Will the Supreme Court Clean up Takings Law in Murr v. Wisconsin?

Abstract

This article examines Murr v. Wisconsin, which will be the Supreme Court’s latest addition to its takings jurisprudence for the 2016–17 term. The precise question in the case asks how the “parcel-as-a-whole” test of Penn Central Transportation Co. v. City of New York applies to two contiguous parcels that ended up under common ownership by different routes.

The first part of the article argues that under the flawed Penn Central test, the two parcels should be treated as separate because their merger under common ownership did not increase any negative externalities on the protected St. Croix River. A simple mistake in conveyancing, easily avoided, should not wipe out development rights that any other owner could possess over the undeveloped parcel.

The second part of this article attacks the dominant Penn Central test that makes the availability of any compensation turn on the ratio of the value taken to the full value of the parcel. The same political considerations that justify a per se compensation rule (subject to a police power exception) in physical cases apply equally in the regulatory context, given that both circumstances present opportunities for majoritarian abuses. The article then examines many of the cases cited in Penn Central, and some decided after it, to support the conclusion that in dealing with partial interests in land, be they air rights, mineral rights, liens, or covenants, the simple rule that sets compensation equal to the fair market value of the property lost outperforms on administrative and welfare grounds the Penn Central test, under which huge private losses are routinely ignored because they do not count as a sufficient diminution in value by a standard that is nowhere either articulated or defended. Penn Central should be overruled or cut down in size.

Keywords: Implicit In-Kind Compensation, Judicial Deference, Numerator/Denominator Test, Police Power, Physical Takings, Regulatory Takings