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 for some limited period of time came under common ownership by different routes. This article first traces the evolution of takings law leading up to that conclusion, and it argues that even under the flawed Penn Central test the two parcels acquired separately in Murr should be treated as one because their merger did not increase any negative physical 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, in relation to the taking of partial interests in land, be they air rights, mineral rights, liens, or covenants. In these cases, a 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. That test fails because it ignores huge private losses created by takings so long those losses do not result in a sufficient diminution of the property’s value, a standard that is nowhere either articulated or defended. As such, Penn Central should be overruled or cut down in size.

A brief postscript examines some of the issues raised in the oral argument before the Supreme Court.

Keywords: common ownership; development restrictions; entire parcel; regulatory takings; Penn Central test