On Friday, the Supreme Court issued its long-awaited decision in Murr v. Wisconsin. After an unusually long delay between granting a case and hearing oral argument—which, according to speculation, was based on the Court wanting to avoid a 4-4 tie while the late Justice Scalia’s seat was vacant—Justice Kennedy joined the Court’s Democratic wing to muddy the waters on what property the Constitution protects.
The question in the case was how to define property in analyzing whether government must compensate property owners for burdensome regulations. The Constitution’s Takings Clause requires the government to pay “just compensation” when it takes private property—which the Court has interpreted to only apply when government “goes too far” in regulating property. Under the Court’s hopelessly fuzzy test, you must compare a regulation’s burden against the remaining use of the property—making the denominator (the definition of “property”) key.
The Murr family owns two adjacent lots along the banks of the St. Croix River in Wisconsin. On one was the family cabin. The other was an investment parcel which the family held to finance the eventual restoration of the aging cabin. That plan was dashed when the government announced that it had decided to treat the two parcels as one, limiting the family to selling them both or keeping them both with only one cabin between them.
The property owners argued that the property here is the investment lot, which the government has entirely forbade them from using, because people routinely rely on lot lines and treat them as the definition of property. Michigan argued that the property should be defined by state law, which treats the two parcels as one. The Court rejected both, adopting a non-test that requires courts to consider several factors of unknown weight. In oral argument, Wisconsin’s Solicitor General derided this vague standard as “Penn Central Squared“—piling one vague, multifactor test on top of another, ensuring that neither property owners nor governments could ever know whether compensation is required. Perhaps a better analogy is a Russian doll—you think you own a particular property but after you remove successive layers of the Court’s vague tests you’re left with a miniature facsimile of what you thought.
NPR’s Nina Totenberg lauds the decision as a major win for environmentalists. Although not surprising, that characterization is disappointing. Totenberg implicitly equates environmentalists with political environmentalism—the belief that government regulation is the best or only way to promote environmental values. By making it less likely that courts will find a taking, the decision encourages environmentalists to rely even more heavily on the political process because it is more likely that they can restrict development without having to pay for it. Unfortunately, avoiding that cost obscures political environmentalism’s many other costs—government officials don’t have the information necessary to balance the costs and benefits of conservation v. development; they lack the incentives to do it anyway; and the political process is negative sum, it encourages both sides to spend significant resources lobbying in the hopes that they’ll win.
The Murr decision is a clear loss for free market environmentalism, which relies on secure property rights, voluntary collaboration, and incentives to promote environmental values. Unlike political environmentalism, free market environmentalism is positive sum—it encourages mutually beneficial agreements. But those agreements depend on clear definitions of property, secure from government interference.
Suppose you were a free market environmentalist who wanted to preserve the shoreline of the St. Croix River from development. To achieve your goal, you would go to property owners and offer to buy conservation easements. If you value conservation higher than the property owner values development, you’ll be able to make a deal. It would be a win-win because property owners like the Murrs would get the money they need to restore their cabin, and environmentalists would obtain the socially optimum amount of conservation.
But under the Supreme Court’s decision, there’s less incentive to work with property owners. Instead, political environmentalists will lobby government to prohibit development, which it will be more likely to do if it won’t have to pay just compensation. Environmentalists won’t be alone in lobbying more. Politically powerful property owners and industries will also lobby against regulation. The result of these incentives will be a lot of resources wasted on lobbying only to have government regulate based on politics rather than what’s best for property owners and the environment. Restrictions will fall most on politically weak property owners, like the Murrs, regardless of whether it makes any sense.
Totenberg shouldn’t describe that as a win for the environment or environmentalists. I don’t mean to pick on Totenberg, she’s nowhere near the only journalist to conflate political environmentalism with environmentalists. The world’s largest conservation organization—the Nature Conservancy—doesn’t get nearly the headlines that groups that devote their resources to lobbying or litigation, rather than real conservation. Murr may be a win for them, since they’ll have more to lobby or litigate over, but it’s a clear loss for environmentalists engaged in real, on-the-ground conservation.