Category: United States Supreme Court

SCOTUS narrows interpretation of “waters of the United States” subject to the Clean Water Act

Gary Taylor

By Gary Taylor

Sackett v. U.S. Environmental Protection Agency

United States Supreme Court, May 25, 2023

The Sacketts purchased property near Priest Lake, Idaho and began backfilling the lot with dirt to prepare for building a home. The Environmental Protection Agency (EPA) informed the Sacketts that their property contained wetlands, and that their backfilling violated the Clean Water Act (CWA). The CWA prohibits discharging pollutants into “the waters of the United States,” and the EPA classified the wetlands on the Sacketts’ lot as waters of the United States because they were adjacent to a ditch that fed into a creek, which fed into Priest Lake, a navigable, intrastate lake. The EPA ordered the Sacketts to restore the site, threatening penalties of over $40,000 per day. The Sacketts sued, alleging that the wetlands they were backfilling were not “waters of the United States.” The District Court entered summary judgment for the EPA, and the Ninth Circuit affirmed, finding that the CWA covers wetlands with an ecologically significant nexus to traditional navigable waters and that the Sacketts’ wetlands satisfy that standard.

The Supreme Court began with a recognition of the “persistent problem” federal agencies and courts have had in defining “the waters of the United States.” During the period relevant to this case, the two federal agencies charged with enforcement of the CWA—the EPA and the Army Corps of Engineers—similarly defined “the waters of the United States” to include “all . . . waters” that “could affect interstate or foreign commerce,” as well as “wetlands adjacent” to those waters. “Adjacent” was defined to mean not just “bordering” or “contiguous,” but also “neighboring.” Agency guidance instructed officials to assert jurisdiction over wetlands “adjacent” to non-navigable tributaries when those wetlands had “a significant nexus to a traditional navigable water.” A “significant nexus” was said to exist when “ ‘wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity’ ” of those waters. Field agents were told to consider a wide range of open-ended hydrological and ecological factors.

In the interest of preserving your patience I will cut to the chase. After a lengthy review of the history of the CWA, agency rule-making on the Act, and Supreme Court interpretations thereof, the Court rejected the agencies’ “significant nexus” test as including more than was the understood scope of the CWA. Under the agencies’ current rule, traditional navigable waters, interstate waters, and the territorial seas, as well as their tributaries and adjacent wetlands, are waters of the United States. Finding a significant nexus continues to require consideration of a list of open-ended factors. By the EPA’s own admission, nearly all waters and wetlands are potentially susceptible to regulation under this test, putting a staggering array of landowners at risk of criminal prosecution for such mundane activities as moving dirt.

The Court held that an interpretation of “navigable waters” that accords with how Congress has employed the term “waters” elsewhere in the CWA and in other laws is “only those relatively permanent, standing or continuously flowing bodies of water ‘forming geographic[al] features’ that are described in ordinary parlance as ‘streams, oceans, rivers, and lakes.’ ” The EPA’s insistence that “water” is “naturally read to encompass wetlands” because the “presence of water is ‘universally regarded as the most basic feature of wetlands’ ” proves too much. This does not mean that no wetlands could ever qualify as “waters of the United States.” Interpreting section 1344(g)(1) of the CWA, the Court concludes that for wetlands to be “included” within “waters of the United States,” these wetlands must qualify as “waters of the United States” in their own right, i.e., be indistinguishably part of a body of water that itself constitutes “waters” under the CWA, rather than be “adjacent to” “waters of the United States. Thus to be included the wetlands must have “a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that there is no clear demarcation between where the waters end and the wetlands begin.

Because the Sacketts’ wetlands were merely “adjacent to” (in the sense that they are in the same neighborhood as) what is described as an “unnamed tributary” (on the other side of a 30-foot road) which feeds into a non-navigable creek, which, in turn, feeds into Priest Lake, a navigable water body, those wetlands are clearly distinguishable from any waters covered by the CWA.

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Seizure of proceeds of tax sale in excess of taxes owed constitutes a taking

Gary Taylor

by Gary Taylor

Tyler v. Hennepin County, Minnesota

United States Supreme Court, May 25, 2023

Ninety-four-year old Geraldine Tyler owned a condominium in Hennepin County, Minnesota, that accumulated $15,000 in unpaid real estate taxes, interest and penalties. Under Minnesota state law, the the County was allowed to seize the condo after three years because of the unpaid taxes. Hennepin County sold the condo for $40,000, and under Minn. Stat. sec. 282.08 the proceeds in excess of the tax debt and the costs of the sale ($25,000) were allowed to be kept by the county and split between the county, the town and the school district. Tyler filed suit, alleging that the County had unconstitutionally retained the excess value of her home above her tax debt in violation of the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment. The District Court dismissed the suit for failure to state a claim, and the Eighth Circuit affirmed. She appealed to the United States Supreme Court.

Standing to sue. The County alleged that Tyler lacked standing to bring the claim because she did not “disclaim the existence of other debts or encumbrances” on her home, namely, a $49,000 mortgage and a lean of $12,000 for unpaid homeowners’ association dues. The County argued that these encumbrances exceeded $25,000 and therefore she had no interest in, and suffered no real financial harm form the sale by the County. The Supreme Court disagreed, observing that in Minnesota a tax sale extinguishes all other liens on a property, so Tyler could have retained the excess and used it to reduce any such remaining liabilities.

Taking. Whether Tyler could claim a taking hinges on whether she had a property interest in the excess value of the condo. To answer this question the Court draws on “existing rules or understandings” about property rights, which includes state law, “traditional property law principles,” “historical practice” and Courts’ precedents. The County reasoned that Tyler had no property interest protected by the Takings Clause because in 1935, the State purported to extinguish that property interest by enacting a law providing that an owner forfeits her interest in her home when she falls behind on her property taxes. However, citing an 1884 Minnesota Supreme Court case, the Court noted that prior to 1935 Minnesota recognized that a homeowner whose property has been sold to satisfy delinquent property taxes had an interest in the excess value of her home above the debt owed. “Though state law is an important source of property rights, it cannot be the only one because otherwise a State could ‘sidestep the Takings Clause by disavowing traditional property interests’ in assets it wishes to appropriate.”

The Court went all the way back to the Magna Carta for “the principle that a government may not take from a taxpayer more than she owes.” “From the founding, the new Government of the United States could seize and sell only ‘so much of [a] tract of land . . . as may be necessary to satisfy the taxes due thereon.’” The Court noted that Minnesota was in the minority in seizing excess tax sale proceeds; most states and the federal government require excess value to be returned to the taxpayer whose property is sold to satisfy outstanding tax debt. The Court also noted that Minnesota law recognizes in many other contexts that a property owner is entitled to the surplus in excess of her debt, citing bank foreclosure on a mortgage and the collection of past due taxes on income or personal property as two examples.

The Court rejected the County’s argument that Tyler had no property interest in the surplus because she constructively abandoned her home by failing to pay her taxes. The Court stated that no precedent exists for concluding that a failure to pay taxes is itself sufficient to prove abandonment. “Abandonment requires the ‘surrender or relinquishment or disclaimer of’ all rights in the property.” “It is the owner’s failure to make any use of the property—and for a lengthy period of time—that causes the lapse of the property right…..The County cannot frame [the failure to pay property taxes] as abandonment to avoid the demands of the Takings Clause.”

The Court concluded that history and precedent dictate that, while the County had the power to sell Tyler’s home to recover the unpaid property taxes, it could not use the tax debt to confiscate more property than was due. Doing so effected a “classic taking in which the government directly appropriates private property for its own use.”

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Sioux Falls, SD slaughterhouse proposal gives me an excuse to talk about zoning by initiative and referendum

Gary Taylor

In South Dakota, the people have a right to propose or refer legislation at the state and also local government levels through initiative (propose new legislation through direct public vote) and referendum (put a recent legislative action up for public vote to accept or reject).

Legislative power–Initiative and referendum. The legislative power of the state shall be vested in a Legislature which shall consist of a senate and house of representatives. However, the people expressly reserve to themselves the right to propose measures, which shall be submitted to a vote of the electors of the state, and also the right to require that any laws which the Legislature may have enacted shall be submitted to a vote of the electors of the state before going into effect, except such laws as may be necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions. Not more than five percent of the qualified electors of the state shall be required to invoke either the initiative or the referendum….This section shall apply to municipalities….

South Dakota State Constitution, Article III, Section 1

Sioux Falls City Charter Section 6.03 expressly reserves the powers of initiative and referendum to the citizens.

In September of 2021, Wholestone Farms announced their intent to build a $500 million-plus pork processing plant on a 170-acre parcel of land in northeast Sioux Falls. Soon after the announcement, an opposition group emerged seeking to halt construction of the plant. Smart Growth Sioux Falls objected to building a slaughterhouse inside the city limits. The group gathered the required signatures to have the voters of Sioux Falls weigh in on whether the city should prohibit future slaughterhouses in Sioux Falls city limits. The question is on the November 8 ballot. If approved by the voters the following language would be added to the city’s code of ordinances:

Notwithstanding any other provision of this Code to the contrary, no new Slaughterhouse may be constructed, or be permitted to operate, within the city limits.

This section does not apply to any existing Slaughterhouse constructed and operating before the effective date of this section. This section does not apply to the expansion or alteration of any Slaughterhouse constructed and operating before the effective date of this section so long as such expansion or alteration occurs at the existing site.

Governor Noem has weighed in, saying that the ballot measure was bad for business and that “at the last minute one person(1) can get mad, do a ballot petition and end my business and my investment.” The Sioux Falls Chamber of Commerce also opposes the measure and states its reasoning here.

Iowa does not allow zoning questions to be put to the people through either initiative or referenda, but a number of other states do and this South Dakota situation gives me an excuse to visit the topic. Referenda are commonly used to call for voter review of legislative actions such a rezoning or a major change to the ordinance. Administrative or quasi-judicial actions – such as conditional uses, variances, and staff decisions – are not subject to referendum, although the line between legislative and administrative decisions is well-known to get messy.

Would we be better off in Iowa if “ballot box zoning” were possible? From a policy perspective the availability of initiative and referendum for zoning matters is controversial. Proponents support ballot box zoning as the most direct expression possible of residents’ wishes for how their communities should grow and thrive. Opponents are concerned that such measures undermine planning, block needed reforms such as increased residential density and fair housing, and violate the due process rights of property owners (see the Sioux Falls Chamber’s policy position).

Zoning initiative and referenda have been the subject of a wide variety of state court cases. They focus on the validity of the ballot box process when a state’s zoning statutes define a process for notice and hearing, when individual referenda appear to conflict with state mandates for fair housing, when referenda appear to conflict with state statutes and/or caselaw requiring consistency with a comprehensive plan, and other issues. The US Supreme Court has weighed in on federal constitutional questions related to zoning referenda twice. In City of Eastlake v. Forest City Enterprises (1976) the majority opinion supported zoning referenda as giving “citizens a voice on questions of public policy” when it dismissed the developer’s contention that the referendum violated due process as a standardless delegation of legislative power to voters. The Court’s majority stated that the Ohio Constitution contemplated a reservation of the power of referendum by the people, and was not a delegation of power to them. The dissent asserted that the “‘spot’ referendum technique appears to open disquieting opportunities…to bypass normal protective procedures for resolving issues affecting individual rights.”

In City of Cuyahoga Falls v. Buckeye Community Hope Foundation (2003) voters petitioned to place site plan approval for a low income housing complex on the ballot. At city council meetings and independent gatherings, some of which the mayor attended to express his personal opposition to the site plan, residents voiced concerns that the development would cause crime and drug activity to escalate, that families with children would move in, and that the complex would attract a population similar to the one on Prange Drive, the City’s only African-American neighborhood. Voters rejected the site plan at the ballot box, and the Court rejected the developer’s Equal Protection challenge to the results. The Court affirmed previous holdings that “[S]tatements made by private individuals in the course of a citizen-driven petition drive, while sometimes relevant to equal protection analysis…do not, in and of themselves, constitute state action for the purposes of the Fourteenth Amendment….[R]espondents put forth no evidence that the ‘private motives [that] triggered’ the referendum drive ‘can fairly be attributed to [city government].”

In fact, by adhering to charter procedures, city officials enabled public debate on the referendum to take place, thus advancing significant First Amendment interests. In assessing the referendum as a “basic instrument of democratic government,” …we have observed that provisions for referendums demonstrate devotion to democracy, not to bias, discrimination, or prejudice.

City of Cuyahoga Falls v. Buckeye Community Hope Foundation, 538 U.S. 188, 196 (2003)

(1) Over 6,000 petition signatures were in fact required for the measure to appear on the November ballot.

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Flag policy catches City of Boston flapping in the breeze

Gary Taylor

by Gary Taylor

Shurtleff v. City of Boston
United States Supreme Court, May 2, 2022

For years, Boston has allowed groups to hold ceremonies on the plaza in front of city hall, during which participants may hoist a flag of their choosing on a flagpole in place of the city’s own flag and fly it for the duration of the event, typically a couple of hours. Between 2005 and 2017 groups raised at least 50 different flags for 284 such ceremonies, including flags from other countries, flags honoring EMS workers, the Pride Flag and others.

Shurtleff, director of a Christian group, wanted to hold a ceremony to celebrate the civic and social contributions of the Christian community, and raise the “Christian flag”: a red cross on a blue field against a white background. Until Shurtleff’s application, the city had never denied a request to fly a flag. No written policies existed outlining what groups could or could not participate, or dictating the contents of the flag, and city employees did not ask to see the flag before the event. The application itself only asked for contact information and a brief description of the event.

City officials found no record of ever allowing a religious flag to be raised in the past. Because of concerns that flying the ”Christian flag” would violate the Establishment Clause of the First Amendment, officials told Shurtleff that his group could hold the event, but could not raise the flag. Shurtleff challenged the denial of the flag-raising in federal district court, contending that it violated is right to free expression under the First Amendment. The district court sided with Boston, and the First Circuit Court of Appeals agreed.

The United States Supreme Court did not. It observed that, generally speaking, flags’ contents, presence, and location have long conveyed governmental messages. The boundary between government speech and private expression can blur when, as here, the government invites the people to participate in a program. In these situations a Court must conduct a “holistic inquiry” into whether the government intends to speak for itself or, rather, to regulate private expression. Among the factors to consider in this inquiry are the history of the expression at issue; the public’s likely perception as to who (the government or a private person) is speaking; and the extent to which the government has actively shaped or controlled the expression. As noted above, other than day, time and location, Boston exerted little control over the expression. The lack of meaningful involvement in the selection of flags or their messages means the flag-raising event is not “government speech,” and flying the flag for a short period of time does not constitute government promotion of a particular religion; therefore, the Establishment Clause of the First Amendment was not implicated. However, Boston’s refusal to let petitioner fly his flag did violate the Free Speech Clause of the First Amendment as it was ”impermissible viewpoint discrimination” that “abridged [Shurtleff’s] freedom of speech.”

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US. Supreme Court upholds distinction between on- and off-premises signs

Gary Taylor

by Gary Taylor

City of Austin, TX v. Reagan National Advertising of Austin
United States Supreme Court, April 21, 2022

The city of Austin, Texas regulates off-premises signs differently than on-premises signs. At the time this dispute arose Austin’s sign code prohibited construction of new off-premises signs. Existing off-premises signs were grandfathered, but could not be altered in ways that increase their non-conformity. Reagan National Advertising (RNA) sought permits to digitize some of its billboards and was denied. RNA sued, claiming the differential treatment of off-premises signs from on-premises signs (on-premises signs were allowed to be digitized) violated the First Amendment. The District Court held that Austin’s code provisions were content neutral under Reed v. Town of Gilbert and therefore did not violate the First Amendment. The Fifth Circuit Court of Appeals found the distinction to be content-based because the sign’s message must be read to determine the distinction between on- and off-premises signs, and therefore did violate the First Amendment. Austin appealed to the U.S. Supreme Court.

The Supreme Court ruled that the on- versus off-premises distinction was facially content neutral and therefore did not violate the First Amendment. Reed held that a regulation of speech is content based if it “targets speech based on its communicative content”; that is, if it applies to particular speech because of the topic discussed or the idea or message expressed. The Fifth Circuit’s interpretation of Reed – that a sign regulation cannot be content neutral if you have to read the sign to understand how to regulate it – is “too extreme” an interpretation. Unlike Reed, Austin’s sign code does not single out any topic or idea expressed for differential treatment; the message matters only insofar as it informs the sign’s location. In this respect, the on- vs. off-premises distinction is more like ordinary time, place or manner restrictions, which do not require the application of the strict scrutiny standard. Furthermore, the Supreme Court has previously validated distinctions between on- and off-premises signs as being content neutral. Reed did not overrule those cases.

Justice Thomas authored a dissent joined by Justices Gorsuch and Barrett. He asserted that the Fifth Circuit correctly interpreted Reed. The Austin code discriminates against certain signs based on the message they convey. This is not changed because the restriction depends on a content neutral factor: the sign’s location. A code enforcement official must not only know where the sign is located, but also what it says.

Suppose a sign [in a storefront window] says “Go To Confession.” After examining the sign’s message, an official would need to inquire whether a priest ever hears confessions at that location. If one does, the sign conveys a permissible “on-premises” message. If not, the sign conveys an impermissible off-premises message.

Justice Thomas contends that the majority “misinterprets Reed’s clear rule for content-based restrictions and replaces it with an incoherent and malleable standard.”

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What to Make of Murr v. Wisconsin

ejchr

by Eric Christianson

Suppose a landowner owns two adjacent parcels, which she purchased at two different points in time.  One parcel is 20 acres that consists almost entirely of wetlands. The second parcel, immediately to the west, is 50 acres of rolling, developable land.

Years after she purchased both parcels the state enacts a law that effectively prohibits filling, dredging, developing, or otherwise modifying wetlands. The landowner sues the state, claiming a taking of “all viable use” of her property.

What is her “property”?  The landowner will claim that her property for purposes of her takings claim is only the parcel made up of the 20 acres of now-unbuildable wetlands. The state will argue that her property is both parcels taken together, which means the landowner continues to have “viable use” 50 of her 70 total acres.

Who is right?  Courts have long struggled with developing rules for determining the appropriate “denominator parcel” for analyzing taking claims. In Murr v Wisconsin (see the full case brief from last week below) the Supreme Court dealt with precisely this question. And while not offering any clear rules, the court does seem to give local governments the benefit of the doubt in this determination.

A key element in arguing a regulatory takings claim successfully is that the owners show that they have been deprived of, “all or nearly all economically beneficial use of their land” by the offending regulation. This is often determined by comparing the value of the property before the law in question went into effect to its value under the effects of the new law.

Defining the property more narrowly usually gives the landowner the upper hand. Focusing only on the effected parcel makes the loss more severe relative to its value. However, when considered with the entirety of a property owner’s holdings, the deprivation may be less significant relative to the the full value of the land. This is often called the “denominator problem” in takings analysis. Courts need to determine which value to divide the loss by to see if a law has resulted in a loss of all economically viable use.

One complicating factor is the existence of merger provisions in state and local law which under certain circumstances automatically merge adjoining parcels held under common ownership. Such merger provisions have been features of local zoning ordinances for a long time. Towns began enacting them in the 1920s. They were very common by the 1960s, because local governments and state courts recognized that they represent an attractive middle ground between two unattractive extremes: (1) entirely prohibiting the development of substandard lots, which would be a hardship to their owners, and (2) allowing the development of all substandard lots, which would be a hardship to neighbors and restrict the ability of a community to pass regulations.

Whether the inclusion of a merger provision in local law is enough to determine the relevant parcel was one of the most important aspects of Murr v. Wisconson. In this case, the Supreme Court adopted a three-part test to help guide lower courts in making this determination. It also gives local governments some idea what the extent of their power is in setting land use regulations.

This new test directs courts to take into account: (1) state and local law, (2) the physical characteristics of the land, and (3) the prospective value of the land. This case does not give us any bright line rules, but it appears that merger clauses will determine the relevant parcel in most cases. Kennedy’s argument in adding physical characteristics and prospective value to the equation is his attempt to avoid “gamesmanship” by states to avoid paying for regulatory takings. States do not have total power to determine what property rights are.

In returning to our example above, while we do not have a clear answer as to how a court would rule, we do have some idea how a court should reason. (1) What does state and local law say about these two parcels? Are they entirely separate? Or, is there some provision in state law which treats them as merged? (2) How do these two parcels fit together? Are they simply touching along a short edge or do they form a cohesive whole? (3) Finally what is the financial impact of the regulation on the parcels? Are the 20 acres of wetland a total loss or can they serve some economic purpose? Perhaps the wetland is an attractive amenity raising the value of a future housing development on the other 50 acres. Clearly our simple example does not have enough detail for us to answer all these questions.

The second and third factors have to do with the inherent qualities of the land and the local property market, but local governments do have control over the first. In Murr the Court gave significant weight to the existence of a merger provision local law.

In the end, this decision preserves the right of local governments to set minimum lot sizes and avoid further subdivision even where lot lines may appear on a plat map. This is overall a win for local and state governments. However, Kennedy finishes up the opinion of the court by reflecting that much like the analysis of regulatory takings itself, determining the relevant parcel “cannot be solved by any simple test.” If recent takings fights have taught us anything, where there is ambiguity, there will be litigation. Stay tuned.

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The power of local governments preserved in Murr v. Wisconsin

ejchr

by Eric Christianson

Murr v. Wisconsin

United States Supreme Court, June 23, 2017

In the 1960s, the Murr family purchased two adjoining lots along the St. Croix River in Wisconsin. Lot F, was purchased in 1960 and used to build a vacation cabin. The other, Lot E, was purchased in 1963 and was primarily held as an investment. Originally the properties were held separately. Lot F was owned by the family plumbing company, and Lot E was owned by the family directly. In 1994 and 1995, the ownership of the two parcels was transferred from the parents, who purchased the lots, to their children. In 2004 the children began to attempt to sell Lot E to fund improvements to the cabin on Lot F; however, they were prevented from selling Lot E separately due to intervening changes in state and local land use laws. Both of these lots are now considered substandard as building sites, and a state law passed in 1976 considers adjoining substandard lots in common ownership to be effectively merged.

According to Wisconsin law in the area where these properties are located, a parcel must have at least one acre of buildable land to be developed or subdivided. Although both of these parcels are approximately 1.25 acres, the topography of the bluffs running through the lots as well as the steep river bank leaves only 0.98 acres of buildable land between the two. Wisconsin law does allow substandard lots to be developed through a grandfather clause, but does not allow them to be further subdivided. Despite the fact that they appear to be two separate lots on the plat map and have been taxed separately, they are effectively merged. The property owners are therefore barred by state and local law from “subdividing” the larger effective parcel and selling either lot independently.

The Murr family sought a variance from the St Croix County Board of adjustment to allow for separate sale of the lots. The Board denied the request, and the family appealed, alleging that the land use regulations deprived them of all economically beneficial use of Lot E. As the case moved through the Wisconsin court system, the argument for regulatory takings hinged largely on the “denominator problem.” This meant that the courts had do determine whether the parcels should be considered as a whole or if the takings analysis should be applied to Lot E alone. In this case, this decision would be determinative as the loss to Lot E is fairly significant, more than 90% of its value, while the loss to the two parcels taken together is fairly minor, less than 10% of the total value.

In a 5-3 decision written by Justice Kennedy (Justice Gorsuch took no part in this case) the court upheld the rulings of the lower courts that the two lots had been effectively merged and that the law as applied did not constitute a regulatory taking. In doing so, the court adopts a new multi factor test to determine the relevant parcel for a takings claim.

The Court continues to rely on the “Penn Central Test” in determining if government action goes too far and constitutes a regulatory taking. Unless regulations deprive property owners of all economically beneficial use of land, there are no hard and fast rules. Instead, courts are asked to reconcile the individual’s right to private property ownership and the government’s power to adjust rights for the public good. Courts have generally relied on a three-part test first established in Penn Central (1) the economic impact of the regulation (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the character of the governmental action.

In this case as in Penn Central itself, before applying the three pronged “Penn Central Test”, the court must establish the relevant parcel. Because the test relies on the value of the property before and after application of a regulation, defining the parcel itself can be key to the the ultimate decision. In this case the state of Wisconsin and the local governments asked the court to defer to state law in determining the relevant parcel. The state argued that the court should take the state at its word that the two parcels are now one. The Murr family disagreed and preferred the lot lines as drawn on the plat maps.

The Court has never been entirely clear about how to determine the parcel to be used for analysis, but there are some principles to be drawn from previous decisions. Historically the court has not allowed petitioners to segment the most effected part of their property to allow them to claim a total loss of value in that particular segment. On the other hand, although property law has its foundations in state law, states have not been granted complete authority to define property rights.

This decision does not offer us a simple answer of how to determine the parcel in question for a takings claim. Instead, Kennedy offers up yet another multi-factor test considering: (1) state and local law, (2) the physical characteristics of the land, and (3) the prospective value of the land.

Under this new test, Lots E and F are considered effectively merged. (1) State law considers adjoining parcels to be merged if held in common ownership. The Murr family brought these two parcels into common ownership in 1995 well after the local law that merged them went into effect in 1976. (2) The physical characteristics of these lots support their treatment as a single parcel. The lots are contiguous along their longest edge and their rough terrain makes it reasonable to expect their use may be limited. (3) Even if Lot E cannot be sold independently it still contributes value to the parcel as a whole. A new larger cabin could be built anywhere on the two lots and the property has more privacy and recreational space than other substandard lots.

Chief Justice Roberts dissented joined by Thomas and Alito; however, they did not dispute the outcome, only the reasoning. Roberts would have preferred a much clearer ruling which takes state law as determinative of the relevant parcel in “all but the most exceptional circumstances.” Justice Thomas also filed a separate dissent stating his desire to “take a fresh look at our regulatory takings jurisprudence” in a way that could be better grounded in the original meaning of the constitution.

Later this week we will upload another post with more analysis of the implications of this decision for practitioners.

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SCOTUS to decide major takings case in 2017

Gary Taylor

The National Constitution Center has listed Murr v. Wisconsin as one of the ten most important US Supreme Court cases to be decided in 2017.  If you attended the Planning Law session at the APA-Iowa Annual Conference in Burlington you heard me discuss the nuances of the “parcel as a whole” rule as it pertains to this case.  The National Constitution Center gives its take on what the case is about here (you’ll need to scroll about halfway down the page).

Constitutional law and history geeks will want to explore the Center’s website generally.  A lot of fascinating reading.

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SCOTUS accepts takings case from Wisconsin

Gary Taylor

Last Friday the United States Supreme Court agreed to take a case from Wisconsin that has implications for takings jurisprudence.  The case is Murr v. State of Wisconsin, and the question certified for the Court is “Whether in a regulatory takings case, the ‘parcel as a whole’ concept as described in Penn Central Transportation Company v City of New York, establishes a rule that two legally distinct but commonly owned contiguous parcels must be combined for takings analysis purposes.”

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US Supreme Court validates disparate impact standard for FHA cases

Gary Taylor

by Gary Taylor

Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.
U.S. Supreme Court, June 25, 2015

The Texas Department of Housing and Community Affairs (Department) is the agency responsible for distributing federal low-income housing tax credits to developers in Texas. the Inclusive Communities Project (ICP) is a Texas-based nonprofit that assists low-income families in obtaining affordable housing.  ICP brought a claim under Sections 804(a) and 805(a) of the Fair Housing Act (FHA) alleging that the Department had caused continued segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas, and too few in predominantly white suburban neighborhoods.  These sections of the FHA provide that it shall be unlawful…

“..to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin. (804(a)).

“…for any person or other entity whose business includes engaging in real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin. (805(a)).

The question before the U.S. Supreme Court was whether the above-cited language in the FHA requires that plaintiffs in such cases prove a discriminatory intent (improper motive) on the part of the defendant, or merely that a disparate impact (that the outcome had a disproportionately adverse effect on minorities) resulted from the action of the defendant.  This question has been simmering in the federal courts for many years, with federal circuit courts concluding that disparate impact (with minor variations) was sufficient.

In a 5-4 decision the Court determined that, with certain conditions proven, disparate impact claims are valid under the FHA. The Court looked to other federal statutes – and the Court’s interpretations of those statutes – for guidance.  Both Title VII of the Civil Rights Act of 1964 (Title VII) and the Age Discrimination in Employment Act of 1967 (ADEA) were interpreted by the Court to allow disparate impact claims because their texts refer to the consequences of actions and not just to the mindset of actors, where that interpretation is consistent with the overall statutory purpose. Carrying that logic to the FHA, the phrase “or otherwise make unavailable” in Section 804(a) is results-oriented, and refers to the consequences of an action rather than the actor’s intent.  It is functionally equivalent to “otherwise adversely affect” language found in both Title VII and AEDA.  In all three these phrases act as a catchall, located at the end of a lengthy sentence that begins with prohibitions on disparate treatment.  The word “otherwise” signals a shift in emphasis from an actor’s intent to the consequences of his actions.  The Court found it relevant that Congress passed the FHA within four years of both Title VII and AEDA, and that therefore Congress must have chosen words that bear the same basic meaning and serve the same basic purpose.

The Court also found it highly relevant that when Congress made significant amendments to the FHA in 1988 they left the language in 804(a) and 805(a) alone, at a time when all nine federal circuit courts had interpreted that language to allow disparate impact claims.  If Congress was dissatisfied with the courts’ interpretations of the language they could have changed it at that time.  Furthermore, three exemptions from FHA liability that were added in 1988 would have been meaningless had Congress assumed that disparate impact liability did not exist under the FHA.

The Court, however, also recognized that disparate impact liability “has always been properly limited in key respects to avoid serious constitutional questions” that might arise if, for example, liability were imposed based solely on a showing of “statistical disparity.”  A disparate impact claim relying on a statistical disparity must fail if the plaintiff cannot point to a policy or policies of the defendant that causes that disparity.  In other words, discriminatory intent need not be shown, but a “robust” showing of a cause-effect relationship is required.  Furthermore, defendants must be given leeway to explain the valid interest served by their policies or practices, and such policies should be allowed to stand – without liability therefore – if it they can be proven to be necessary to achieve a valid interest.  Policies and practices do not run afoul of the disparate impact standard unless they are “artificial, arbitrary, and unnecessary barriers.”

The Court also cautioned that disparate impact should not be interpreted so broadly as to inject racial considerations into every housing decision.  “The FHA does not decree a particular vision of urban development; and it does not put housing authorities and private developers in a double bind of liability, subject to suit whether they choose to rejuvenate a city core or to promote new low-income housing in suburban communities….Disparate impact liability does not mandate that affordable housing be located in neighborhoods with any particular characteristic.”

The Court affirmed the right of local housing authorities to design race-neutral efforts to encourage revitalization of communities that have long suffered the harsh consequences of segregated housing patters.  Such authorities may choose to foster diversity and combat racial isolation race-neutral tools.  The mere awareness of race in attempting to solve the problems facing inner cities does not doom such endeavors.

Fair Housing Act, Federal courts, United States Supreme Court , ,
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