they chose to
acquire Lot E in 1995, after their having acquired Lot F in
1994." App. to Pet. for Cert. A- 17, 130. The court also
discounted the severity of the economic impact on
petitioners' property, recognizing the Circuit
Court's conclusion that ...