On June 23, 2017, the United States Supreme Court decided Murr v. Wisconsin, No. 15-214, holding that, in determining whether a regulatory taking has occurred under the Takings Clause of the Fifth Amendment, courts should apply a three-factor test to identify the boundaries of the parcel in question so as to assess the burden of the regulation. Applying the test, the Supreme Court held that the property in question was a single parcel and no compensable taking had occurred.
The Murr family owns two adjacent lots reaching from the riverbank up to the bluffs along the Wisconsin side of the St. Croix River. They wanted to sell one of the lots to fund development on the other, but state and local regulations prohibit the common owner of adjacent lots from separating the lots unless each lot has at least one acre of land that is suitable for development—and the Murr family lots do not meet this test. The Murrs sought a variance, which was denied. Then they sued, arguing that the regulations effectively took the entirety of the lot they were prohibited from selling and thus amounted to an unconstitutional taking of property under the Fifth Amendment. The Wisconsin courts rejected the claim.
The Supreme Court affirmed, holding that the Murrs’ two lots should be analyzed as a single parcel of land for purposes of determining whether the regulations imposed so great a burden that they effected a taking of property. The proper way to determine the relevant parcel, the Court held, is to apply a three-factor test. First, courts should give substantial—but not controlling—weight to how the land is bounded and divided under state and local. Second, courts should look to the physical characteristics of the property. Finally, courts should assess the value of the property under the challenged regulation, paying special attention to the effect of the regulated land on the value of other holdings.
Applying this three-factor test, the Court held that the Murrs’ property should be evaluated as a single parcel. From that viewpoint, the regulations did not rise to the level of a compensable taking because the Murr family has not been deprived of all economically beneficial use of their property, the limitation on separating smaller lots was a reasonable land-use regulation, and the economic impact on the Murrs was not severe, given that they could build a larger structure on the combined lots.
Justice Kennedy delivered the opinion of the Court, in which Justices Ginsburg, Breyer, Sotomayor, and Kagan joined. Chief Justice Roberts filed a dissenting opinion, in which Justices Thomas and Alito joined. Justice Thomas filed a dissenting opinion. Justice Gorsuch took no part in the consideration or decision of the case.