TortDeform: The Civil Justice Defense Blog

Paul Ruschman

“Regulatory Takings”: The Sleeper Issue of the 2006 Election?

Next month, “regulatory takings” proposals will be on the ballot in six western states: Arizona, California, Idaho, Montana, Nevada, and Washington. The legalistic and innocuous-sounding phrase, “regulatory takings,” hides the intention—not to mention the impact—of these proposals. If enacted, they could derail the enforcement of a host of zoning, environmental, or other land-use laws.

These measures are being sold to voters as legal weapons that the little guys can use against Big Government. In reality, there’s big money behind them. The money trail behind these proposals leads to a reclusive billionaire developer named Howard Rich, who is also bankrolling anti-tax proposals similar to Colorado’s Taxpayers Bill of Rights—which will also be on the ballot in a number of states. Millions of dollars from Rich’s Americans for Limited Government has gone to groups such as America at its Best, Fund for Democracy, and Montanans in Action, which put regulatory-takings measures on the ballot.

To understand the regulatory-takings controversy, we need to go back to last May, when the U.S. Supreme Court handed down Kelo v. City of New London. In Kelo, a five-justice majority voted to allow New London, Connecticut, to go forward with the condemnation of Susette Kelo’s home to clear the way for a downtown redevelopment project.


The Kelo majority didn't rule that the condemnation was just, and didn't find that the redevelopment actually would create jobs bring in and tax revenue. All it did was refuse to second-guess state and local officials' determination that New London needed redevelopment and that Kelo's land was needed to carry out that project.

Kelo was consistent with the Court's century-old "hands-off" policy toward condemnation decisions. As Justice John Paul Stevens observed in his majority opinion:

Our earliest cases in particular embodied a strong theme of federalism, emphasizing the "great respect" that we owe to state legislatures and state courts in discerning local public needs....For more than a century, our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power.
However, Americans perceived Kelo quite differently. Property-rights activists, who have taken aim at government regulations for decades, made sure of that. They portrayed the case as one of heartless politicians bullying a woman out of her home in order to hand it over to greedy developers.

Polls showed that as many as 90 percent of Americans disagreed with the Court's decision. And state lawmakers listened. According to the Institute for Justice, which represented Susette Kelo, more than 30 states reacted to the decision by passing laws that restrict Kelo-type takings.

Kelo has been the gift that keeps on giving. Property-rights advocates are using anti-Kelo sentiment to push regulatory takings measures similar to Oregon's Measure 37, which voters approved in 2004. The measure, which has been codified as §197.352 of the Oregon Revised Statutes, provides:

  • If the government enacts or enforces a land-use regulation that has the effect of reducing the fair market value of the owner's property or any interest in it, it has to pay the owner just compensation, which is deefined as the reduction in the affected property's fair market value.
  • The regulations covered by Measure 37 include acts of the Oregon legislature; rules of the Oregon Land Conservation and Development Commission; and communities' master plans, zoning ordinances, land division ordinances, and transportation ordinances.
  • Regulations that are not considered takings include restrictions on public nuisances; health and safety measures; and yes, laws against pornography and nude dancing.
  • A property owner has two years from the time a new land-use regulation takes effect, or when she is denied permission to improve her property, to demand compensation. If the government enforces the regulation in question for 180 days after receiving the owner's demand, the owner gains the right to sue.

  • Instead of paying compensation, the government can make the lawsuit go away by modifying or not applying the regulation being challenged. Hence it's been called a "pay or waive" law.
  • Measure 37 has huge potential to disrupt land-use regulations, even including Oregon's statewide land-use planning law that was passed in 1973. On a few thousand condemnations on behalf of developers occur each year, but land-use regulations affect millions of property owners, day in and day out.

    According to an article by Ray Ring of High Country News (the site asks you to register; it's free), as of July, some 2,700 claims have been brought under Measure 37. And since enforcement of that measure was held up for more than a year by legal challenges, there might be a lot more claims in the pipeline. Faced with big demands for compensation (Oregon property owners have asked for a total of $4 billion), regulators have a strong incentive to waive the regulation and allow development to happen.

    The strategy behind takings measures is to conflate them with Kelo. Last year, the libertarian Reason Foundation wrote a paper that urged "exporting" Measure 37 to other states. In its analysis of this year's regulatory-takings measures, the American Planning Association pointed out that four of the six combine new curbs on eminent domain with regulatory-takings proposals. In fact, the Idaho proposal is titled "This House is My Home."

    There' s likely more to come. Anti-Kelo measures are on the ballot in eight other states: Colorado, Florida, Georgia, Louisiana, Michigan, New Hampshire, North Dakota, and South Carolina. According to the Ballot Initiative Strategy Center, these proposals are "likely a precursor" to regulatory takings" measures.

    If one or more regulatory-takings proposals passes, there won't be any swearing-in ceremony, inaugural ball, or parade of new officeholders. Eventually, however, voters will feel the impact. Ray Ring told the story of one Oregonian who now has voter's remorse:

    "I voted for the measure because I believe in property rights," Rose Straher, who lives in tiny Brookings on the southern Oregon coast, told me. The owner of a nearby 10-acre lily farm filed a Measure 37 claim to turn it into a 40-space mobile-home park, and got the Curry County government to waive its regulations.

    Justice Louis Brandeis famously wrote that the states serve as a laboratory where they can try novel social and economic experiments. What Brandeis didn't mention, but perhaps should have, is that some experiments have the potential to blow up in citizens' faces.

    Posted at 12:18 PM, Oct 19, 2006 in Permalink | Comments (0) | TrackBack (0)