`(Slip Opinion)
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` OCTOBER TERM, 2016
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`
`Syllabus
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`1
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` NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
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`
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` being done in connection with this case, at the time the opinion is issued.
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`
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` The syllabus constitutes no part of the opinion of the Court but has been
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` prepared by the Reporter of Decisions for the convenience of the reader.
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` See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
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`SUPREME COURT OF THE UNITED STATES
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`
` Syllabus
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` MURR ET AL. v. WISCONSIN ET AL.
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`
`
`CERTIORARI TO THE COURT OF APPEALS OF WISCONSIN
`
` No. 15–214. Argued March 20, 2017—Decided June 23, 2017
`The St. Croix River, which forms part of the boundary between Wiscon-
`
`sin and Minnesota, is protected under federal, state, and local law.
`Petitioners own two adjacent lots—Lot E and Lot F—along the lower
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`portion of the river in the town of Troy, Wisconsin. For the area
`where petitioners’ property is located, state and local regulations
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`prevent the use or sale of adjacent lots under common ownership as
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`separate building sites unless they have at least one acre of land
`suitable for development. A grandfather clause relaxes this re-
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`striction for substandard lots which were in separate ownership from
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`adjacent lands on January 1, 1976, the regulation’s effective date.
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`Petitioners’ parents purchased Lots E and F separately in the
`1960’s, and maintained them under separate ownership until trans-
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`ferring Lot F to petitioners in 1994 and Lot E to petitioners in 1995.
`Both lots are over one acre in size, but because of their topography
`they each have less than one acre suitable for development. The uni-
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`fication of the lots under common ownership therefore implicated the
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`rules barring their separate sale or development. Petitioners became
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`interested in selling Lot E as part of an improvement plan for the
`lots, and sought variances from the St. Croix County Board of Ad-
`justment. The Board denied the request, and the state courts af-
`firmed in relevant part. In particular, the State Court of Appeals
`found that the local ordinance effectively merged the lots, so petition-
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`ers could only sell or build on the single combined lot.
`
`Petitioners filed suit, alleging that the regulations worked a regu-
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`latory taking that deprived them of all, or practically all, of the use of
`Lot E. The County Circuit Court granted summary judgment to the
`State, explaining that petitioners had other options to enjoy and use
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`their property, including eliminating the cabin and building a new
`residence on either lot or across both. The court also found that peti-
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`2
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`MURR v. WISCONSIN
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`Syllabus
`tioners had not been deprived of all economic value of their property,
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`because the decrease in market value of the unified lots was less than
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`10 percent. The State Court of Appeals affirmed, holding that the
`takings analysis properly focused on Lots E and F together and that,
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`using that framework, the merger regulations did not effect a taking.
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`Held: The State Court of Appeals was correct to analyze petitioners’
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`property as a single unit in assessing the effect of the challenged gov-
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`ernmental action. Pp. 6–20.
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`(a) The Court’s Takings Clause jurisprudence informs the analysis
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`of this issue. Pp. 6–11.
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`
`
`(1) Regulatory takings jurisprudence recognizes that if a “regula-
`
`
`tion goes too far it will be recognized as a taking.” Pennsylvania Coal
`Co. v. Mahon, 260 U. S. 393, 415. This area of the law is character-
`
`ized by “ad hoc, factual inquiries, designed to allow careful examina-
`
`tion and weighing of all the relevant circumstances.” Tahoe-Sierra
`
`Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535
`
`U. S. 302, 322 (citation and internal quotation marks omitted).
`
`The Court has, however, identified two guidelines relevant for de-
`termining when a government regulation constitutes a taking. First,
`“with certain qualifications . . . a regulation which ‘denies all econom-
`
`ically beneficial or productive use of land’ will require compensation
`
`under the Takings Clause.” Palazzolo v. Rhode Island, 533 U. S. 606,
`
`
`617 (quoting Lucas v. South Carolina Coastal Council, 505 U. S.
`
`
`1003, 1015). Second, a taking may be found based on “a complex of
`factors,” including (1) the economic impact of the regulation on the
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`claimant; (2) the extent to which the regulation has interfered with
`distinct investment-backed expectations; and (3) the character of the
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`governmental action. Palazzolo, supra, at 617 (citing Penn Central
`Transp. Co. v. New York City, 438 U. S. 104, 124). Yet even the com-
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`
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`plete deprivation of use under Lucas will not require compensation if
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`the challenged limitations “inhere . . . in the restrictions that back-
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`ground principles of the State’s law of property and nuisance already
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`placed upon land ownership.” Lucas, 505 U. S., at 1029.
`
`
`A central dynamic of the Court’s regulatory takings jurisprudence
`thus is its flexibility. This is a means to reconcile two competing ob-
`jectives central to regulatory takings doctrine: the individual’s right
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`to retain the interests and exercise the freedoms at the core of private
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`property ownership, cf. id., at 1027, and the government’s power to
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`“adjus[t] rights for the public good,” Andrus v. Allard, 444 U. S. 51,
`65. Pp. 6–9.
`
`
`(2) This case presents a critical question in determining whether
`a regulatory taking has occurred: What is the proper unit of property
`against which to assess the effect of the challenged governmental ac-
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`tion? The Court has not set forth specific guidance on how to identify
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`

`

`3
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`Cite as: 582 U. S. ____ (2017)
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`Syllabus
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`the relevant parcel. However, it has declined to artificially limit the
`parcel to the portion of property targeted by the challenged regula-
`tion, and has cautioned against viewing property rights under the
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`Takings Clause as coextensive with those under state law. Pp. 9–11.
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`(b) Courts must consider a number of factors in determining the
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`proper denominator of the takings inquiry. Pp. 11–17.
`(1) The inquiry is objective and should determine whether rea-
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`sonable expectations about property ownership would lead a land-
`owner to anticipate that his holdings would be treated as one parcel
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`or as separate tracts. First, courts should give substantial weight to
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`the property’s treatment, in particular how it is bounded or divided,
`under state and local law. Second, courts must look to the property’s
`physical characteristics, including the physical relationship of any
`distinguishable tracts, topography, and the surrounding human and
`ecological environment. Third, courts should assess the property’s
`value under the challenged regulation, with special attention to the
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`effect of burdened land on the value of other holdings. Pp. 11–14.
`(2) The formalistic rules for which the State of Wisconsin and
`petitioners advocate do not capture the central legal and factual prin-
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`ciples informing reasonable expectations about property interests.
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`Wisconsin would tie the definition of the parcel to state law, but it is
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`also necessary to weigh whether the state enactments at issue accord
`with other indicia of reasonable expectations about property. Peti-
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`tioners urge the Court to adopt a presumption that lot lines control,
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`but lot lines are creatures of state law, which can be overridden by
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`the State in the reasonable exercise of its power to regulate land.
`The merger provision here is such a legitimate exercise of state pow-
`er, as reflected by its consistency with a long history of merger regu-
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`lations and with the many merger provisions that exist nationwide
`today. Pp. 14–17.
`
`(c) Under the appropriate multifactor standard, it follows that peti-
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`tioners’ property should be evaluated as a single parcel consisting of
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`Lots E and F together. First, as to the property’s treatment under
`state and local law, the valid merger of the lots under state law in-
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`forms the reasonable expectation that the lots will be treated as a
`single property. Second, turning to the property’s physical character-
`istics, the lots are contiguous. Their terrain and shape make it rea-
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`sonable to expect their range of potential uses might be limited; and
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`petitioners could have anticipated regulation of the property due to
`its location along the river, which was regulated by federal, state,
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`and local law long before they acquired the land. Third, Lot E brings
`prospective value to Lot F. The restriction on using the individual
`lots is mitigated by the benefits of using the property as an integrat-
`
`ed whole, allowing increased privacy and recreational space, plus an
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`4
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`MURR v. WISCONSIN
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`Syllabus
`optimal location for any improvements. This relationship is evident
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`in the lots’ combined valuation. The Court of Appeals was thus cor-
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`rect to treat the contiguous properties as one parcel.
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`Considering petitioners’ property as a whole, the state court was
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`correct to conclude that petitioners cannot establish a compensable
`taking. They have not suffered a taking under Lucas, as they have
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`not been deprived of all economically beneficial use of their property.
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`See 505 U. S., at 1019. Nor have they suffered a taking under the
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`more general test of Penn Central, supra, at 124. Pp. 17–20.
`2015 WI App 13, 359 Wis. 2d 675, 859 N. W. 2d 628, affirmed.
`KENNEDY, J., delivered the opinion of the Court, in which GINSBURG,
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` BREYER, SOTOMAYOR, and KAGAN, JJ., joined. ROBERTS, C. J., filed a
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`dissenting opinion, in which THOMAS and ALITO, JJ., joined. THOMAS, J.,
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`filed a dissenting opinion. GORSUCH, J., took no part in the considera-
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`tion or decision of the case.
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` Cite as: 582 U. S. ____ (2017)
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`Opinion of the Court
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`1
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` NOTICE: This opinion is subject to formal revision before publication in the
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` preliminary print of the United States Reports. Readers are requested to
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` notify the Reporter of Decisions, Supreme Court of the United States, Wash­
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` ington, D. C. 20543, of any typographical or other formal errors, in order
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` that corrections may be made before the preliminary print goes to press.
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`SUPREME COURT OF THE UNITED STATES
`
`_________________
`No. 15–214
`_________________
` JOSEPH P. MURR, ET AL., PETITIONERS v.
`
`
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`WISCONSIN, ET AL.
`
`
`ON WRIT OF CERTIORARI TO THE COURT OF APPEALS OF
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`WISCONSIN, DISTRICT III
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`
`[June 23, 2017]
`JUSTICE KENNEDY delivered the opinion of the Court.
`The classic example of a property taking by the govern­
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`ment is when the property has been occupied or otherwise
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`seized.
`In the case now before the Court, petition-
`ers contend that governmental entities took their real
`property—an undeveloped residential lot—not by some
`physical occupation but instead by enacting burdensome
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`regulations that forbid its improvement or separate sale
`because it is classified as substandard in size. The rele­
`vant governmental entities are the respondents.
`Against the background justifications for the challenged
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`restrictions, respondents contend there is no regulatory
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`taking because petitioners own an adjacent lot. The regu­
`lations, in effecting a merger of the property, permit the
`continued residential use of the property including for a
`single improvement to extend over both lots. This re­
`tained right of the landowner, respondents urge, is of
`sufficient offsetting value that the regulation is not severe
`enough to be a regulatory taking. To resolve the issue
`whether the landowners can insist on confining the analy­
`sis just to the lot in question, without regard to their
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`2
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` MURR v. WISCONSIN
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`Opinion of the Court
`ownership of the adjacent lot, it is necessary to discuss the
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`background principles that define regulatory takings.
`I
`
`A
`
`
`The St. Croix River originates in northwest Wisconsin
`and flows approximately 170 miles until it joins the Mis­
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`sissippi River, forming the boundary between Minnesota
`and Wisconsin for much of its length. The lower portion of
`the river slows and widens to create a natural water area
`known as Lake St. Croix. Tourists and residents of the
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`region have long extolled the picturesque grandeur of the
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`river and surrounding area. E.g., E. Ellett, Summer Ram­
`bles in the West 136–137 (1853).
`
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`Under the Wild and Scenic Rivers Act, the river was
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`designated, by 1972, for federal protection. §3(a)(6), 82
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`Stat. 908, 16 U. S. C. §1274(a)(6) (designating Upper St.
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`Croix River); Lower Saint Croix River Act of 1972, §2, 86
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`Stat. 1174, 16 U. S. C. §1274(a)(9) (adding Lower St. Croix
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`River). The law required the States of Wisconsin and
`Minnesota to develop “a management and development
`program” for the river area. 41 Fed. Reg. 26237 (1976). In
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`compliance, Wisconsin authorized the State Department of
`Natural Resources to promulgate rules limiting develop­
`ment in order to “guarantee the protection of the wild,
`scenic and recreational qualities of the river for present
`and future generations.” Wis. Stat. §30.27(l) (1973).
`
`Petitioners are two sisters and two brothers in the Murr
`family. Petitioners’ parents arranged for them to receive
`ownership of two lots the family used for recreation along
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`the Lower St. Croix River in the town of Troy, Wisconsin.
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`The lots are adjacent, but the parents purchased them
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`separately, put the title of one in the name of the family
`business, and later arranged for transfer of the two lots,
`on different dates, to petitioners. The lots, which are
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`referred to in this litigation as Lots E and F, are described
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`3
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` Cite as: 582 U. S. ____ (2017)
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`Opinion of the Court
`in more detail below.
`
`For the area where petitioners’ property is located, the
`Wisconsin rules prevent the use of lots as separate build­
`
`ing sites unless they have at least one acre of land suitable
`for development. Wis. Admin. Code §§ NR 118.04(4),
`118.03(27), 118.06(1)(a)(2)(a), 118.06(1)(b) (2017). A grand­
`father clause relaxes this restriction for substandard
`
`lots which were “in separate ownership from abutting
`lands” on January 1, 1976, the effective date of the regula­
`tion. § NR 118.08(4)(a)(1). The clause permits the use of
`qualifying lots as separate building sites. The rules also
`include a merger provision, however, which provides that
`adjacent lots under common ownership may not be “sold or
`developed as separate lots” if they do not meet the size
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`requirement. § NR 118.08(4)(a)(2). The Wisconsin rules
`localities to adopt parallel provisions, see
`require
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`§ NR 118.02(3), so the St. Croix County zoning ordinance
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`contains identical restrictions, see St. Croix County, Wis.,
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`Ordinance §17.36I.4.a (2005). The Wisconsin rules also
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`authorize the local zoning authority to grant variances
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`from the regulations where enforcement would create
`§ NR 118.09(4)(b); St. Croix
`“unnecessary hardship.”
`County Ordinance §17.09.232.
`B
`
`
`Petitioners’ parents purchased Lot F in 1960 and built a
`small recreational cabin on it. In 1961, they transferred
`title to Lot F to the family plumbing company. In 1963,
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`they purchased neighboring Lot E, which they held in
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`their own names.
`
`
`The lots have the same topography. A steep bluff cuts
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`through the middle of each, with level land suitable for
`development above the bluff and next to the water below
`it. The line dividing Lot E from Lot F runs from the river­
`front to the far end of the property, crossing the blufftop
`along the way. Lot E has approximately 60 feet of river
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`

`

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` MURR v. WISCONSIN
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`Opinion of the Court
`frontage, and Lot F has approximately 100 feet. Though
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`each lot is approximately 1.25 acres in size, because of the
`waterline and the steep bank they each have less than one
`acre of land suitable for development. Even when com­
`bined, the lots’ buildable land area is only 0.98 acres due
`to the steep terrain.
`The lots remained under separate ownership, with Lot F
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`
`
`owned by the plumbing company and Lot E owned by
`
`petitioners’ parents, until transfers to petitioners. Lot F
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`was conveyed to them in 1994, and Lot E was conveyed to
`them in 1995. Murr v. St. Croix County Bd. of Adjust-
`ment, 2011 WI App 29, 332 Wis. 2d 172, 177–178, 184–
`185, 796 N. W. 2d 837, 841, 844 (2011); 2015 WI App 13,
`
`359 Wis. 2d 675, 859 N. W. 2d 628 (unpublished opinion),
`
`App. to Pet. for Cert. A–3, ¶¶4–5. (There are certain
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`ambiguities in the record concerning whether the lots had
`
`merged earlier, but the parties and the courts below ap­
`pear to have assumed the merger occurred upon transfer
`to petitioners.)
`A decade later, petitioners became interested in moving
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`the cabin on Lot F to a different portion of the lot and
`selling Lot E to fund the project. The unification of the
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` lots under common ownership, however, had implicated
`
`the state and local rules barring their separate sale or
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`development. Petitioners then sought variances from the
`St. Croix County Board of Adjustment to enable their
`building and improvement plan, including a variance to
`allow the separate sale or use of the lots. The Board de­
`nied the requests, and the state courts affirmed in rele­
`vant part. In particular, the Wisconsin Court of Appeals
`agreed with the Board’s interpretation that the local
`
`ordinance “effectively merged” Lots E and F, so petitioners
`“could only sell or build on the single larger lot.” Murr,
`supra, at 184, 796 N. W. 2d, at 844.
`Petitioners filed the present action in state court, alleg­
`
`ing that the state and county regulations worked a regula­
`
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`4
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`Opinion of the Court
`tory taking by depriving them of “all, or practically all, of
`the use of Lot E because the lot cannot be sold or devel­
`oped as a separate lot.” App. 9. The parties each submit­
`ted appraisal numbers to the trial court. Respondents’
`appraisal included values of $698,300 for the lots together
`as regulated; $771,000 for the lots as two distinct build-
`able properties; and $373,000 for Lot F as a single lot with
`improvements. Record 17–55, 17–56. Petitioners’ ap­
`praisal
`included an unrebutted, estimated value of
`$40,000 for Lot E as an undevelopable lot, based on the
`counterfactual assumption that it could be sold as a sepa­
`rate property. Id., at 22–188.
`
`
`The Circuit Court of St. Croix County granted summary
`judgment to the State, explaining that petitioners retained
`“several available options for the use and enjoyment of
`
`their property.” Case No. 12–CV–258 (Oct. 31, 2013), App.
`to Pet. for Cert. B–9. For example, they could preserve the
`existing cabin, relocate the cabin, or eliminate the cabin
`
`and build a new residence on Lot E, on Lot F, or across
`
`both lots. The court also found petitioners had not been
`deprived of all economic value of their property. Consider­
`ing the valuation of the property as a single lot versus two
`separate lots, the court found the market value of the
`
`property was not significantly affected by the regulations
`because the decrease in value was less than 10 percent.
`Ibid.
`
`The Wisconsin Court of Appeals affirmed. The court
`explained that the regulatory takings inquiry required it
`to “‘first determine what, precisely, is the property at
`
`issue.’” Id., at A–9, ¶17. Relying on Wisconsin Supreme
`Court precedent in Zealy v. Waukesha, 201 Wis. 2d 365,
`548 N. W. 2d 528 (1996), the Court of Appeals rejected
`
`petitioners’ request to analyze the effect of the regulations
`on Lot E only. Instead, the court held the takings analysis
`“properly focused” on the regulations’ effect “on the Murrs’
`
`
`property as a whole”—that is, Lots E and F together. App.
`
`5
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`6
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` MURR v. WISCONSIN
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`Opinion of the Court
`to Pet. for Cert. A–12, ¶22.
`
`Using this framework, the Court of Appeals concluded
`the merger regulations did not effect a taking. In particu­
`lar, the court explained that petitioners could not reason­
`ably have expected to use the lots separately because they
`were “‘charged with knowledge of the existing zoning
`laws’” when they acquired the property. Ibid. (quoting
`Murr, supra, at 184, 796 N. W. 2d, at 844). Thus, “even if
`[petitioners] did intend to develop or sell Lot E separately,
`that expectation of separate treatment became unreason­
`able when they chose to acquire Lot E in 1995, after their
`having acquired Lot F in 1994.” App. to Pet. for Cert. A–
`17, ¶30. The court also discounted the severity of the
`
`economic impact on petitioners’ property, recognizing the
`Circuit Court’s conclusion that the regulations diminished
`
`the property’s combined value by less than 10 percent.
`The Supreme Court of Wisconsin denied discretionary
`review. This Court granted certiorari, 577 U. S. ___
`(2016).
`
`
`II
`
`A
`
`
`The Takings Clause of the Fifth Amendment provides
`
`that private property shall not “be taken for public use,
`without just compensation.” The Clause is made applica­
`
`ble to the States through the Fourteenth Amendment.
`
`Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226 (1897).
`As this Court has recognized, the plain language of the
`Takings Clause “requires the payment of compensation
`
`whenever the government acquires private property for a
`public purpose,” see Tahoe-Sierra Preservation Council,
`
`Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302,
`321 (2002), but it does not address in specific terms the
`
`imposition of regulatory burdens on private property.
`Indeed, “[p]rior to Justice Holmes’s exposition in Pennsyl-
`
`vania Coal Co. v. Mahon, 260 U. S. 393 (1922), it was
`
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`

`

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`Opinion of the Court
`generally thought that the Takings Clause reached only a
`direct appropriation of property, or the functional equiva­
`lent of a practical ouster of the owner’s possession,” like
`the permanent flooding of property. Lucas v. South Caro-
`
`lina Coastal Council, 505 U. S. 1003, 1014 (1992) (citation,
`
`brackets, and internal quotation marks omitted); accord,
`
`Horne v. Department of Agriculture, 576 U. S. ___, ___
`(2015) (slip op., at 7); see also Loretto v. Teleprompter
`Manhattan CATV Corp., 458 U. S. 419, 427 (1982). Ma-
`
`hon, however, initiated this Court’s regulatory takings
`jurisprudence, declaring that “while property may be
`
`regulated to a certain extent, if regulation goes too far it
`will be recognized as a taking.” 260 U. S., at 415. A regu­
`
`lation, then, can be so burdensome as to become a taking,
`
`yet the Mahon Court did not formulate more detailed
`guidance for determining when this limit is reached.
`
`
`In the near century since Mahon, the Court for the most
`
`part has refrained from elaborating this principle through
`definitive rules. This area of the law has been character­
`
`ized by “ad hoc, factual inquiries, designed to allow careful
`
`examination and weighing of all the relevant circumstances.”
`Tahoe-Sierra, supra, at 322 (citation and internal quota­
`
`
`tion marks omitted). The Court has, however, stated two
`guidelines relevant here for determining when govern­
`
`ment regulation is so onerous that it constitutes a taking.
`
`First, “with certain qualifications . . . a regulation which
`
`
`‘denies all economically beneficial or productive use of
`
`land’ will require compensation under the Takings
`Clause.” Palazzolo v. Rhode Island, 533 U. S. 606, 617
`(2001) (quoting Lucas, supra, at 1015). Second, when a
`
`regulation impedes the use of property without depriving
`
`the owner of all economically beneficial use, a taking still
`
`
`may be found based on “a complex of factors,” including (1)
`the economic impact of the regulation on the claimant; (2)
`
`the extent to which the regulation has interfered with
`distinct investment-backed expectations; and (3) the char­
`
`7
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`

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` MURR v. WISCONSIN
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`Opinion of the Court
` acter of the governmental action. Palazzolo, supra, at 617
`
`(citing Penn Central Transp. Co. v. New York City, 438
`U. S. 104, 124 (1978)).
`By declaring that the denial of all economically benefi­
`
`cial use of land constitutes a regulatory taking, Lucas
`
`stated what it called a “categorical” rule. See 505 U. S., at
`1015. Even in Lucas, however, the Court included a ca­
`
`veat recognizing the relevance of state law and land-use
`customs: The complete deprivation of use will not re-
`quire compensation if the challenged limitations “inhere
`. . . in the restrictions that background principles of the
`
`State’s law of property and nuisance already placed upon
`land ownership.” Id., at 1029; see also id., at 1030–1031
`
`(listing factors for courts to consider in making this
`
`determination).
`A central dynamic of the Court’s regulatory takings
`
`
`jurisprudence, then, is its flexibility. This has been and
`remains a means to reconcile two competing objectives
`central to regulatory takings doctrine. One is the individ­
`ual’s right to retain the interests and exercise the free­
` doms at the core of private property ownership. Cf. id., at
`
`1028 (“[T]he notion . . . that title is somehow held subject
`to the ‘implied limitation’ that the State may subsequently
`eliminate all economically valuable use is inconsistent
`with the historical compact recorded in the Takings
`Clause that has become part of our constitutional cul­
`ture”). Property rights are necessary to preserve freedom,
`for property ownership empowers persons to shape and to
`plan their own destiny in a world where governments are
`always eager to do so for them.
`
`The other persisting interest is the government’s well-
`
`established power to “adjus[t] rights for the public good.”
`
`Andrus v. Allard, 444 U. S. 51, 65 (1979). As Justice
`
`Holmes declared, “Government hardly could go on if to
`some extent values incident to property could not be di­
`minished without paying for every such change in the
`
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`Opinion of the Court
` general law.” Mahon, supra, at 413. In adjudicating
`
`regulatory takings cases a proper balancing of these prin­
`ciples requires a careful inquiry informed by the specifics
`
`of the case. In all instances, the analysis must be driven
`“by the purpose of the Takings Clause, which is to prevent
`the government from ‘forcing some people alone to bear
`
`public burdens which, in all fairness and justice, should be
`borne by the public as a whole.’” Palazzolo, supra, at 617–
`
`
`618 (quoting Armstrong v. United States, 364 U. S. 40, 49
`(1960)).
`
`
`
`B
`
`This case presents a question that is linked to the ulti­
`
`mate determination whether a regulatory taking has
`occurred: What is the proper unit of property against
`
`which to assess the effect of the challenged governmental
`
`
`action? Put another way, “[b]ecause our test for regulatory
`taking requires us to compare the value that has been
`
`taken from the property with the value that remains in
`
`the property, one of the critical questions is determining
`how to define the unit of property ‘whose value is to fur­
`nish the denominator of the fraction.’” Keystone Bitumi-
`nous Coal Assn. v. DeBenedictis, 480 U. S. 470, 497 (1987)
`(quoting Michelman, Property, Utility, and Fairness, 80
`Harv. L. Rev. 1165, 1992 (1967)).
`
`As commentators have noted, the answer to this ques­
`tion may be outcome determinative. See Eagle, The Four-
`
`Factor Penn Central Regulatory Takings Test, 118 Pa. St.
`
`L. Rev. 601, 631 (2014); see also Wright, A New Time for
`
`Denominators, 34 Env. L. 175, 180 (2004). This Court,
`too, has explained that the question is important to the
`regulatory takings inquiry. “To the extent that any por­
`tion of property is taken, that portion is always taken in
`its entirety; the relevant question, however, is whether the
`
`property taken is all, or only a portion of, the parcel in
`question.” Concrete Pipe & Products of Cal., Inc. v. Con-
`
`
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`

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`
` MURR v. WISCONSIN
`
`Opinion of the Court
`struction Laborers Pension Trust for Southern Cal., 508
`U. S. 602, 644 (1993).
`
`Defining the property at the outset, however, should not
`necessarily preordain the outcome in every case. In some,
`though not all, cases the effect of the challenged regulation
`must be assessed and understood by the effect on the
`
`entire property held by the owner, rather than just some
`part of the property that, considered just on its own, has
`
`been diminished in value. This demonstrates the contrast
`between regulatory takings, where the goal is usually to
`determine how the challenged regulation affects the prop­
`erty’s value to the owner, and physical takings, where the
`impact of physical appropriation or occupation of the
`property will be evident.
`
`While the Court has not set forth specific guidance on
`
`how to identify the relevant parcel for the regulatory
`taking inquiry, there are two concepts which the Court
`
`has indicated can be unduly narrow.
`
`
`First, the Court has declined to limit the parcel in an
`
`artificial manner to the portion of property targeted by the
`
`challenged regulation. In Penn Central, for example, the
`Court rejected a challenge to the denial of a permit to
`build an office tower above Grand Central Terminal. The
`
`Court refused to measure the effect of the denial only
`
`against the “air rights” above the terminal, cautioning
`that “‘[t]aking’ jurisprudence does not divide a single
`
`parcel into discrete segments and attempt to determine
`whether rights in a particular segment have been entirely
`abrogated.” 438 U. S., at 130.
`
`In a similar way, in Tahoe-Sierra, the Court refused to
`“effectively sever” the 32 months during which petitioners’
`property was restricted by temporary moratoria on devel­
`
`opment “and then ask whether that segment ha[d] been
`
`taken in its entirety.” 535 U. S., at 331. That was because
`
`“defining the property interest taken in terms of the very
`regulation being challenged is circular.” Ibid. That ap­
`
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`proach would overstate the effect of regulation on property,
`turning “every delay” into a “total ban.” Ibid.
`The second concept about which the Court has ex­
`
`pressed caution is the view that property rights under the
`Takings Clause should be coextensive with those under
`state law. Although property interests have their founda­
`tions in state law, the Palazzolo Court reversed a state-
`court decision that rejected a takings challenge to regula­
`tions that predated the landowner’s acquisition of title.
`
`533 U. S., at 626–627. The Court explained that States do
`not have the unfettered authority to “shape and define
`property rights and reasonable investment-backed expec­
`tations,” leaving landowners without recourse against
`unreasonable regulations. Id., at 626.
`By the same measure, defining the parcel by reference
`
`to state law could defeat a challenge even to a state en­
`actment that alters permitted uses of property in ways
`inconsistent with reasonable investment-backed expecta­
`tions. For example, a State might enact a law that consol­
`idates nonadjacent property owned by a single person or
`entity in different parts of the State and then imposes
`development limits on the aggregate set. If a court de­
`fined the parcel according to the state law requiring con­
`solidation, this improperly would fortify the state law
`
`against a takings claim, because the court would look to
`
` the retained value in the property as a whole rather than
`considering whether individual holdings had lost all value.
`
`III
`
`A
`
`
`As the foregoing discussion makes clear, no single con­
`
`sideration can supply the exclusive test for determining
`the denominator. Instead, courts must consider a number
`of factors. These include the treatment of the land under
`state and local law; the physical characteristics of the
`
`land; and the prospective value of the regulated land. The
`
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`Opinion of the Court
`endeavor should determine whether reasonable expecta­
`tions about property ownership would lead a landowner to
`anticipate that his holdings would be treated as one par­
`cel, or, instead, as separate tracts. The inquiry is objec­
`
`tive, and the reasonable expectations at issue derive from
`
`background customs and the whole of our legal tradition.
`Cf. Lucas, 505 U. S., at 1035 (KENNEDY, J., concurring)
`
`(“The expectations protected by the Constitution are based
`
`on objective