The United States Supreme Court has scheduled oral argument of the Muir case for March 20, 2017. The case involved a regulatory taking claim which was premised on the adoption of a zoning ordinance which required a minimum “net project area.” This resulted in the inability to develop or sell the contiguous parcel. There were two parcels which although owned by the same owner and contiguous were purchased separately at different times for different purposes. By itself the other lot would be grandfathered under the zoning law, but not when it adjoins another parcel owned by the same owner.
The Wisconsin Court denied the inverse taking holding that Penn Central requires aggregation of adjacent parcels.
As I wrote in my column in the New York Law Journal defining regulatory takings, the United States Supreme Court in Lingle v Chevron U.S.A. Inc., 544 US 528 (2005), has defined four types of regulatory takings. Two categories of regulatory takings generally will be deemed per se takings for Fifth Amendment purposes. The first is where government requires an owner to suffer a permanent physical invasion of property – however minor.
This taking occurs even if there is no permanent actual occupation of the land. United States v Causby, 328 US 256 (1946), provides an example wherein the United States Supreme Court held that a taking occurred when low flying military aircraft caused damages to a chicken farm when the chickens would not lay eggs. The Court noted that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere.
A second categorical taking applies to regulations that completely deprive an owner of “all economically beneficial us[e]” of the property.
The leading example of a deprivation of all economically viable use of land is Lucas v South Carolina Coastal Council, 505 US 1003 (1992). In Lucas, a property owner purchased property to build single family homes. South Carolina passed a Beach Front Management Act, which prohibited the construction of any permanent structures on the property. The United States Supreme Court ruled that the deprivation of all economically viable uses of the property would be a taking and remanded for findings whether the regulation would be equivalent of State exercise of private nuisance abatement. During the pendency of the action, the Act was amended to allow “special permits” for construction of structures so that the State Court found only a temporary taking.
Outside of these two narrow categories, regulatory takings challenges are governed by the standards set forth in Penn Central Transportation Co. v New York City, 438 US 104 (1978). The Court in Penn Central acknowledged that it had been unable to develop any set formula but identified several factors that have particular significance. Primary among those factors are the economic impact of the regulation on the claimant, and in particular, the extent to which the regulation has interfered with distinct investment backed expectations. In addition, the character of the governmental action may be relevant in discerning whether a regulatory taking has occurred.
The last category of inverse condemnation is land use extractions. In Nollan v California Coastal Commission, 483 US 825 (1987), the United States Supreme Court found an unconstitutional extraction when the Commission demanded, as a condition to granting a permit to demolish an existing house on beach front property, that the Nollans provide an easement across their property. The Supreme Court held that requiring the easement could not be treated as an exercise of its land use power. The court stated that if the commission wanted the easement, it would have to acquire it by eminent domain and pay just compensation. Id. at 841-842. Inverse Condemnation or De Facto Taking: What’s in a Name? New York Law Journal, February 23, 2016.
In Muir, the appellant is represented by Pacific Legal Foundation, which argues that there is no support in either the law or the facts of Penn Central for the Wisconsin Court’s conclusion that the Court established a rule that commonly owned contiguous parcels must be combined for consideration under the Takings Clause.
It is argued that Penn Central establishes a presumption that the relevant parcel to measure the degree of interference is the single parcel. The Bar has expressed keen interest in the case because the Supreme Court must revisit Penn Central.