Photographer: Andrew Harrer/Bloomberg

Property Rights Curbed by Top U.S. Court in Development Case

  • Kennedy joins court’s liberals in majority in 5-3 decision
  • Wisconsin family objected to rules protecting riverfront

The U.S. Supreme Court dealt a blow to property-rights advocates Friday, ruling that regulators didn’t violate the Constitution when they refused to allow separate houses on adjoining riverfront lots owned by four siblings.

The justices, voting 5-3, said a Wisconsin state court was right to consider the two lots together in deciding whether building restrictions were so onerous they required the Murr family to be compensated.

Writing for the court, Justice Anthony Kennedy said the family had ample options, including an expansion of the existing cabin on one of the lots. He said evidence in the case indicated that the restrictions had reduced the property’s value by less than 10 percent.

"The expert appraisal relied upon by the state courts refutes any claim that the economic impact of the regulation is severe," Kennedy wrote.

The case divided the court along ideological lines. Chief Justice John Roberts and Justices Samuel Alito and Clarence Thomas dissented. Justice Neil Gorsuch didn’t take part in the case, which was argued before he joined the court.

The case centered on the constitutional prohibition against government taking of private property without just compensation. The central question was whether to consider the two lots as a single parcel.

A 1978 Supreme Court decision says courts should look at "the parcel as a whole" when considering whether land-use regulations are so severe they require compensation to the owner.

The Murr siblings argued that the two lots should be treated separately because their parents bought them at different times in the 1960s for different purposes. The family was exploring the possibility of selling one of the lots for development while upgrading the existing cabin on the other lot.

Local regulators rejected the plan, pointing to rules designed to protect the river and surrounding land. A Wisconsin state court said the family wasn’t entitled to compensation.

Kennedy said the test for answering the constitutional question is a multi-factored one that considers state and local laws, the physical characteristics of the property, the economic impact of the regulation and the reasonable expectations of the owners.

In dissent, Roberts said the result in the case "does not trouble me," given that the Murrs "can still make good use of both lots." But he faulted the court for laying out an overly elaborate test to determine property rights.

"I would stick with our traditional approach: State law defines the boundaries of distinct parcels of land, and those boundaries should determine the ‘private property’ at issue in regulatory takings cases," Roberts wrote.

The case is Murr v. Wisconsin, 15-214.

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