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Why Several Western States Are Watching This Important Property Rights Case

Supreme Court will hear oral arguments Monday in Murr v. Wisconsin, which tests the rules for when governments must pay compensation for regulatory takings.

Olivier Douliery - Pool via CNP/NewscomOlivier Douliery - Pool via CNP/NewscomA dispute between a Wisconsin family and their local government could set an important precedent for how the federal government must compensate states when taking land.

The case, Murr v. Wisconsin, goes before the U.S. Supreme Court on Monday for oral arguments. The Murr family owns two adjacent plots of land along the banks of the St. Croix River in western Wisconsin, and wants to sell one of the parcels (with an estimated value of $400,000, the family claims) to pay for maintenance on the recreational cabin that sits on the other parcel. The county government, acting under the terms of a 1975 state law, prohibited the family from selling the second parcel and declared the two parcels are effectively a single parcel—a regulatory ruling that the Murr family claims has reduced the value of their land by as much as 90 percent.

(For more on the details and background of the case, check out my previous reporting here.)

The whole thing seems very narrow and technical—it's almost so provincial that it makes you wonder why the Supreme Court is involved at all—but the key detail is not the fight over whether the Murr's own one 2.5 acre parcel of land or two 1.25 acre parcels of land. No, the real question here is whether the state government has to compensate them for the loss of value.

Usually, this is fairly clear cut. The U.S. Constitution says governments must compensate property owners when land is taken for public purposes. In this case, though, the land wasn't necessarily taken, but rather the use of the land was significantly restricted by state regulations regarding where structures can be built relative to waterways, and by the separate decision to merge the two parcels into one without the Murr's consent.

The case before the Supreme Court will deal mostly with the question of whether the simple fact of having two adjacent parcels owned by the same person can allow the government to reduce the value of those parcels without having to pay compensation—something the government would not be able to do if the two parcels had different owners.

"However you come down on the question of whether there is a taking in [the Murr's] case or not, the answer shouldn't depend on the fact that the owners of one lot also happen to own the lot next door," said Ilya Somin, a professor of law at George Mason University, during a forum on the Murr case hosted Friday by the Cato Institute, a libertarian think tank. Somin has called the case "by far the most important property rights case to come before the Supreme Court this term, and probably the most important in at least two or three years, if not longer."

It's the question of compensation that has attracted the interest of several states that are not directly involved in the dispute. Eight western states, led by Nevada, filed amicus briefs with the Supreme Court in support of the Murr's claim. If the state can combine the Murr's parcels of land and not have to compensate the family for the lost value, those states argue, then similar reasoning could leave states vulnerable to large-scale uncompensated encroachment by the federal government.

"If regulators do not have to pay compensation to affected property owners in cases where the latter happen to possess contiguous lots, they will often have little incentive to fully consider the costs and benefits of proposed regulations, and prioritize those with the greatest likely beneficial impact," they argue. "Aggregating contiguous parcels under common ownership into a single super-parcel will undermine traditional notions of property rights, have deleterious economic consequences, and encourage the undisciplined regulation of individuals' and states' property."

The states are not concerned with whether Wisconsin should have to compensate the Murr family for the reduced value of their property, but rather with the way in which the government executed the merger of the two parcels. If governments are allowed to do that—to decide that two adjacent parcels of land with the same owner can be treated as a single parcel under the law—then it creates several perverse incentives for individuals, states, and the federal government.

At the Cato forum on Friday, Somin, who authored the amicus brief on behalf of those several western states, outlined some of those potential perverse incentives:

  • If property owners know that contiguous parcels can be merged together by governments, without compensation, they will have an incentive to NOT get common ownership. That creates other problems with efficiency, as property owners find ways to get around it, such as by creating other parties for a transaction purely to avoid legal problems.
  • It would make it harder to collect parcels of land for a large building project, either public or private.
  • States will have incentives to redefine parcels to avoid liabilities under the constitution's takings clause, and regulators will be able to undermine property values without having to worry about paying compensation
  • Many state governments own contiguous lots and large bodies of water near areas owned by the federal government (military bases, national parks, etc). Takings rules apply to land taken by the federal government from state government, but if you can say contiguous lots are merged, then the federal government would be able to impose severe restrictions on state land and wouldn't have to pay consequences.

The last point is the one that most concerns the states that are watching the Murr case closely. If the federal government is able to merge state-owned parcels and reduce access to them or otherwise regulate them to the point where they become unusable, the feds would normally have to compensate the state for the loss of access to its land. Depending on the outcome of the Murr case, that might change.

(The Reason Foundation, which publishes this blog, filed an amicus brief with the Supreme Court in defense of the Murr family's claim).

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  • Citizen X - #6||

    I doubt that your mom in-law woz like actualey making money.

  • Social Darwinist||

    If the government regulates something to the point of it being useless then they have essentially taken it by restricting its use, and in this case, redefining the boundaries of the property. I hope SCOTUS rules in favor of Murr.

  • rudehost||

    So basically western state governments could care less about the rights of citizens but don't want their rights harmed. I would expect no less.

  • SomeGuy||

    Don't want their tyranny harmed.

  • Bongstar420||

    Damn straight. I want the right to watch others starve because I have property, they don't, and I don't like them.

  • Longtobefree||

    So the states, who are in terms of property rights the bad guys here, want to join the case with the good guys?
    WTF???

  • rudehost||

    Hard to call them the bad guys but the article suggests they want to do the right thing for the wrong reasons. It is hard to criticize their actions but easy to criticize their apparent motivations.

  • Agammamon||

    They want to do the right thing for the same reason the Murr's do - protect themselves from a threat of theft.

  • rudehost||

    Isn't protecting their citizens from theft the more important issue? The suggestion here is none of their brief had a thing to do with their citizen's rights but only the rights of the precious bureaucracy. I have an issue with that if true.

  • Bongstar420||

    Can I get protection from theft even though I was born to poverty with a mind who objects to the greedy?

    For instance, can I get protected from the rich stealing the value of my work because I have that choice or starvation due to circumstances outside of my "personal responsibility" sphere?

    Or in another set of terms, can I get protection from the poors if I am also a poor? Will a poor person get equal protection from theft vs a rich person....

  • loveconstitution1789||

    There's bad guys (states abusing power) and then there's really bad guys (federal gov abusing power).

    You can always move from a state that becomes fucked up and remain in the USA. If the federal gov is out of control, then your choices become more limited.

    Most people do not understand how much federal land is out West.

  • Dan S.||

    Federal land isn't involved here at all, even potentially. State land near federal land might be. Really, whether two adjacent parcels of land that come under common ownership become a "single parcel" of land shouldn't matter at all. You'd think that, to simplify bookkeeping, all parties involved would want them to. But that would only be true if rules limiting what could be built on "one parcel" of land didn't exist. It is a pleasant irony to see a group of states siding with a citizen against another state. But suppose, in other circumstances (where these use-limiting rules don't exist), someone wants to combine multiple parcels into one, just to simplify things. Would they be able to, even if the Murrs win?

  • Tionico||

    In an area such as the one in this case, a building lot is a building lot. One lot twice the size of another, all other things equal, never has twice the value of the smaller lot. Areas like that have minimum lot size for a new residence. Any deeded lot can hold a new residence, thus has value as a "homesite" independent of its actual area. In this case, the state are attempting to prevent the construction of a new home by combining the vacant land with the one already improved with the dwelling. By doing this without the property owner's permission they DO cheat the owner of the extra value.
    I own a five acre lot, one home. For a short while they had rezoned my lot from one house per five acres to one house per acre. I assumed it was a permanent change, so did not persue deeding two, or even four, lots out of the one five acre one. EACH lot would have had nearly the same value as the whole single 5 acre one. I lost a LOT of real value by not acting quickly. I never thought they'd change it within less than a year.

  • Bongstar420||

    OK..you want to develop. Fine

    No profits, gains go to those who are not already wealthy.

    Lets how badly they fight for that.

    Obviously, this issue is not about the advancement of society, unless by "society," you mean the interests of the already wealthy.

  • C. S. P. Schofield||

    I have to wonder whether the petty bureaucratic jackass who started this, upon learning it was headed to the Supreme Court, thought "Oh, Shit!". I'd like to think so, but I doubt it. He probably views it as a confirmation of his titanic ego.

  • rudehost||

    I doubt they said "oh shit". They have no personal skin in the outcome. The worst that happens is they waste some taxpayers money. Now if losing meant they got fired they might be concerned.

  • Longtobefree||

    Yeah, but the taxpayers money comes first from his budget, so he will get beat up in the next budget cycle. Losing bureaucratic power is worse than being fired. Of course, if he wins, he will not only get promoted, but they will probably name a park after him.

  • rudehost||

    Perhaps. Although I have a hard time believing that losing a lawsuit like this would typically lead to a loss of funds. Anecdotally speaking losing large settlements doesn't seem to have changed police behavior which you would expect if losing legal battles hurts their budget.

  • buybuydandavis||

    In this case, though, the land wasn't necessarily taken, but rather the use of the land was significantly restricted by state regulations

    Property is just a bundle of rights. *Taking* some of those rights is a taking.

  • creech||

    Every time a municipality changes zoning it engages in a "taking" which, apparently, courts have ruled is fine and requires no compensation. Here in Penna. a farmer may lose the right to develop his property due to a zoning change or a homeowner lose the right to erect a garage due to a widening of the riparian buffer zone. Most of the zoning board disputes I hear about would never take place if the municipality couldn't change zoning willy nilly without paying the property owners for the loss in value.

  • Tionico||

    or how about letting the involved property owners come and tell them what they think about the rezone? Or, better yet, put it on the ballot for the next election. Seems some gummit hoo hahs go slamming their headache sticks wherever they please, no concern for their victims, er, squeeze me, their customers, oops, blew it again, their subjects.

  • gaoxiaen||

    Why would you pay for something if you could legally steal it?

  • Diane Reynolds (Paul.)||

    I'm going to be watching this case closely, but I suspect the Wisconsin couple will lose. The government at all levels engages in these so-called regulatory takings all the time. The disruption it would cause to demand that government compensate would be significant.

    I'm really surprised that the King Country Critical Areas Ordinance didn't make it to the Supreme Court, because if there was ever a case of a regulatory taking, that was it.

  • Tionico||

    Every county in the State of Washington has a similar, and similarly ratty Critical Areas Ordinance.. mandated by state law. Every one of them stinks, as the state butchers come round, stick their noses into county business, and TELL them how they have to decide what..... suing them if they don't jig to the state fiddle.

  • Uncle Jay||

    RE: Why Several Western States Are Watching This Important Property Rights Case
    Supreme Court will hear oral arguments Monday in Murr v. Wisconsin, which tests the rules for when governments must pay compensation for regulatory takings.

    Why is this even going to court?
    Everyone knows The State owns all lands, and therefore should never compensate the squatters who live there, improved the land and paid property taxes for year on said property.
    Giving the lowly plebian class money for taking care of their property only encourages more of this false redistribution of wealth.
    Only The State should receive money, not the unwashed masses.

  • Bongstar420||

    In America, the state is equal to the sum of its citizens.

  • Bongstar420||

    I will concede to further privitization when it does not result in gains for those who already have.

    I feel no empathy for the rich when the big bad gubmint seizes the property they gained through other people's work.

    Now, if the property is 100% the result of your own intellect and hands, that should be relatively free of intervention. The problem with that is you can't get "rich" by your own hands in a free market.

  • Mahesh Raju||

    Obviously, this issue is not about the advancement of society, unless by "society," you mean the interests of the already wealthy. IMO for pc and Tubemate for pc

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