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United States Supreme Court Upholds Wisconsin Land Use Regulations Against Constitutional Challenge

on Friday, 8 September 2017 in Dirt Alert: David C. Levy, Editor

The United States Supreme Court has upheld the constitutionality of a Wisconsin regulation that prevented a landowner from selling an adjacent lot as a separate building site.  Murr et. al. v. Wisconsin et. al., No. 15–214 (June 23, 2017).  The relevant regulation prevents Wisconsin landowners from subdividing and selling an adjacent lot as a separate building site unless both lots contain at least one acre of land suitable for development.  Otherwise, the lots merge into a single parcel under common ownership.

In Murr, the landowners possessed separate, adjacent lots bordering a river.  While both lots exceeded an acre, the topography was such that neither lot contained an acre of land suitable for development.  Accordingly, pursuant to Wisconsin law, common ownership of the adjacent lots resulted in merger and prohibited the landowners from further subdivision or use of the land as separate lots.  

The landowners sought variances from the local Board of Adjustment for subdivision and sale of the adjacent lot.  The Board of Adjustment denied the request and the state appellate courts affirmed the denial.  

The landowners appealed to the United States Supreme Court.  They argued that the regulation resulted in a regulatory taking, depriving them of the economically beneficial use of the lot they wished to sell.

The Supreme Court cited the longstanding Penn Central and Lucas balancing tests governing regulatory takings.  However, the Supreme Court ultimately strayed from these cases to determine whether the land should be viewed as a single parcel (i.e., that the Wisconsin law requiring merger of the parcels is constitutional) or as the original separate parcels.  The Supreme Court created a balancing test to “determine whether reasonable expectations about property ownership would lead a landowner to anticipate that his holdings would be treated as one parcel, or, instead, as separate tracts.”  The balancing test considered three factors: (1) treatment of the property under the state and local law, and in particular, how the property is bounded and divided; (2) the property’s physical characteristics and whether such characteristics are indicative of a single tract or separate tracts; and (3) the regulation’s effect on the land’s value.

In weighing the above factors, the Supreme Court found that: (1) Wisconsin’s “merger” laws are a legitimate and reasonable exercise of its power to regulate land; (2) the terrain reasonably supported the property’s treatment as a single parcel (i.e., the range of potential uses as separate parcels may be limited); and (3) the land’s value (both monetary and non-monetary) as a single parcel mitigated the landowner’s inability to treat the land as separate parcels.  Accordingly, the Supreme Court upheld the state courts’ treatment of the land as a single parcel.

The Supreme Court further held that the landowners could not establish a regulatory taking under the Lucas or Penn Central tests.  Specifically, when viewed as a single parcel, the landowners could not establish that the regulation deprived them of all or most economically beneficial use of the property.

Michael D. Sands


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