Amicus Curiae Brief — Murr v. Wisconsin, 136 S. Ct. 890 (2016) (No. 15-214)

IN THE

Supreme Court of the United Stites |

JOSEPH P. MURR, et al.,

Petitioners,

v.

STATE OF WISCONSIN AND ST. CROIX COUNTY,

Respondents.

On Writ or CERTIORARI TO THE CouRT OF APPEALS

OF THE STATE OF WISCONSIN

Sa $$ — a —<<—<———

BRIEF OF THE CATO INSTITUTE AND

OWNERS’ COUNSEL OF AMERICA AS AMICI

CURIAE IN SUPPORT OF PETITIONERS

—_—

ILtyA SHAPIRO Micwak. H. Park

Cato INSTITUTE Counsel of Record

1000 Massachusetts Avenue, N:'W. Consovoy McCartuy Park PLLC

Washington, D.C. 20001 Three Columbus Circle,

(202) 842-0200 15th Floor

New York, New York 10019

Rosert H. THoMAs (212) 247-8006

Damon Key LEonc Kupcuak park@consovoymecarthy.com

HASTERT

1003 Bishop Street, 16th Floor THomas R. McCarrny

Honolulu, Hawaii 95813 Bryan K. WEIR

(808) 531-8031 Consovoy McCartuy Park PLLC

GEORGE Mason UNIVERSITY

ScHOOL OF LAw

SUPREME CouRrT CLINIC

3033 Wilson Boulevard, Suite 700

Arlington, Virgina 22201

(703) 243-9423

Libsary of Cougrecr

i

TABLE OF CONTENTS

Page

PNT bn con cc cscesccececccccses i

TABLE OF CITED AUTHORITIES .............. ii

INTEREST OF AMICI CURIAE

PPD ccc cecsccveccsscccesseces 1

SUMMARY OF THE ARGUMENT................ 2

Sie ca ek ds cee bed Renee ke eeed 6

Separate Parcels of Land Should Not

Be Aggregated Under Penn Central for

A. The Penn Central Test Is a “Muddle” That

Inadequately Protects Property Rights. . . .6

B. A Bright-Line Rule Against Combining

Properties to Create a New “Parcel as a

Whole” Would Mitigate Penn Central’s

C. Permitting the Combination of Adjacent

Parcels Would Exacerbate Penn Central’s

a2

TABLE OF CITED AUTHORITIES

Page

CASES

Am. Savs. & Loan Ass'n v. Cnty. of Marin,

653 F.2d 364 (9th Cir. 1981)..............200000- 20

Andrus v. Allard,

as ss veda ken kb ken eaeees Smae 9

Bd. of Regents v. Roth,

Crk. ind pngé ech whawe ews ke 13

Bernardsville Quarry, Inc. v.

Borough of Bernardsville,

ET WG IIE 6 5 cnc ccc cccecccnsses 12

Dist. Intown Props. P’ship v.

District of Columbia,

198 F.3d 874 (D.C. Cir. 1999)............ 8, 10, 15, 20

Dunes West Golf Club, LLC v.

Town of Mt. Pleasant,

og 8 ee 20

Eastern Enters. v. Apfel,

ccc wccctcceceseceteons 7, 8, 22

Edward Rose Bldg. Co. v. Indep. Twp.,

462 N.W.2d 325 (Mich. 1990).................... 14

Forest Props., Inc. v. United States,

EE IIIS 5c bea nesesscscvceucccvess 23

121

Cited Authorities

Page

Giovanella v. Conserv. Comm'n of Ashland,

857 N.E.2d 451 (Mass. 2006) ................ 21, 22

Hodel v. Irving,

481 U.S. 704 (1987). ........... RAR AE PS @ 8, 9, 10

K & K Const., Inc. v. Dep’t of Nat. Res.,

575 N.W.2d 531 (Mich. 1998). .............20200: 20

Keystone Bituminous Coal Ass’n v.

DeBenedictis,

ae atk ebeknevinsennkl 8,9

Landgraf v. USI Fiim Prods.,

Ne eon vcknkcenvécwvben ee 4,15

Lingle v. Chevron U.S.A. Inc.,

is adwecdccvna ons 3, 6, 7, 11

Lost Tree Vill. Corp. v. United States,

707 F.3d 1286 (Fed. Cir. 2018) ............. 4, 13, 19

Lucas v. S. Carolina Coastal Council,

Cnc ee chdeseesuesens 10

MacDonald, Sommer & Frates v. Yolo Cty.,

cence abanes as i Ae 7

Machipongo Land & Coal Co. v. Commonwealth,

rene whcdccvccescececesse 20

Ww

Cited Authorities

Page

Nasser v. City of Homewood,

671 F.2d 432 (11th Cir. 1982).................... 12

Pace Res., Inc. v. Shrewsbury Twp.,

808 F.2d 1023 (8d Cir. 1987) ...............-.... 12

Palazzolo v. Rhode Island,

Ne oo coe ance siees ewan passim

Payne v. Tennessee,

EE ra a 15

Penn Central Trans. Co. v. New York City,

EE He, ae passim

Republic of Austria v. Altmann,

eee vce sc wabens eee 7eery 15

Ruckelshaus v. Monsanto Co.,

i hd g's baibwbe-nueds eae 10

State ex rel. R.T-G., Inc. v. Ohio,

780 N.E.2d 998 (Ohio 2002). .................-.. 20

Stop the Beach Renourishment, Inc. v.

Fla. Dep’t of Envtl. Prot.,

ocak ock ka weed ewewesi —

Tahoe-Sierra Pres. Council, Inc. v.

Tahoe Regional Planning sastiiee

eee 7, 11, 14

Vv

Cited Authorities

Page

Theobald v. Cty. of Lake,

712 N.W.2d 180 (Minn. 2006) .......... (eicacenee 14

Walcek v. United States,

so oe cle ab hceeewcteenen 12

OTHER AUTHORITIES

Adam R. Pomeroy, Penn Central After 35 Years: A

Three Part Balancing Test or a One Strike Rule?,

ee RT IS 6 ove cccscccccseseecs 7

Carol M. Rose, Crystals and Mud in Property Law,

Se i IE on cc ve ccscsveesacdses 24

Carol M. Rose, The Shadow of the Cathedral,

ce. ke ue pa kuseaws 16

Dwight H. Merriam, Rules for the Relevant Parcel,

25 U. Haw. L. Rev. 353 (2008)................ 15, 21

Eric R. Claeys, Takings, Regulations, and

Natural Property Rights,

88 Cornell L. Rev. 1549 (2003) ........ we lea atic 12

F. Patrick Hubbard et al., Do Owners Have a

Fair Chance of Prevailing Under the Ad Hoc

Regulatory Takings Test of Penn Central

Transportation Company?,

14 Duke Envtl. L. & Pol’y F. 121 (2003) ..... 3, 11-12

vu

Cited Authorities

Frank I. Michelman, Property, Utility,

and Fairness: Comments on the Ethical

Foundations of “Just Compensation” Law,

Pes ks I IEDs 6 occ vc cccccccsscucs 16

Holly Doremus, Takings and Transitions,

19 J. Land Use & Envtl. L. 1 (2008) ............. 10

J. Peter Byrne, Ten Arguments for the Abolition

of the Regulatory Takings Doctrine,

22 COey LAG, SO CIOS) ccc cc ccccccccccecs 9,10

John D. Echeverria, Making Sense of Penn Central,

23 UCLA J. Envtl. L. & Pol’y 171 (2005) ........ 8,9

John E. Fee, The Takings Clause as a

Comparative Right,

po OR eee 7

Keith Woffinden, The Parcel as a Whole: A

Presumptive Structural Approach for

Determining When the Government Has

Gone Too Far,

2008 B.Y.U. L. Rev. 623 (2008). ................. 23

Kenneth A. Stahl, Reliance in Land Use Law,

2013 B.Y.U. L. Rev. 949 (2018) ............... 16, 17

Laura J. Powell, The Parcel as a Whole:

Defining the Relevant Parcel in Temporary

Regulatory Takings Cases,

89 Wash. L. Rev. 151 (2014).................. 15, 21

vit

Cited Authorities

Mark W. Cordes, The Fairness Dimension in

Takings Jurisprudence,

20-FALL Kan. J.L. & Pub. Pol’y 1 (2010)......... 11

Raymond R. Coletta, The Measuring Stick

of Regulatory Takings: A Biological and

Cultural Analysis,

1 U. Pa. J. Const. L. 20 (1998)............. 14, 18, 19

Steven J. Eagle, The Four-Factor Penn Central

Regulatory Takings Test,

118 Penn St. L. Rev. 601 (2014)............. 9, 14-15

Susan Rose-Ackerman, Against Ad Hocery: A

Comment on Michelman,

88 Colum. L. Rev. 1697 (1988)............... 24, 25

Troy A. Rule, Property Rights and Modern Energy,

20 Geo. Mason L. Rev. 803 (2013) ............ 16, 17

William Wade, Sources of Regulatory Takings

Economic Confusion Subsequent to Penn Central,

41 Envtl. L. Rep. News & Analysis 10936 (2011)... .9

James W. Ely, The Guardian of Every Other Right:

A Constitutional History of Property Rights

SS ick ke ay bebGGn ss ee ees ece so wi 1

Richard A. Posner,

Economic Analysis of Law 40 (8th ed. 2011)....... 16

Viti

Cited Authorities

Page

Kelsey Davis, NORA Relaunches Lot Next Door

Program on Monday,

WSU Nowe Glam. BB, BOMB)... occ cc ccccccce 18

1 E. Ziegler, Rathkopf’s The Law of Zoning and

Planning § 11:20 (4th ed. 2001).................. 24

2 Am. Law Zoning § 12:9 (5th ed.)................-. 17

2 Am. Law Zoning § 14:7 (5th ed.).................. 17

4 Am. Law Zoning § 32:2 (5th ed.)................5. 17

1

INTEREST OF AMICI CURIAE

AND INTRODUCTION'

The Cato Institute was established in 1977 as a

nonpartisan public policy research foundation dedicated

to advancing the principles of individual liberty, free

markets, and limited government. Cato’s Center for

Constitutional Studies promotes the principles of limited

constitutional government that are the foundation of

liberty. Toward those ends, Cato conducts conferences;

publishes books, studies, and the annual Cato Supreme

Court Review; and files amicus briefs on a host of legal

issues, including property rights.

Owners’ Counsel of America (“OCA”) is an invitation-

only nationa; network of experienced eminent domain

and property rights attorneys. They have joined together

to advance, preserve, and defend the rights of private

property owners, and thereby further the cause of liberty,

because the right to own and use property is “the guardian

of every other right,” and the basis of a free society. See

James W. Ely, The Guardian of Every Other Right: A

Constitutional History of Property Rights (2d ed. 1998).

OCA is a non-profit 501(c)(6) organization sustained solely

by its members. Only one member lawyer is admitted

from each state. Since its founding, OCA has sought to

use its members’ combined knowledge and experience as a

resource in the defense of private property ownership, and

OCA member attorneys have been involved in landmark

1. The parties have consented to the filing of this brief. No

counsel for any party authored this brief in whole or in part,

and no person or entity, other than amici and its counsel, made

a monetary contribution intended to fund the preparation or

submission of this brief.

2

property law cases in nearly every jurisdiction nationwide.

Additionally, OCA members and their firms have been

counsel for a party or amicus in many of the property

cases this Court has considered in the past forty years.

Amici urge the Court to reverse the Wisconsin

Court of Appeals. That court incorrectly permitted the

government to effect a taking of Petitioners’ property

by combining separate but contiguous parcels of land

they own to create a new “parcel as a whole” under the

regulatory takings analysis of Penn Central Trans.

Co. v. New York City, 438 U.S. 104 (1978). Landowners

challenging government actions that affect their property

already face an uphill climb under Penn Central. Adding

another layer of uncertainty—asking whether contiguous

parcels should be combined—would only complicate that

analysis further. The Wisconsin court’s holding also

creates larger parcels of land, making it easier for the

government to eifect uncompensated takings. The Court

should thus adopt a bright-line rule against combining

separate properties to create a “parcel as a whole.”

SUMMARY OF THE ARGUMENT

This Court first outlined the test for regulatory

takings in Penn Central. Although ubiquitous, it is a

notoriously difficult test to apply. Its three factors—(1) the

“character of the government action,” (2) the regulation’s

economic impact, and (3) the regulation’s interference

with “reasonable investment-backed expectations”—have

perplexed courts and litigants for decades.

The Penn Central factors are vague and difficult to

apply to concrete property interests. As a result, courts

3

have considered the factors differently depending on the

case, treating one factor as dispositive in one case while

ignoring it altogether in others. The factors themselves

are also circular. A landowner’s “investment-backed

expectations” will necessarily depend on existing

regulatory regimes, so the “character of the government

action” shapes a landowner’s expectations.

The Court has attempted to clarify Penn Central,

see, e.g., Lingle v. Chevron U.S.A., Inc., 544 U.S. 528,

540 (2005), but these efforts have been inadequate. For

example, the Court has acknowledged that notions of

“fairness and justice” drive the analysis. Falazzolo v.

Rhode Island, 533 U.S. 606, 617-18 (2001). This opaque

overlay to the Penn Central factors only worsens the

ambiguity. The Court’s failure to clarify the meaning of

each factor, or how each should be weighed, has solidified

the widely held view that the Penn Central test is a

muddled area of the law.

This situation is further exacerbated by the fact that

landowners rarely prevail in regulatory takings cases.

One empirical study found that landowners lose 90 percent

of regulatory takings claims. See F. Patrick Hubbard et

al., Do Owners Have a Fair Chance of Prevailing Under

the Ad Hoc Regulatory Takings Test of Penn Central

Transportation Company?, 14 Duke Envtl. L. & Pol’y F.

121, 141 (2003). In many cases, the impact of such losses

can be staggering, with landowners losing almost all of the

value of their properties without receiving compensation.

The focus of this case is the “parcel as a whole”

inquiry embedded in the Penn Central analysis. Whether

a regulation amounts to a taking hinges in large part on

the “extent of the interference with rights in the parcel

4

as a whole.” Penn Central Trans. Co. v. New York City,

438 U.S. 104, 130-31 (1978) (emphasis added). Thus,

before courts can begin to address the intrusiveness

of a regulation, they must first define the scope of the

affected property. To that end, the size of the property

often dictates the severity of the regulation’s impact; the

smaller the piece of property, the more severe an impact

the regulation will likely have. The issue presented in this

case is whether courts can combine adjacent parcels to

create a new “parcel as a whole” simply because the two

parcels have the same owner.

The Court should adopt a bright-line rule against

aggregating separate parcels under common ownership.

Such a rule would add much-needed clarity to the Penn

Central test by simplifying the analysis. The lower courts’

various tests for when to aggregate parcels are just as

complicated as the Penn Central test itself. See, e.g., Lost

Tree Vill. Corp. v. United States, 707 F.3d 1286, 1293

(Fed. Cir. 2013). Attempting to articulate a new test for

aggregating parcels, instead of adopting a bright-line rule

against it, would only complicate Penn Central further.

More importantly, a rule against aggregation would

serve to protect landowner rights. Respecting the

separation of distinct parcels would ensure that the impact

of a regulation is measured against the proper piece of

impacted property. As a result, prohibiting aggregation

would make it more likely that landowners would receive

compensation for onerous regulations. A bright-line rule

would also protect landowners’ reliance interests on

their property lines. This Court has long recognized the

benefits of stable property rights. See, e.g., Landgruf' v.

US! Film Prods., 511 U.S. 244, 271 (1994). The ability to

5

rely on expectations in property interests encourages

investment, development, and the accrual of wealth. States

themselves have protected such reliance interests by

adopting various zoning protections, such as the “vested

rights doctrine” and “nonconforming uses.” A bright-line

rule against aggregating separate parcels wou'd do the

same.

On the other hand, a rule permitting aggregation of

parcels would exacerbate Penn Central’s failings. Indeed,

simply permitting aggregation at all undermines property

interests and makes it more likely that landowners will

lose regulatory takings claims because the relevant

“parcels as a whole” will be larger. This case is an excellent

example of that dynamic. After building a cabin on Lot F,

the Murrs purchased the adjacent Lot E for investment

purposes. But the county blocked them from building on or

selling Lot E, dashing any plans the Murrs may have had

for the land. Making matters worse, state courts combined

the two properties based on their common ownership.

That converted a categorical taking of Lot E, for which

the Murrs would at least have received compensation, into

an uncompensated burden t.°e Murrs must bear.

The losses that the Murrs and other owners of

contiguous properties have suffered are particularly

troubling because of the arbitrary nature of the

government actions. When governments combine separate

parcels of property in this manner, they target those

who choose to invest in contiguous pieces of property.

This haphazard system can only be described as a form

of the maligned “reverse spot zoning.” Worse yet, the

uncertainty created by such aggregation destabilizes

landowners’ reliance interests. The complicated tests

6

for aggregation make it more difficult for landowners to

predict the impact of future regulations and the outcome

of subsequent takings claims. This in turn discourages

laudowners from purchasing contiguous properties or

investing in properties they already own.

Instead of undermining property interests and

further muddling the Penn Central analysis, the Court

should adopt the most natural “parcel as a whole” rule:

preexisting, state-drawn property lines should define the

relevant parcels. And states should be prohibited from

combining contiguous parcels under common ownership

when landowners pursue regulatory takings claims.

ARGUMENT

Separate Parcels of Land Should Not Be Aggregated

Under Penn Central for Takings Analysis Purposes.

A. The Penn Central Test Is a “Muddle” That

Inadequately Protects Property Rights.

The Penn Central test governs almost all regulatory

takings cases. See Lingle v. Chevron U.S.A. Inc., 544 U.S.

528, 539 (2005). That test is not a “set formula” but instead

relies on “several factors that have particular significance.”

Id. (quoting Penn Central Trans. Co. v. New York City, 438

U.S. 104, 124 (1978)). “Primary among those factors are

‘[t]he economic impact of the regulation on the claimant

and, particularly, the extent to which the regulation has

interfered with distinct investment-backed expectations.”

Id. (citation omitted). Also relevant is the “character of

the governmental action’—for instance whether it amounts

to a physical invasion or instead merely affects property

7

interests through ‘some public program adjusting the

benefits and burdens of economic life to promote the

common good.” /d. (citation omitted). In short, “Penn

Central is a balancing test that considers three factors: (1)

the character of the state action; (2) the economic impact

of the regulation; and (3) the regulation’s interference

with the owner’s investment-backed expectations.” Adam

R. Pomeroy, Penn Central After 35 Years: A Three Part

Balancing Test or a One Strike Rule?, 22 Fed. Cir. B.J.

677, 677 (2013).

“If there is a consensus today about regulatory

takings law, it is that it is highly muddled.” John E. Fee,

The Takings Clause as a Comparative Right, 76 8. Cal.

L. Rev. 1003, 1006 (2003). The Court itself has joined that

consensus, noting that the Penn Central factors have

“given rise to vexing subsidiary questions,” see Lingle,

544 U.S. at 529, and admitting that it has “given some,

but not too specific, guidance to courts confronted with

deciding whether a particular government action goes too

far and effects a regulatory taking,” Palazzolo v. Rhode

Island, 533 U.S. 606, 617 (2001). The Court has further

said that the analysis is “characterized by ‘essentially

ad hoc, factual inquiries.” Tahoe-Sierra Pres. Council,

Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302,

322 (2002) (citation omitted). Finally, this Court has also

acknowledged the subjective nature of the analysis, noting

that it relies “as much on the exercise of judgment as on

the application of logic.” MacDonald, Sommer & F rates

v. Yolo Cty., 477 U.S. 340, 349 (1986). In short, “(clases

attempting to decide when a regulation becomes a taking

are among the most ... perplexing in current law.” Eastern

Enter. v. Apfel, 524 U.S. 498, 541 (1998) (Kennedy, J.,

concurring in judgment and dissenting in part).

8

Numerous deficiencies in the Penn Central analysis

lead to this “muddle.” At the outset, the language the

Court uses to articulate the test is notoriously vague and

generally unhelpful to lower courts. Although the Court

has repeated the Penn Central formula many times, it

“has provided little guidance on the meaning and proper

application of these three factors.” John D. Echeverria,

Making Sense of Penn Central, 23 UCLA J. Envtl. L. &

Pol’y 171, 171-72 (2005). And the meaning of the factors

seems to change from case to case. In that regard, the

Court has identified “nine plausible definitions of the term

of ‘character.” Jd. at 186 (labeling the Court’s varying

definitions of “character” a “veritable mess”). At different

times, the Court has applied the “character” of the

state action prong to focus on factors such as: the public

interests served by the regulation, see, e.g., Keystone

Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470,

485 (1987); whether the regulation benefits the property

owner by similarly restricting other property owners (the

so-called “average reciprocity of advantage”), see, e.g., id.

at 491-92; whether the regulation restricts the right to

devise the property, see, e.g., Hodel v. Irving, 481 U.S. 704,

716 (1987); whether the regulation has retroactive effect,

see, e.g., Apfel, 524 U.S. at 537 (plurality); and whether the

regulation remedies a harm caused by the landowners’

own actions, see, ¢.g., id. (explaining that a taking may

be less likely when the regulation fixes an injury caused

by the landowner).

Moreover, “(t]he regulation’s economic effect upon

the claimant may be measured in several different ways.”

Dist. Intown Props. P’ship v. District of Columbia, 198

F.3d 874, 879 (D.C. Cir. 1999). For example, the Court

has looked at the market value of the property, Hodel,

9

481 U.S. at 714; whether the regulation makes a business

“commercially impracticable,” DeBenedictis, 480 U.S. at

495-96; whether there are other economic uses to which

the property can be dedicated, Andrus v. Allard, 444 U.S.

51, 66, 100 (1979); and whether the property can earn a

reasonable rate of return, Penn Central, 438 U.S. at 136.

Suffice it to say, the Penn Central factors have substantial

definitional problems. Echeverria, supra, at 178-99

(attempting to reconcile the Court’s varying decisions on

the Penn Central factors).

The Court’s failure to clarify the meaning of these

factors has “perpetuat[ed] the essentially ad hoc approach

to takings analysis and contributied] to the widespread

view that regulatory takings is an especially confused field

of law.” Echeverria, supra, at 171-72. The factors have

been “affirmed repeatedly as the eye of the needle through

which millions of words have been jammed with little

agreement among courts about how to analyze the three

step test.” William Wade, Sources of Regulatory Takings

Economic Confusion Subsequent to Penn Central, 41

Envtl. L. Rep. News & Analysis 10936, 10936 (2011).

Ultimately, the lack of clarity “invites [courts] to engage

in open-ended value judgments.” J. Peter Byrne, Ten

Arguments for the Abolition of the Regulatory Takings

Doctrine, 22 Ecology L.Q. 89, 104 (1995).

In addition, the factors are themselves circular.

“{E]ach of the principal elements of Penn Central depends

on the others for content and meaning.” Steven J. Eagle,

The Four-Factor Penn Central Regulatory Takings

Test, 118 Penn St. L. Rev. 601, 604 (2014). A landowner

cannot have “reasonable investment-backed expectations”

in a jurisdiction that already has plenary regulations

10

because new regulations are more predictable. “[E]xcept

for a regulation of almost unimaginable abruptness,

all regulation will build on prior regulation and hence

be said to defeat any expectations.” Jntown, 198 F.3d

at 887 (Williams, J., concurring). So the “nature of the

government action” influences precisely what expectations

are “reasonable.” Lucas v. S. Carolina Coastal Council,

505 U.S. 1003, 1034 (1992) (Kennedy, J., concurring)

(“{I}f the owner’s reasonable expectations are shaped by

what courts allow as a proper exercise of governmental

authority, property tends to become what courts say it

is.”); Palazzolo, 533 U.S. at 634 (O’Connor, J., concurring)

(“(T |he nature and extent of permitted development under

the regulatory regime vis-a-vis the development sought

by the claimant may also shape legitimate expectations.”).

Complicating matters further, “(t]he Court ... has

never ... explained how thie] factors should be weighted.”

Holly Doremus, Takings and Transitions, 19 J. Land

Use & Envtl. L. 1, 7 (2003). Are courts to weigh each

factor equally or is one factor dispositive? The Court’s

own decisions suggest that “the weight to be afforded

conclusions under any separate category must itself

depend on the facts of the particular case.” Byrne,

supra, at 104. For example, in Hodel, the court found the

“character of the governmental action” to be dispositive,

481 U.S. at 716, while in Ruckelshaus v. Monsanto Co., 467

U.S. 986 (1984), the Court found the “investment-backed

expectations” factor to be “so overwhelming ... that it

disposes of the takings question,” id. at 1005.

11

Over time, the Court has attempted to clarify the

analysis. See, e.g., Lingle, 544 U.S. at 540 (holding after

decades of confusion that “due process” considerations

have “no proper place in our [regulatory] takings

jurisprudence”). But these efforts have ultimately failed.

The Court has emphasized that the purpose of the Takings

Clause is to promote “fairness and justice.” Palazzolo,

533 U.S. at 617-18; Tahoe-Sierra, 535 U.S. at 333-34, 342;

Lingle, 544 U.S. at 537. And the Penn Central analysis

itself should be “informed” by that purpose. Palazzolo,

533 U.S. at 617-18; see also Mark W. Cordes, The Fairness

Dimension in Takings Jurisprudence, 20-FALL Kan.

J.L. & Pub. Pol’y 1, 3 (2010) (explaining that Palazzolo,

Tahoe-Sierra, and Lingle “confirmed that the takings

question ultimately concerns ‘fairness and justice,’ and

that courts should apply the Penn Central test in this

light”). This “fairness and justice” overlay to the Penn

Central test has made it even more ambiguous, and it has

exacerbated rather than clarified the test. Palazzolo, 533

U.S. at 633 (O’Connor, J., concurring) (“The concepts of

‘fairness and justice’ that underlie the Takings Clause, of

course, are less than fully determinate.”). What remains is

more difficult to apply. See Cordes, supra, at 4-5 (“[Bjoth

the Penn Central test itself, as well as notions of ‘fairness

and justice,’ are hardly meaningful guideposts to assess

whether a restriction constitutes a regulatory taking.”).

The arbitrariness of Penn Central is particularly

problematic because it places a substantial obstacle in

the way of landowners who challenge government actions

affecting their properties. Indeed, empirical studies show

that landowners lose over 90 percent of their takings

claims under Penn Central. See F. Patrick Hubbard et

al., Do Owners Have a Fair Chance of Prevailing Under

12

the Ad Hoc Regulatory Takings Test of Penn Central

Transportation Company?, 14 Duke Envtl. L. & Pol’y

F. 121, 141 (2003). This drastic imbalance in litigation

outcomes suggests that Penn Central is a poor protector

of property rights.

A survey of cases confirms as much. Lower court

decisions applying Penn Central often conclude that no

taking has occurred despite extreme diminution in value.

See, e.g., Pace Res., Inc. v. Shrewsbury Twp., 808 F.2d 1023,

1031 (8d Cir. 1987) (finding that an 89.5 percent diminution

in value is not a taking); Nasser v. City of Homewood, 671

F.2d 482, 435, 438 (11th Cir. 1982) (finding a 52.6 percent

diminution not to be a taking); Bernardsville Quarry,

Inc. v. Borough of Bernardsville, 608 A.2d 1377, 1386,

1388-90 (N.J. 1992) (finding a 92 percent diminution not

to be a taking); Walcek v. United States, 49 Fed. Cl. 248,

271-72 (2001), aff'd, 303 F.3d 1349 (Fed. Cir. 2002) (finding

a 59.7 percent diminution not to be a taking).

The Penn Central factors are difficult to understand

and to apply, and they obstruct the ability of landowners

to obtain just compensation for government regulation

of their properties. In other words, “the law is muddled,

though the muddle never quite seems to stop the

government from winning.” Eric R. Claeys, Takings,

Regulations, and Natural Property Rights, 88 Cornell

L. Rev. 1549, 1644 (2003).

13

B. A Bright-Line Rule Against Combining

Properties to Create a New “Parcel as a Whole”

Would Mitigate Penn Central’s Failings.

The Penn Central analysis hinges in part on the

“extent of the interference with rights in the parcel as

a whole.” Penn Central, 438 U.S. at 130-31 (emphasis

added). Therefore, before courts can begin to navigate

the Penn Central analysis they first must define the

scope of the affected property. See Lost Tree Vill. Corp.

v. United States, 707 F.3d 1286, 1292 (Fed. Cir. 2013)

(“(T ]he definition of the relevant parcel of land is a crucial

antecedent that determines the extent of the economic

impact wrought by the regulation.”). The issue in this

case, of course, is whether courts can combine adjacent

parcels to create a new “parcel as a whole.”

The Court should adopt a bright-line rule that

preexisting, state-drawn property lines define the “parcel

as a whole.” And the Court should not permit efforts

by governments to combine adjacent properties simply

because they share an owner. A bright-line rule would

add some clarity to the Penn Central analysis because it

would be simple to apply in practice. For the most part,

“state law defines property interests.” Stop the Beach

Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot., 560

U.S. 702, 707 (2010). The most basic of those interests

is the metes and bounds of the property. See id. at 707-

09 (explaining how state law defined the boundaries of

privately owned land); see also Bd. of Regents v. Roth, 408

U.S. 564, 577 (1972) (“Property interests ... are created

and their dimensions are defined by existing rules or

understandings that stem from an independent source

such as state law.”). Courts can easily rely on those same

boundaries when defining the relevant “parcel as a whole.”

14

This method of defining the “parcel as a whole” is

the most natural test. See Raymond R. Coletta, The

Measuring Stick of Regulatory Takings: A Biological

and Cultural Analysis, 1 U. Pa. J. Const. L. 20, 81 (1998)

(“[R]esolution of this issue of parcel definition seems

fairly straightforward: identify the relevant parcel as

the entirety of the originally purchased tract.”). In

fact, this Court has already once defined the “parcel

as a whole” in this way, noting that the “interest in

real property is defined by the metes and bounds that

describe its geographic dimensions.” Tahoe-Sierra, 535

U.S. at 331. Such an approach would plainly be feasible

as states and localities already rely on property lines in

other contexts. For example, many states provide that

separate, contiguous parcels under common ownership

should be treated as separate parcels for tax valuation

and assessment purposes. See, e.g., Edward Rose Bldg.

Co. v. Indep. Twp., 462 N.W.2d 325, 330 & n.4 (Mich. 1990);

Theobald v. Cty. of Lake, 712 N.W.2d 180, 183 (Minn. 2006).

States could easily apply the same standard in regulatory

takings claims. Although such a bright-line rule would not

solve Penn Central’s other infirmities, at least it would not

make matters worse.

Perhaps more importantly, a bright-line rule against

aggregation will help level the playing field. Under

the current legal regime, it is extremely difficult for

landowners to prevail in regulatory takings claims. See,

supra, at 11-12. It would become even more difficult to do so

when governments can aggregate separate properties into

one. “The determination of what constitutes the ‘parcel as

a whole’ in a given case often is outcome determinative,

because regulatory takings law measures the claimant’s

loss with respect to the relevant parcel.” Eagle, supra,

15

at 631; Intown, 198 F.3d at 880 (“The definition of the

relevant parcel profoundly influences the outcome of

the takings analysis.”). The size of “[t]he relevant parcel

impacts the severity of a regulation’s economic impact—

the factor that largely determines whether a regulatory

taking has occurred.” Laura J. Powell, The Parcel as

a Whole: Defining the Relevant Parcel in Temporary

Regulatory Takings Cases, 89 Wash. L. Rev. 151, 159

(2014). “(The larger the relevant parcel, the smaller the

regulation’s economic impact will be on the property” and

the “less likely a court will find a taking has occurred.”

Intown, 198 F.3d at 885 (Williams, J., concurring); see

also Dwight H. Merriam, Rules for the Relevant Parcel,

25 U. Haw. L. Rev. 353, 414 (2003) (“Size matters in a

takings case.”). Combining two separate parcels into

one creates a larger parcel, thus reducing the apparent

economic impact of the applicable regulation. As a result,

prohibiting aggregation would make it more likely for

landowners to receive “just compensation” for the harms

caused by oppressive regulations.

Moreover, a bright-line rule would provide legal

clarity that would protect property owners’ reliance

interests and promote land-use development. This Court

has recognized the benefit of stable property interests.

See, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 271

(1994) (explaining that, for property rights, “predictability

and stability are of prime importance”); Republic of

Austria v. Altmann, 541 U.S. 677, 693 (2004) (same).?

2. In fact, this Court has placed so much weight on reliance

interests in property rights that the consideration affects the

Court’s stare decisis analysis. See, e.g., Payne v. Tennessee, 501

U.S. 808, 828 (1991) (“Considerations in favor of stare decisis are

at their acme in cases involving property and contract rights,

where reliance interests are involved.”).

16

That position is not controversial because the benefits

of preserving reliance interests are straightforward.

“(Mien will not labor diligently or invest freely unless

they know they can depend on rules which assure them

that they will indeed be permitted to enjoy a substantial

share of the product as the price of their labor or their

risk of savings.” Frank I. Michelman, Property, Utility,

and Fairness: Comments on the Ethical Foundations of

“Just Compensation” Law, 80 Harv. L. Rev. 1165, 1212

(1967). Property owners must be given “some assurance

that they will have the eventual opportunity to harvest

the fruits of their labor.” Kenneth A. Stahl, Reliance

in Land Use Law, 2013 B.Y.U. L. Rev. 949, 959 (2013).

Otherwise, “landowners would be hesitant to invest in

real property out of fear that their investment could be

rendered worthless at the whim[s] of [the government].”

Id. To that end, “(well-defined and stable property-rights

regimes ... reduce legal uncertainty, encouraging more

optimal levels of investment [] and development.” Troy

A. Rule, Property Rights and Modern Energy, 20 Geo.

Mason L. Rev. 803, 813 (2013). In short, promoting clear

rules that better protect property rights encourages

investment, development, and, ultimately, the further

accrual of wealth. Richard A. Posner, Economic Analysis

of Law 40-42 (8th ed. 2011); Carol M. Rose, The Shadow of

the Cathedral, 106 Yale L.J. 2175, 2187 (1997) (“The usual

roles of property rules—defining rights and identifying

rights-holders— ... encourage individual investment,

planning, and effort because actors have a clearer sense

of what they are getting”).

17

“Given the efficiency and fairness benefits of consistent

property arrangements, it is hardly surprising that

clarity and stability have long been key aims of property

law” itself. Rule, supra, at 813. States and localities

have implemented a number of “doctrines designed

to protect landowners who have reasonably relied on

an existing scheme of land use regulations against an

adverse change in that regulatory change.” Stahl, supra,

at 957; see also id. (“[O)ne persistent theme in land use

law is the desire to vindicate the expectations of those

who have taken substantial actions to their detriment

in reasonable reliance on the status quo.”). The “vested

rights doctrine determines whether a government can

enforce a new zoning ordinance against a landowner

that began to develop the land under the previous zoning

regulation.” 4 Am. Law Zoning § 32:2 (5th ed.). Relatedly,

“zoning estoppel” protects a property owner who has

“made substantial investments in the property[] in

good faith reliance on some municipal action or official

conduct purporting to authorize the use.” /d. § 12:9. And

“nonconforming use” rules allow a landowner to continue

using land in a manner consistent with prior zoning

regulations when those regulations are changed. 2 Am.

Law Zoning § 14:7 (5th ed.).

“Indeed, it has long been public policy at the national

level to induce Americans to incur massive amounts of debt

to purchase homes by providing them with the assurance

that their investment would be protected.” Stahl, supra,

at 964-65. One of the “principle tools” used to accomplish

that predictability in the 20th century was establishing

consistent zoning rules. /d. at 965. Those rules provided

“greater safety and security in investment’ by stabilizing

property values against unpredictable change.” Jd.

18

(quoting Peter Hall, Cities of Tomorrow 317-18 (3d ed.

2002)). A bright-line rule against aggregation would do

the same. If potential landowners know that property

boundaries are set and will not be shifted later under

Penn Central, then they will be more likely to invest in and

develop property. This is particularly important in cities

like New Orleans, which have many vacant lots without

viable purchasers other than the owners of adjacent

properties. See Kelsey Davis, NORA Relaunches Lot Next

Door Program on Monday, WDSU News (Jan. 25, 2016),

http://goo.gl/BWffSh (explaining New Orleans’s “lot next

door” program, which provides incentives to buy adjacent

empty lots). Homeowners will be less likely to purchase

vacant lots adjacent to their own property if they are put

at a disadvantage relative to others for doing so.

There is some concern that a bright-line standard

would empower landowners to dictate their own fate

under new regulations. See Palazzolo, 533 U.S. at 655

(Breyer, J., dissenting); Coletta, supra, at 82. That is, if

the “parcel as a whole” is defined by property boundaries,

then landowners could simply convey the portion of their

property that is affected by a regulation and artificially

create a regulatory taking. For example, if a regulation

bans any development on a three-acre portion of a nine-

acre property, then the landowner could sever and sell

the three-acre portion to a third party. That third party

could then file a regulatory takings claim against the

locality because the three acres are worthless as a result

of the regulation.

This hypothetical scenario is easily avoided by adding

a temporal limitation to the analysis. The Court could

define the “parcel as a whole” as the property boundaries

19

that existed prior to the relevant regulation’s effective

date. In such a situation, “if the landowner subsequently

subdivides the parcel, the original whole will still provide

the denominator of the takings calculation.” Coletta,

supra, at 82. Alternatively, the Court could fashion a

narrow exception permitting states to defeat a takings

claim by showing that the landowner subdivided the

property intentionally to create an artificial taking under

Penn Central. Under either limitation, the perceived

opening for abuse quickly closes without introducing the

uncertainty that currently plagues the Penn Central

analysis itself.

C. Permitting the Combination of Adjacent

Parcels Would Exacerbate Penn Central's

Problems.

Any rule that permits courts to combine parcels

would amplify Penn Central shortcomings. Pet. Br. 24-28.

First, a survey of the lower courts’ fact-driven “parcel

as a whole” cases demonstrates that such tests further

obscure the Penn Central analysis. For example, the

Federal Circuit “has taken a ‘flexible approach, designed

to account for factual nuances,’ in determining the relevant

parcel where the landowner holds (or has previously held)

other property in the vicinity.” Lost Tree, 707 F.3d at

1293. The “critical issue” in that analysis is “the economic

expectations of the claimant with regard to the property,”

i.e., whether the property owner “treats several legally

distinct parcels as a single economic unit.” /d.

By way of comparison, Michigan applies a different,

but no less amorphous, test. There, the size of the parcel

as a whole is an inherently “factual inquiry” and involves

20

consideration of factors like the “degree of contiguity,”

“the dates of acquisition,” and “the extent to which the

parcel has been treated as a single unit,” but it also allows

that “many other[] [factors] enter the calculus.” K & K

Const., Inc. v. Dep’t of Nat. Res., 575 N.W.2d 531, 536

(Mich. 1998). In addition to these considerations, Michigan

courts also examine whether it is “realistic” and “fair”

to consider only one parcel for purposes of the takings

analysis. /d.

The Pennsylvania Supreme Court also uses a “flexible

approach, designed to account for factual nuances” and

considers a “variety of factors” without making one factor

“more important than any other.” Machipongo Land &

Coal Co. v. Commonwealth, 799 A.2d 751, 768 (Pa. 2002).

“These factors would include, but would not be limited to:

unity and contiguity of ownership, the dates of acquisition,

the extent to which the proposed parcel has been treated

as a single unit, the extent to which the regulated holding

benefits the unregulated holdings; the timing of transfers,

if any, in light of the developing regulatory environment;

the owner’s investment backed-expectations; and, the

landowner’s plans for development.” /d at 768-69.

The lower courts’ tests all differ in one way or

another,’ but they share one aspect in common: each is

as complicated as the Penn Central analysis itself. See

Dunes West Golf Club, LLC v. Town of Mt. Pleasant, 737

S.E.2d 601, 617 (S.C. 2013) (referring to the “parcel as a

3. Other courts apply similarly nebulous tests. See, e.g., Intown,

198 F.3d at 880; Am. Savs. & Loan Ass'n v. Cnty. of Marin, 653 F.2d

364, 369-71 (9th Cir. 1981); State ex rel. R.T-G., Inc. v. Ohio, 780

N.E.2d 998, 1009 (Ohio 2002).

21

whole” analysis as a “Gordian Knot”); Merriam, supra,

at 415 (“The world of the relevant parcel is indeed a

wonderland.”). These courts must engage in a complicated

two-step. First, they apply a multi-factor test to identify

the relevant “parcel as a whole” and, second, they move

on to the Penn Central analysis itself. In essence, before

litigants can even discuss the economic impact within

the context of Penn Central, they must litigate “these

fact-specific inquiries [that] have created confusion and

inconsistent results in regulatory takings jurisprudence.”

Powell, supra, at 154. If the Court approves a test like

these, it would lead to similar parcels across the country

being treated as one piece of property in some instances

and separate properties in others, with little rhyme or

reason. This would make an already uncertain legal

regime even more difficult to navigate.

Those jurisdictions that apply a presumption against

aggregation are preferable, although they still fall short.

For example, Massachusetts finds that “contiguous

commonly-owned property gives rise to a rebuttable

presumption defining the relevant parcel.” Giovanella v.

Conserv. Comm’n of Ashland, 857 N.E.2d 451, 458 (Mass.

2006). This presumption does streamline the analysis

some. But with every presumption comes factors that

may overcome it. In Massachusetts, the “definition of the

relevant parcel is a fact sensitive inquiry” even with the

presumption because the court still looks to a plethora

of additional factors. The presumption can be overcome

by factors such as “whether the property is divided by

a road,” “whether property was acquired at the same

time,” “whether the purchase and financing of parcels

were linked,” “the timing of development,” “whether the

land is put to the same or different uses,” “whether the

22

owner intended to or actually did use the property as

one economic unit,” and the “treatment of the property

under State law.” Jd. at 728-29. Petitioner’s proposed

presumption likewise leaves open the possibility “for

landowners or governments to argue, in the particular

case, that the facts and circumstances warrant some

degree of segmentation and aggregation.” Pet. Br. 25.

These rules, while an improvement on others, also make

an “already difficult and uncertain rule” more opaque.

Apfel, 524 U.S. at 542 (Kennedy, J., concurring).

Moreover, simply allowing courts to combine parcels

under any test makes it less likely that the landowner

will prevail on a takings claim. See, swpra, at 14-15.‘ One

need look no further than this case to see the damage

aggregation causes, as the Murrs lost a substantial sum

because Wisconsin was able to aggregate Lot E with Lot

F. Lot E would be worth $410,000 without the regulation

prohibiting the Murrs from building on or selling it. JA

113. But those prohibitions reduced Lot E’s value to a

tenth of that amount. JA 114. Wisconsin managed to avoid

compensating the Murrs for that loss because combining

Lot E with Lot F mitigated the ban’s impact. Instead of

decimating almost all value of a piece of property (Lot

E), the prohibition merely diminished the value of the

aggregated “parcel as a whole” (Lot E + Lot F). Pet. App.

C-9. That diminution in value was inadequate to establish

a regulatory taking.

4. For this reason, even those states that permit aggregation

with relatively straightforward analyses, such as Wisconsin, see

Pet. App. at A-11 120, exacerbate Penn Central's failings.

23

Other cases across the country show that landowners

suffer big losses when their properties are aggregated.

For example, in Forest Properties, Inc. v. United States,

the Federal Circuit’s parcel-aggregation led to staggering

uncompensated losses. 39 Fed. Cl. 56 (1997). There, the

landowner obtained 9.4 acres of “lake bottom” land. Jd.

at 72. The Army Corp of Engineers later prohibited the

landowner from developing that land, id. at 64-66, and

in response the landowner asserted that the prohibition

amounted to a regulatory taking and a $2.36 million loss.

Id. at 67, 79. The court disagreed, holding that the “parcel

as a whole” was not just the affected 9.4 acres but also

53 adjacent acres under common ownership. /d. at 73.

Though the court agreed that the prohibition caused a

multi-million-dollar loss, the prohibition did not amount

to a taking because there was still substantial value in the

remaining 53 acres. Jd. at 80. In other words, aggregating

the 9.4 acres with an additional 53 acres permitted the

government to effect an astounding categorical taking

simply because the adjacent land shared an owner.

These losses are particularly troubling because

they can be described only as arbitrary. When courts

use common ownership as a basis for defining separate

parcels as one, they burden those who invest in contiguous

properties and not those who buy nonadjacent property.

Keith Woffinden, The Parcel as a Whole: A Presumptive

Structural Approach for Determining When the

Government Has Gone Too Far, 2008 B.Y.U. L. Rev. 623,

640 (2008) (“The contiguous, commonly-owned property

approach is also subject to criticism because it can produce

arbitrary and unfair results.”). This makes Penn Central’s

ad hoc analysis all the more capricious.

24

To that end, combining adjacent parcels because of

shared ownership resembles “reverse spot zoning,” which

the Court criticized in Penn Central itself. Reverse spot

zoning “severely restricts a small parcel of land that is

surrounded by lands not similarly restricted.” 1 E. Ziegler,

Rathkopf’s The Law of Zoning and Planning § 11:20

(4th ed. 2001). Wisconsin accomplished that same feat

by combining Lot E and Lot F. While the Murrs face a

categorical restriction, there are no analogous restrictions

on similar lots nearby. This “arbitrarily singles out a

particular parcel for different, less favorable treatment

than the neighboring ones,” Penn Central, 438 U.S. at 132,

which is “discriminatory zoning” that is “the antithesis of

land-use control.” Jd.

Further, the various tests for combining parcels

destabilize property owners’ reliance interests. As already

explained, “the industrious and rational need to know

that the consequences of their dealings are fixed, at least

legally; no shifts of responsibility after the fact.” Carol M.

Rose, Crystals and Mud in Property Law, 40 Stan. L. Rev.

577, 592 (1988). That “means that the legal consequences

of rules ought to be clear in advance, in other words,

crystals rather than mud.” /d. Allowing aggregation on

an essentially ad hoc basis, see, supra, at 19-21, creates

instability in property rights and undermines individuals’

reliance on the property lines they purchased. “If takings

jurisprudence is both ad hoc and ex post, [then] investors

may have a very difficult time knowing whether a ... state

action will or will not be judged to be a taking.” Susan

Rose-Ackerman, Against Ad Hocery: A Comment on

Michelman, 88 Colum. L. Rev. 1697, 1700 (1988). At best,

aggregation discourages individuals from purchasing and

developing lands in close proximity to their own land. A

25

bright-line rule against aggregation, however, avoids

this problem by protecting owners’ reliance interests on

pre-existing property lines. /d. (“Takings law should be

predictable ... so that private individuals confidently can

commit resources to capital projects.”).

CONCLUSION

The Court should reverse the judgment below.

ItyA SHAPIRO

Cato INSTITUTE

1000 Massachusetts Avenue, N.W.

Washington, D.C. 20001

(202) 842-0200

Rosert H. THomas

Damon Key LEonGc KupcHak

HASTERT

1003 Bishop Street, 16th Floor

Honolulu, Hawaii 95813

(808) 531-8031

Respectfully submitted,

MICHAEL H. PARK

Counsel of Record

Consovoy McCartuy Park PLLC

Three Columbus Circle,

15th Floor

New York, New York 10019

(212) 247-8006

park@consovoymccarthy.com

Tuomas R. McCarruy

Bryan K. WEIR

Consovoy McCarry PARK PLLC

GEORGE Mason UNIVERSITY

ScHooL Or Law

SUPREME Court CLINIC

3033 Wilson Boulevard, Suite 700

Arlington, Virgina 22201

(703) 243-9423

Counsel for Amici Curiae