Argument analysis: Wading through the “themeless pudding” of Clean Water Act jurisdiction

Argument analysis: Wading through the “themeless pudding” of Clean Water Act jurisdictionThe scope of the federal government’s regulatory authority under the Clean Water Act has long been controversial. Stretch it too far, and it appears that the federal government can regulate every puddle in the nation; narrow it too much, and the government is left unable to protect the quality of interconnected waters. For that reason, […]

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Argument analysis: Wading through the “themeless pudding” of Clean Water Act jurisdiction

The scope of the federal government’s regulatory authority under the Clean Water Act has long been controversial. Stretch it too far, and it appears that the federal government can regulate every puddle in the nation; narrow it too much, and the government is left unable to protect the quality of interconnected waters. For that reason, each time the government has promulgated a rule defining the act’s geographic scope — as it did in the 2015 “Clean Water Rule” — lawsuits quickly follow. In yesterday’s argument in National Association of Manufacturers v. Department of Defense, the Supreme Court considered the preliminary question of whether those lawsuits should be filed in district courts or courts of appeals.

Rachel P. Kovner, assistant to the U.S. solicitor general (Art Lien)

As described in my preview, the case hinges on a provision of the statute, 33 U.S.C § 1369(b)(1), which specifies seven actions by the Environmental Protection Agency that are reviewable directly in the courts of appeals. The petitioners — a varied group including the National Association of Manufacturers, states, environmental groups, electric utilities and agricultural companies — all argue that the Clean Water Rule does not fall within any of the EPA actions on the list, so lawsuits challenging the rule should be filed in district court. The United States, along with fellow-respondents the Natural Resources Defense Council and the National Wildlife Federation, argues that the rule does fall within the provisions that trigger direct appellate review. Specifically, the government argues, the rule falls within Subsection (E), which covers EPA actions “in approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title”; as a fallback, the government also argues that the rule is within the scope of Subsection (F), which covers EPA actions “in issuing or denying any permit under section 1342 of this title.”

The oral argument focused largely on whether the government’s position can be squared with the text of Section 1369(b)(1). Timothy Bishop, arguing for NAM, began by stressing that his position is consistent with the act’s text: The Clean Water Rule simply isn’t an “effluent limitation or other limitation,” and it is not promulgated “under” section 1311. Justice Sonia Sotomayor, however, suggested — echoing the government’s position — that perhaps the rule is such a limitation. After all, she noted, “[o]nce you define navigable waters you say where an effluent applies or doesn’t.” Rachel Kovner of the U.S. solicitor general’s office, representing the United States, stressed that point: The rule is a limitation because it restricts where pollutants can be discharged. As for whether the rule was promulgated “under” section 1311, Justice Elena Kagan asked whether “under” could mean “regulating actions taken under” section 1311 — which would seem to cover the rule. Kovner also argued that the rule is “under” section 1311 in the sense that it was promulgated under the authority of section 1311. On the whole, however, the government’s textual argument faced an uphill battle, and it was likely not a good sign for Kovner when Justice Stephen Breyer remarked that it was “hard to agree” with the government’s position.

Timothy S. Bishop for petitioner (Art Lien)

But if the petitioners had the textual advantage, they faced harder questions about whether the statute makes any sense under their reading. As Justice Ruth Bader Ginsburg pointed out, NAM’s position means that individual permit decisions go to appellate courts, whereas broad definitional pronouncements like the Clean Water Rule go to the district court, and “[o]ne would think it would be just the other way around.” Bishop conceded that he was not aware of any explanation for why Congress had assembled this seemingly incongruous list of actions that get direct appellate review. This led Kagan to ask whether Bishop’s position was that the court should “just resign [itself] to thinking of this as having no particular rationale. Congress said what it said … It’s all a themeless pudding and that’s just what it is?” Bishop said yes, stressing that the best way to handle seemingly puzzling language is to stick to the text. Ohio Solicitor General Eric Murphy, sharing argument time with Bishop, suggested that a unifying theme for the list is that each of the seven subsections refers to a specific action that Congress was instructing the EPA to take. Perhaps those, above others, were actions that Congress thought should receive direct appellate review.

The argument also brought to the surface two broader and competing concerns. On one hand, several questions pointed out the inefficiency of NAM’s approach. Chief Justice John Roberts, for example, observed that NAM’s position calls for district courts around the country to review the agency’s entire administrative record, and then for appellate courts to review the exact same record “all over again.” This led him to ask, “You’ll agree that it’s inefficient, won’t you?” In response, both Bishop and Murphy suggested that their rule actually fosters efficiency by creating a clearer jurisdictional test. Kovner resisted that characterization, arguing that, to the contrary, the government’s rule “is very clear”: It just asks “does it impose a limitation under section 1311?”

But would the government’s position raise problems under the due process clause? This argument, which Murphy identified, flows from Section 1369(b)(2)’s limitation on future litigation: When direct appellate review applies, Section (b)(2) says that challenges must occur within 120 days of the relevant action, and litigants may not later challenge the EPA decision at issue if they could have obtained review within that 120-day period. What if, Roberts asked, the government brings an enforcement action against “a farmer in Kansas” who doesn’t think he’s within the Act’s geographic scope — is that farmer barred from challenging the rule as a defense? Kovner explained that the Supreme Court has previously left open whether applying a similar bar in enforcement situations would raise due-process concerns. She urged that if due-process concerns did exist (she did not take a firm position on whether they did), the solution would be to construe Section (b)(2) narrowly — an approach that doesn’t bear on the proper meaning of Section (b)(1). Justice Neil Gorsuch seemed to suggest, however, that this due-process carve-out from appellate jurisdiction dimmed the government’s purportedly bright-line rule.

Finally, the justices inquired about the case’s potential mootness. The Trump administration has already proposed rescinding the Clean Water Rule, and Kovner opined that this case would become moot if that rescission occurred before the court reached a decision. But, as both she and Bishop pointed out, the administration’s repeal process will take an unknown amount of time, and this controversy remains live in the interim.

[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case. The author of this post, however, is not affiliated with the firm.]

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Argument preview: Justices to determine how Clean Water Act litigation flows

For decades, the scope of the federal government’s regulatory authority under the Clean Water Act has been a flashpoint for debate. In 2015, the Obama administration promulgated the “Clean Water Rule,” the most recent of several attempts to define the act’s geographic scope. By defining the key statutory term “waters of the United States,” the […]

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For decades, the scope of the federal government’s regulatory authority under the Clean Water Act has been a flashpoint for debate. In 2015, the Obama administration promulgated the “Clean Water Rule,” the most recent of several attempts to define the act’s geographic scope. By defining the key statutory term “waters of the United States,” the rule determines, among other issues, which water bodies are subject to the act’s discharge limitations and permitting requirements. Over 100 parties flooded the courts with challenges to the rule, leading to a nationwide stay. In next Wednesday’s argument in National Association of Manufacturers v. Department of Defense, the Supreme Court will consider a preliminary question: Should the lawsuits challenging the rule have been filed in federal district courts, or courts of appeals? Although the Trump administration has announced its intent to withdraw the Clean Water Rule, the justices declined to stay the litigation, and the forum question remains live – with important practical and strategic implications, both in this litigation and beyond.

The case turns on a provision of the act, 33 U.S.C § 1369(b)(1), which lists seven types of actions by the Environmental Protection Agency that are reviewable directly (and exclusively) in the courts of appeals. As relevant here, the list includes actions “(E) in approving or promulgating any effluent limitation or other limitation under section 1311, 1312, 1316, or 1345 of this title;” and “(F) in issuing or denying any permit under section 1342 of this title.” Does review of the Clean Water Rule fall within either Subsections (E) or (F)? The U.S. Court of Appeals for the 6th Circuit said yes (to Subsection (F)) in a divided opinion, deepening confusion in the lower courts regarding the scope of Section 1369(b)(1).

There is a sense in which any answer to the question will improve the status quo for all parties. At present, the uncertainty about which forum is proper all but requires parties to file protectively in both district and appellate courts; as the petitioner National Association of Manufacturers put it, this yields “duplicative litigation, conflicting decisions on jurisdiction, significant delay, and tremendous waste of judicial  and  party  resources.” Of course, there are additional stakes on each side. District-court litigation affords certain benefits to those who wish to challenge EPA actions. When Section 1369’s direct appellate review applies, challenges must occur within 120 days of the relevant action, and litigants may not later challenge the EPA decision at issue if they could have obtained review within that 120-day period. Filing suit in district court also can give parties more control over their forum, because multiple appellate challenges to agency decisions are automatically consolidated, “by means of random selection,” in one of the courts where suit was filed. On the other hand, direct appellate review tends to foster certainty and predictability, avoids duplicative or overlapping litigation, and may limit the time and cost of litigating.

Notably, how parties weigh these variables does not hinge on their view of the merits of any given EPA action. Indeed, the case divides parties who generally agree on the Clean Water Rule’s merits and unites some who do not. The parties on NAM’s side of the case include agricultural companies and trade associations, electric utilities, states and environmental groups – all frequent challengers of EPA decisions. They argue that the cases must originate in district court. (These parties collectively filed four separate briefs; at oral argument, they will divide time between NAM’s counsel of record, Timothy Bishop, and Ohio Solicitor General Eric Murphy.) On the other side, defending the propriety of the appellate forum, are the federal government and several more environmental groups, including the Natural Resources Defense Council and the National Wildlife Federation. Rachel Kovner from the U.S. solicitor general’s office will argue for the respondents.

NAM – echoed by the separate briefs of its allies in the case – primarily argues that the act’s plain language bars appellate jurisdiction over the rule. The rule is not an action “in issuing or denying any permit” (for purposes of Subsection (F)), nor is it an “other limitation” promulgated under Section 1311 (for purposes of Subsection (E)). Rather, NAM emphasizes, the rule is a definition. On its own, it “limits no action.” That, in NAM’s view, should end the argument. The state of Ohio’s brief emphasizes this textual tack, framing the case as one in which the federal government seeks to revive an outdated “purpose-over-text approach to statutory interpretation.” The brief for Agrowstar LLC and other groups similarly stresses that the federal agencies’ approach requires rewriting the statute. The brief for Waterkeeper Alliance and other environmental groups adds that the Clean Water Rule was actually promulgated jointly by the EPA and the Army Corps of Engineers, and thus is not strictly an action by “the [EPA] Administrator,” as Section 1369(b)(1) specifies.

Other factors, NAM argues, only confirm its point. Reading Section 1369 to encompass a nationwide rulemaking like the Clean Water Rule would mean there is no “logical stopping point” for the provision’s scope; yet Congress, by enumerating only seven types of EPA actions that qualify for direct appellate review, clearly did not intend to encompass all actions related to the Clean Water Act (though NAM grants that the “list can be criticized as odd or arbitrary”). Moreover, Congress knows how to provide for broad appellate jurisdiction when it wants to (and has done so in the Clean Air Act) – and Section 1369’s legislative history reflects failed efforts to extend the provision’s scope. NAM argues that policy considerations, too, point in its direction: The Supreme Court has recognized that jurisdictional rules should be clear. Confining Section 1369 to its plain text would advance that goal. Moreover, because Section 1369 precludes certain later suits, construing its scope broadly raises “due process concerns,” a point that the brief for Utility Water Act Group develops further.

The federal agencies respond with textualist rejoinders, as well as arguments from precedent and purpose. Regarding the text, the agencies argue that the Clean Water Rule constitutes an “other limitation” promulgated “under Section 1311” for purposes of Subsection (E). After all, the agencies point out, the effect of the rule is to prohibit discharges of pollutants to covered waters; that is precisely why NAM and others object to it. Indeed, fellow-respondent NRDC urges that NAM’s assertion that the rule imposes no limits contradicts NAM’s own lower-court filings and jeopardizes the case’s justiciability. But that difficulty is readily resolved, the respondents argue, by the plain fact that the rule is an “other limitation.” As for Subsection (F), the agencies argue, the Supreme Court’s precedents construe it to encompass actions that are “functionally similar” to permit decisions, and here the rule’s function is to govern whether permits are required for a given water body. Any other reading would lead to what the Supreme Court – in Crown Simpson Pulp Co v. Costle and E.I. du Pont de Nemours & Co. v. Train, respectivelypreviously called a “seemingly irrational bifurcated system” and a “truly perverse” result: a scheme where individual permit decisions get direct appellate review, but the underlying rule gets review in district courts around the nation. Adhering to precedent not only upholds the values of stare decisis, the government claims, but also serves Congress’ goal of having “quick and orderly resolution” of important administrative rules.

It seems reasonably likely that the textualist appeal of the challengers’ arguments will prevail in the Supreme Court. If the justices agree that the agencies are seeking to defy the act’s text, that would seem to put the matter easily to rest. But of course, the agencies and NRDC argue that their interpretation is textually faithful, that the text is not as plain as it seems, and that precedent is on their side. Ultimately, whatever the answer, the court’s decision is poised to – as NAM’s certiorari petition put it – “bring to an end the current jurisdictional morass.’

[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, is among the counsel to the respondents in this case. The author of this post, however, is not affiliated with the firm.]

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Opinion analysis: In regulatory takings case, court announces a new test

Opinion analysis: In regulatory takings case, court announces a new testUnder the doctrine of regulatory takings, government regulation that goes “too far” in burdening property rights counts as a taking under the Fifth Amendment, entitling the owner to “just compensation.” In deciding such claims, courts often must deal with a tricky preliminary question: How should they define the bounds of the property that the government […]

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Opinion analysis: In regulatory takings case, court announces a new test

Under the doctrine of regulatory takings, government regulation that goes “too far” in burdening property rights counts as a taking under the Fifth Amendment, entitling the owner to “just compensation.” In deciding such claims, courts often must deal with a tricky preliminary question: How should they define the bounds of the property that the government has allegedly taken? That question, often dubbed “the denominator problem,” could be outcome-determinative. For example, a regulatory burden on a small pond may seem minor if the property interest is defined as the developer’s much larger contiguous holdings, but severe if the property is defined as the pond itself. The court has long maintained that the denominator analysis must focus on the “parcel as a whole,” but that cryptic instruction has left litigants and lower courts at sea.

The parties in Murr v. Wisconsin offered the court three very different approaches to the denominator analysis. The case is interesting, and challenging, because each test would vindicate a slightly different view of the takings clause. As described in my earlier post, the Murrs argued that  a “merger” provision in state and local law — which barred them from selling separately their two undersized, riverfront lots — was a taking of the one lot they wished to sell. The Murrs urged a bright-line denominator test, hinging on the lot lines of the parcel alleged to be taken. This test would typically make it easier for landowners to assert takings. The state, arguing against a taking, offered a different bright-line test based on state law taken as a whole; here, the state’s merger provision would set the denominator as both lots together. The state’s test would offer the greatest deference to state prerogatives in defining property. Finally, the county (and in a similar vein, the United States as amicus) offered a multi-factor approach that would provide the least predictability, but the most flexibility to determine the interests of justice in any given case.

In today’s 5-3 decision, the court ruled against the Murrs, adopting aspects of the tests pressed by the county and the United States. Writing for the majority, Justice Anthony Kennedy stated that the denominator question, like the overall takings inquiry, turns on a multi-part analysis. “Like the ultimate question whether a regulation has gone too far,” he wrote, “the question of the proper parcel in regulatory takings cases cannot be solved by any simple test.” The court rejected the “formalistic” rules proposed by both the Murrs and Wisconsin. The Murrs’ proposed test, the court explained, would unjustifiably elevate lot lines over other aspects of state law. And although state law is relevant to the inquiry, the majority could not accept Wisconsin’s proposal to define the denominator based on state law as a whole: Courts must also “weigh[] whether the state enactments at issue accord with other indicia of reasonable expectations about property.”

The court emphasized that any denominator test must ascertain, through an “objective” analysis, “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 court’s prescribed test includes three factors: “[1] the treatment of the land under state and local law; [2] the physical characteristics of the land; and [3] the prospective value of the regulated land.” With regard to the third factor, the analysis should give “special attention to the effect of burdened land on the value of other holdings.”

 The court then applied these guidelines and concluded that the Murrs’ two lots should be treated as one for takings analysis. First, Wisconsin property law — specifically, the merger provision — treats the two parcels as one. Second, the lots are contiguous, and their “rough terrain,” “narrow shape,” and riverfront location all make land-use regulations predictable. Third, the lots are more valuable when combined. Going one step further (and arguably a bit beyond the question presented), the court then held that, on the facts of this case, no taking had occurred.

The court’s selection of a standard over a rule may sound like a property law technicality. But it also implicates deeper questions about the takings clause. All sides agree that, as the majority explains, the takings clause serves dual goals of protecting both private property rights and the government’s need to regulate in the public interest. But where does the emphasis belong — and who gets to decide? As I’ll explain, there are reasons to doubt that the choice of denominator test will drastically change the outcomes of takings cases. Still, the provocative theme of a battle between property rights and government regulation bubbles near the surface of this case, as do questions about how much deference is warranted to states, localities, and their lawmaking bodies. These controversial issues likely explain why the justices labored over the case until the penultimate day of opinion announcements.

Indeed, Chief Justice John Roberts’ dissent, joined by Justices Samuel Alito and Clarence Thomas, criticized the majority’s approach as a threat to property rights. Although the dissent did not dispute the court’s holding that no taking had occurred in this case, it rejected the new denominator test. Quoting Alexander Hamilton, the dissent noted that “‘the security of Property’ is one of the ‘great object[s] of government.’” But the new test, the dissent explained, stacks the deck in the government’s favor. It does that through “clear double counting”—considering the government’s interests not just in the ultimate inquiry into whether a taking occurred, but also when defining the denominator. Once applied, the dissent stated, this will push courts to define parcels in ways that align with “[r]easonable government regulation,” making it less likely that such regulation will be deemed a taking. Thomas penned a short separate dissent, expressing interest in taking a “fresh look” at whether the court’s regulatory-takings doctrine can be squared with the Constitution’s original public meaning.

This decision is certainly one for property law casebooks, and it provides a new test that will now play a major role in regulatory-takings litigation. It’s not clear, however, that the stakes are quite as high as the opinions suggest. The denominator question, after all, is just a preliminary step; courts must then decide whether a taking occurred, applying (as relevant here) the tests from Penn Central Transportation Co. v. New York City or Lucas v. South Carolina Coastal Council. In some cases — like this one — judges may be able to agree on whether a taking has occurred despite disagreement on what constitutes the denominator. Moreover, the Penn Central test, the usual test in regulatory-takings cases, is famous for the broad discretion it affords courts. Whether the denominator test preferred by the dissent and the Murrs would actually have spurred courts to find more takings, despite their broad discretion at the second step of the process, is an interesting but unclear empirical question. The more certain result of Murr is that the takings analysis is now more complex. Courts and litigators will spend the coming years interpreting the Supreme Court’s new, open-textured definition of the takings denominator.

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Argument analysis: Justices search for a common denominator in takings case

At yesterday’s oral argument in Murr v. Wisconsin, the justices discussed a longstanding dilemma in the field of regulatory takings. As I described in my earlier post, the Fifth Amendment’s prohibition on uncompensated government takings of private property includes instances when, in Justice Holmes’ famously vague formulation, a regulation “goes too far.” But to assess […]

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At yesterday’s oral argument in Murr v. Wisconsin, the justices discussed a longstanding dilemma in the field of regulatory takings. As I described in my earlier post, the Fifth Amendment’s prohibition on uncompensated government takings of private property includes instances when, in Justice Holmes’ famously vague formulation, a regulation “goes too far.” But to assess a regulation’s impact on a property, a court must first answer the threshold question of what property is at issue. The Supreme Court has said the property at issue must be the “parcel as a whole,” but the lower courts have struggled to determine what that means. This is what courts and scholars have termed the “denominator problem.” (For those who are not takings clause devotees, similar comparative issues—think of them as framing problems—arise all the time. My March Madness bracket looks great if you count only first-round games, but not so great once you add in second-round games.)

The facts in this case illustrate the dilemma. In the 1990s, the Murr siblings received two adjacent parcels of waterfront property from their parents. One, Lot E, had been formally owned by their parents; the other, Lot F, by their parents’ plumbing company. Under zoning requirements that took effect in 1976, the lots were “substandard,” meaning they were too small to be built upon individually. The zoning law contained a grandfather clause allowing the lots to be developed separately as long as they were held by different owners. But it also contained a so-called “merger” provision, which excluded commonly owned adjacent lots from the grandfather clause. (Amicus briefs explain that this combination of lot-size requirements, grandfather clauses and merger provisions is common around the country.) The merger provision kicked in when the siblings became the owners of both lots, thus precluding them from selling Lot E by itself, as they had hoped to do. This is where the denominator problem emerges. If the parcel at issue is just Lot E, the Murrs have a stronger case that the merger provision effected a taking: They can’t develop or sell Lot E by itself. But if Lots E and F together constitute the denominator, it seems clear that no taking has occurred. The siblings can still develop or sell the two lots together, and the restriction has a minimal economic effect on them.

So which is it? The four attorneys who argued the case offered four different approaches to the denominator problem. Although phrased in starkly divergent terms, the arguments did eventually reveal some common ground—even beyond the advocates’ “agreement” that, as Wisconsin’s solicitor general put it, this “area of law is incredibly complicated.”

The first attorney to the lectern was John Groen of the Pacific Legal Foundation, representing the Murr siblings. In arguing that the parcel at issue is Lot E, he urged the court to adopt a presumption that the lot lines of the parcel alleged to be taken define the denominator. Lot lines, Groen stated at one point, inform how “people traditionally understand and use [property] in their daily lives” — a point Chief Justice Roberts seemed to accept. Justice Elena Kagan asked why the court shouldn’t look at all of state law, not just lot lines, in defining the denominator. Why exclude the merger provision? “If we’re looking to State law,” she suggested, “let’s look to State law, the whole ball of wax.” In a similar vein, Justice Stephen Breyer asked, why aren’t lot lines just one factor among many? Breyer was skeptical of applying a “mechanical test.”

John M. Groen for petitioners (Art Lien)

Notably, the questioning also drew out that Groen’s lot-line presumption is rebuttable. In response to questions from Justices Anthony Kennedy and Sonia Sotomayor, Groen explained that the presumption could be overcome with evidence of “unity of use”—that is, evidence that the parties were in fact treating the two lots as “an integrated economic unit,” or that other facts “show in fairness and justice that the individual should bear the burden.” This begins to sound a bit like the other side’s test. Indeed, Kennedy asked twice why the “unity of use” notion didn’t defeat the Murrs’ case here. After all, the family did use the parcels together to some extent; according to the briefing, Lot E contained a volleyball court and propane tank that were used in conjunction with Lot F’s cabin.

Misha Tseytlin, the solicitor general of Wisconsin, was next to the podium. He urged the court to adopt a test involving “one straightforward question: Is the land lot at issue completely separate from any other land under State law?” Here, because of the merger provision, he explained, the lots “have merged for all relevant purposes.” This position, too, drew skepticism, this time from Roberts and Kennedy. Kennedy stated, “[i]t seems to me that your position is as wooden and as vulnerable [to] criticism” as the Murrs’. Why elevate the merger provision over lot lines?

Justice Samuel Alito raised a different concern, one based on the court’s existing doctrines: He suggested that the state’s position — that the denominator must be the two parcels together because the siblings took title subject to the pre-existing merger rule — is “completely contrary to the reasoning in” Palazzolo v. Rhode Island. (Palazzolo indicated that a person can assert a regulatory taking even if the person took title to property knowing that the regulation was already on the books.) Tseytlin, echoing an interpretation offered earlier by Kagan, responded that Palazzolo applies only when an earlier and later owner would have the same takings claim. Here, the siblings, as common owners of both lots, have a different claim from their predecessor owners.

Justice Kagan described herself as “pretty sympathetic to the idea that pre-existing state law really does influence quite a bit your expectations about” property, but asked why the state needed a bright-line rule based only on state law. “[W]hat’s the harm,” she asked, in allowing a more “fluid” analysis, in which factors other than state law might sometimes matter? Tseytlin explained the state’s view that the denominator inquiry should be a simple, “straightforward” first step of the analysis. After identifying the parcel, the court should move on to the multi-factor analysis of whether a taking has occurred, following the test set out in a famous case called Penn Central. But to apply a multi-factor test at both steps, Tseytlin said, would amount to “Penn Central squared,” and would lead to an overly complex analysis.

Richard Lazarus of Harvard Law School argued next, on behalf of St. Croix County. Unlike the state, the county embraces a multi-factor test for the denominator. It looks at “three things”: the economic impact of the parcel (the court must “[d]efine the parcel in a way which actually evaluates the real impact”), people’s reasonable expectations based on state law, and “the physical and geographic characteristics of the parcel.” Those three considerations, Lazarus explained, will help guide the court in determining the right parcel — with the point being “to see what the real burden is that people are suffering in the case.” Roberts echoed Tseytlin’s concern about turning the analysis into “Penn Central squared,” and also echoed Groen’s point that lot lines are “the regular way” to “figure out … what the land interest is.” But Lazarus emphasized that, while “[t]here’s no question state law defines what you own,” the takings question — whether, for purposes of federal constitutional law, the economic impact on a property-owner is excessive — is different. Lazarus further noted that several earlier Supreme Court cases evaluated property interests together even though they were defined separately under state law. In response to a question from Breyer, Lazarus added that “this is really the easy case,” because the Murrs face little hardship — indeed, he pointed out, that is the rationale behind the merger provision. A single owner facing development restrictions on a substandard lot might face “a complete economic wipeout,” but the owners of two such lots, “like the Murrs, have development options.”

The final attorney to argue was Elizabeth Prelogar, an assistant to the U.S. solicitor general, appearing as an amicus in support of the state and county. She began by urging the court not to adopt “a presumption or bright line rule that focuses on lot lines in isolation,” arguing that such an approach would have both legal and practical problems. As a practical matter, “lot lines will frequently not be an accurate indicator” of how a person is affected by a regulation, and would exclude “relevant considerations about the on-the-ground economic realities.” In response to a question from Alito, Prelogar stated that her office is asking the court to look for “what in the interest of fairness and justice is an accurate way to measure economic impact.” And in this case, several factors — including the timing of the relevant transfers, the contiguous nature of the parcels and the “linked uses” of the property — show that “it’s proper to view these two parcels together as one integrated whole.”

Sometimes commentators doubt that oral arguments matter much. But this one seemed useful to the justices, as it helped them understand the metes and bounds (sorry) of the parties’ positions. In particular, the argument suggested that the parties may have some common ground. To be sure, each party emphasizes a different part of the denominator inquiry — the Murrs focus on lot lines, the state focuses on the merger provision, and the county and solicitor general stress the need not to apply any one factor too mechanically. But the argument underscored that the Murrs agree that fairness and factual inquiries, and not just lot lines, bear on the analysis. This seemed to pique the interest of Kennedy, likely the swing vote, who seemed resistant to a test that would focus so tightly on one feature of state law that it could miss the forest for the trees. Given that, it’s not hard to imagine a narrow win for the state and county that allows consideration of multiple factors. Such an opinion might speak of the need to look closely at both lot lines and other state law requirements, while eschewing a “wooden” or “mechanical” inquiry that ignores the traditional takings clause emphasis on fairness. Or the court could give the Murrs a narrow win, reversing the decision below and sending the case back to the Wisconsin courts to consider factors left out of their prior analysis. Either way, the case is poised to shed important light on a longstanding dilemma—but probably will not mark the end of debates about the takings denominator.

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Argument preview: Defining the denominator in regulatory takings law

Under the Fifth Amendment, “private property” cannot be “be taken for public use, without just compensation.” The doctrine of regulatory takings famously states that if government regulation of a property interest “goes too far, it will be recognized as a taking.” The doctrine has been around for almost 100 years, but some of its defining […]

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Under the Fifth Amendment, “private property” cannot be “be taken for public use, without just compensation.” The doctrine of regulatory takings famously states that if government regulation of a property interest “goes too far, it will be recognized as a taking.” The doctrine has been around for almost 100 years, but some of its defining features remain unsettled. One key dilemma, commonly known as the “denominator problem,” is how to define what property is at issue. The Supreme Court has opaquely instructed courts to look at the effect of a regulation on “the parcel as a whole,” but has acknowledged that defining the parcel has remained a “difficult, persisting question.” When real property is at issue, is the parcel the single lot whose use is most affected by the challenged regulation, the owner’s contiguous holdings, or some broader set of the owner’s affected interests? Is the parcel defined by state lot lines, by other state land use regulations, or by other criteria? The answers matter: A regulation’s burden might look severe when measured against one segment of a property, but slight when compared to a larger property interest. In Murr v. Wisconsin, set for argument next Monday, the court will address the denominator problem once again.

Petitioners, the Murrs, are four siblings who own waterfront property on the St. Croix River in Wisconsin. The Murrs’ parents purchased the property in the 1960s as two separately recorded parcels, known as Lot E and Lot F. The parents held title to Lot E in their own name, and to Lot F (on which they built a cabin) in the name of their plumbing business. In 1976, these lots became subject to new county zoning requirements, adopted for the river area pursuant to state legislative and regulatory directives. Those standards made three key moves that are common in zoning ordinances around the country: They established minimum lot sizes for different zones in the river’s vicinity; grandfathered in pre-existing lots rendered “substandard” by the new requirements; and created an exception to the grandfather clause – a “merger” provision – for adjacent lots under common ownership. Under these standards, the parents’ lots became substandard – that is, smaller than the required minimum lot size. But because the parcels were formally in separate ownership, they were protected by the grandfather clause.

The plot(s) thickened in 1994 and 1995. In two separate conveyances in those years, the Murrs’ parents conveyed the respective parcels to the siblings as a group, bringing the parcels under the siblings’ common ownership. (The briefing now indicates that the parents also owned both parcels at some point in the 1980s, but that was not part of the record below.) The siblings’ common ownership triggered the merger provision. In turn, it precluded the plan the siblings proposed in 2004: to sell Lot E and use the proceeds to upgrade the cabin on Lot F. A county board denied the Murrs a variance, and after losing that appeal, they asserted an unconstitutional taking.

The state courts rejected the takings claim. They conceived of the denominator as Lots E and F together. They explained that when the affected property was considered that way, the Murrs could still make plenty of use of their land. The siblings could keep both lots and locate their cabin on either lot, or they could sell the two lots together. They just could not treat the land as two separately developable parcels – and that limitation alone was not a taking. The Murrs demurred, and the justices agreed last January to hear the case.

This case puts the denominator question front and center. The question presented, although phrased differently by each party, is whether the state courts erred in considering Lots E and F together as the denominator in the takings fraction. The idea, again, is that the denominator makes a difference: Had the state courts considered the regulatory burden using only Lot E as the denominator, they would arguably have been more likely to find a taking, because the Murrs could do little with Lot E (though the parties dispute that too). In briefing the question, each party proposes a denominator test for the court to use going forward.

The Murrs argue that the correct denominator is presumptively “the single parcel alleged to be taken,” defined by recorded lot lines. In this case, that is Lot E alone – it is Lot E that the state’s merger law prevents them from selling, and thus Lot E that they allege has been taken. The Murrs stress that Penn Central v. New York City and later cases train analysis on the “single parcel” at issue, and they argue that a parcel’s recorded boundaries are the most reliable identifier. They add that there is no practical reason to lump Lot F in with Lot E for analysis; Lots E and F “were purchased at different times, for different purposes, and have never been considered as a single economic unit or jointly developed.”

The respondents – the state of Wisconsin and St. Croix County, supported by the U.S. solicitor general as amicus – argue that the relevant “single parcel” is Lots E and F together. However, each proposes a somewhat different denominator analysis. Citing the court’s decision in Lucas v. South Carolina Coastal Council, Wisconsin argues that it is not just lot lines, but “all of a state’s laws,” that shape the denominator. Specifically, the denominator is defined by a property owner’s objectively reasonable expectations, as informed by state property law. And under the state’s merger law, the Murrs took title in 1995 “to a single merged parcel, not two separate lots.”

The county similarly criticizes the Murrs for trying to “pick and choose among relevant state laws that define the scope of their property rights.” The county also stresses that merger provisions are so prevalent and well-settled that they are surely part of the body of state property law that shapes the denominator. As the county puts it, “anyone remotely knowledgeable about land use law knows the implications of owning adjacent, substandard lots.” The county argues further that no taking occurred regardless of the denominator: The Murrs have plenty of reasonable options for Lot E, even if they hinge on the involvement of Lot F.

Finally, the United States argues that the correct approach is a case-by-case inquiry informed by fairness and justice. The solicitor general states that spatial, temporal and functional factors support treating both Lots E and F as the correct parcel here, because the lots are contiguous, were acquired close in time, and may be used as an integrated whole. Indeed, as Wisconsin points out, the parcels have been used in tandem to some extent – Lot F contains the cabin, and Lot E contains a volleyball court for guests’ use and the propane tank for the cabin. (While the state and county both propose a more rule-like test, each also agrees with the solicitor general that the Murrs fail under a case-by-case analysis as well.)

All told, then, the principal briefs offer the court several different approaches to resolving the denominator problem. As the briefing observes, each has some drawbacks – as befits an issue that has challenged courts and scholars for almost a century. The Murrs’ heavy reliance on state lot lines seems to turn a blind eye to the bigger picture, including the merger provision that had been in place for decades when they took title. At the same time, however, the state’s and county’s apparent suggestion that the denominator is entirely a function of all of a state’s property law seems in tension with both precedent and the federal nature of the protection against uncompensated takings. As an amicus brief of property law professors urges, leaving the takings clause to the whims of state property law may not track the “federal constitutional objective of achieving fairness and justice.” To be sure, the state and county could prevail even if state law as a whole does not automatically define the denominator. But if the court is to pick and choose among state laws that count, it will need a principle to guide it in choosing between the Murrs’ position and that of the state and county. Or it will need to treat state law as just one component of an ad hoc inquiry; that is essentially the solicitor general’s position. But that sort of case-by-case assessment, while promising for doing justice in any given case, might exacerbate the uncertainty and unpredictability that have plagued regulatory takings law.

It is worth noting that the court delayed the argument in this case for roughly six months; many commentators speculated that the court was awaiting a ninth justice to ensure that the case’s contentious issues did not produce a deadlock. As it turns out, only eight justices will hear argument next Monday. (Judge Neil Gorsuch’s confirmation hearing is scheduled to begin the same day.) In the absence of a ninth member, the court may well gravitate toward a narrow holding. Such a holding might rest, as the state and county and some of their amici urge, on the particularly well-settled nature of state-law merger provisions, or it might rest on the unusual facts of this case. It could even conceivably rest on vehicle problems or other procedural grounds. In the end, this may not be the year for the conclusive enumeration of the denominator’s elements.

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