SCOTUS Decision Eviscerates Property Rights, States Must Defend Ownership

Before they were swept up into the lead roles in a contentious Supreme Court case, the Murrs were just four siblings with a cabin on two lots by a wooded Wisconsin lake.  When the Murrs tried to sell one of their lots, they confronted a state regulation that went into effect in 1976, not long after their parents had acquired the property.


In an effort to preserve the area’s natural beauty, the law required new buildings be built on parcels larger than the Murrs’ two individual lots.  The market value of their undeveloped lot was destroyed because it was now too small to legally build upon.


Normally, the state of Wisconsin would be required to compensate the Murrs for their lost property value under the Fifth Amendment and the momentous 1922 Mahon Supreme Court decision.  But because of two questionable judicial precedents used by the majority on the Court this year, the Murrs were denied compensation in their own case, Murr v. Wisconsin.


The first precedent states that the government doesn’t have to pay property owners to compensate for value-damaging regulations unless the economic value of the property is totally “wiped out.”  This precedent’s heinous implications were on full display when Pima County, Arizona refused to give Kent Wonders compensation after regulations destroyed “only” 30 percent of his property value.


But it was a second judicial precedent, one that allowed the Court to consider the Murrs’ two plots of land as one, that decided Murr.  Based on another Supreme Court case, this precedent considers the Murrs’ adjacent lots as a single property.  This “interpretive jiggery pokery,” as the late Justice Scalia might have called it, essentially means the government can decide whether someone owns two small plots or one large plot based on its whims.


In considering their property as one lot that lost a little value instead of two lots, one of which lost almost all its value, the Court decided Wisconsin owed the Murrs nothing.


In his dissent, Chief Justice Roberts shows that this ruling destroys property rights “most of the time” by making the definitions of a property line too subject to the government’s desire to regulate, take, or do anything else with the land.  Rather than an island of government mandate bounded by a sea of individual rights, the majority opinion confines property rights to the little island, surrounded by the vast and unassailable authority of the government.


For the Murrs, regulation without compensation, or “regulatory taking,” meant a less valuable, if still beautiful summer recreational area.  For other victims, regulatory takings strike closer to home.  A recent paper by the Goldwater Institute is full of stories of governments abusing property rights: cities condemning entire neighborhoods on the basis of a few houses’ condition, booting local businesses to make room for big corporations to move in, and threatening home owners with jail time for renting rooms in their houses.


Right here in Nebraska, the owners of three historic downtown Omaha buildings feared the city may use eminent domain to seize and demolish their buildings for a parking garage.  The victims of property rights abuse are, by and large, ordinary citizens in the way of the government’s big plans.


New York University Professor Rick Hills argues that state legislatures have the real power when it comes to defining and protecting property rights.  To that end, the Goldwater Institute’s paper also includes model legislation for states.


Under their Ownership Fairness Act, if the government limits “the existing rights to use, divide, sell, or possess real property” without the justification of protecting the public (e.g. from pollution or dangerous structures), they must compensate property owners.  This resolves situations like the Murrs’, too, by ensuring that any reduction in the use or value of land requires compensation.


The Unicameral should consider the Ownership Fairness Act, and the Ricketts administration should apply careful scrutiny in its ongoing regulatory review to guard Nebraskans’ constitutional rights and stand up to governments that bully property owners through flawed regulations.

Posted by: Albert Gustafson

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