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Property-Rights Showdown

By James L. Huffman July 21, 2007 Wall Street Journal

PORTLAND , Ore. -- Oregon loves environmental regulation. It's home to the Northern Spotted Owl, whose travails led the federal government to curb timber cutting in the Northwest in 1994. More than its share of environmentalists have chained themselves to trees. And its old-growth forests have given seed to many new-growth restrictions on private property.

But even Oregonians are only so green. The state is now in the midst of high-stakes battle over whether the government should be forced to pay property owners when it imposes regulations that strip land of its value. Among the top concerns: regulations so strict that families who have owned property for decades cannot subdivide and pass separate parcels to their children.

This fight has hit the ballot box, twice. The first time was in 2000, when voters approved an amendment to the constitution forcing the state to pay for the loss of value property owners suffer at the hands of land use and environmental regulations. The amendment was bogged down in litigation and was tossed out by the state Supreme Court.

Three years ago voters tried again. This time 61% of them voted to enact "Measure 37," a law that does what the constitutional amendment attempted to do -- force the government to pay for the environmental regulations it imposes on landowners. The law, which has withstood court scrutiny, allows the government to waive regulations when it prefers not to compensate a landowner. But in recent weeks, the Democratically controlled legislature, voting along party lines, moved to "reform" Measure 37 -- a euphemism for emptying the law of any real meaning. The legislature has put the bill on the November ballot.

Earlier this year House Speaker Jeff Merkley opened the assault, declaring that the law "now reverberates with the sound of industrial chainsaws and bulldozers. It bears no resemblance to the measures voters approved, so we have to do everything we can to make sure Oregonians are getting what they bargained for." In other words, voters didn't know what they were doing and need to be saved from themselves. Senate President Peter Courtney has made similar statements.

Opponents of Measure 37 exploit fears that the law will force local and state officials to approve large scale development projects. The reforms on the ballot would drastically limit the number of new home sites and allow the government to put regulations on commercial and industrial property without having to compensate the owners for loss of value.

The reform, drafted by Democrats, has been drafted with some appealing elements. It would expedite claims filed by property owners under Measure 37; and it would explicitly grant property owners the right to transfer their claim for compensation to another person -- something that should be possible under Measure 37, but which is now being fought over in the courts. Nevertheless, while these provisions are good, the Democrats' overall aim is to split the coalition needed to keep Measure 37 intact by driving a wedge between ordinary folks and business, industry and subdivision developers.

One persistent argument in favor of Measure 37 "reform" is that it could hurt farmers by spurring development that would place new homeowners near existing farms, whose sounds and smells might be considered a nuisance. As the argument goes, this could lead to the new homeowners filing nuisance lawsuits. But there is already a "right to farm" law to protect against such claims.

Another argument, this one made by the American Land Institute, is that Measure 37 is a gift to farmers who already get a break because their land isn't taxed at higher, urban assessments. But taxing farmers at a lower rate allows them to keep farming, rather than forcing them sell to developers. And if they do sell out, they must pay back taxes for as far back as 10 years.

The Georgetown Environmental Law & Policy Institute, in Washington , D.C. , is already getting in on act, asserting in a recent study that the premise of the law is mistaken. The study claims that " Oregon 's land use program has not unfairly burdened property owners" and that "Measure 37 is itself deeply flawed as public policy because it confers windfalls . . . without clear evidence of injury."

There are two problems with this. First, it was never claimed that land regulation leads to systematic burdens on property owners as a class. Rather voters were persuaded that it is unfair for some property owners to suffer a loss because of regulation benefiting the general public. Only those individuals are entitled to compensation, and only after proving actual loss.

Secondly, if it is true that all or most of those who have filed claims under Measure 37 weren't actually harmed by regulation, why reform the law? If there is no loss, there is no compensation.

Ironically, opponents of the law have changed their tune on property losses. When the issue was on the ballot in 2004, the state estimated that regulations cost landowners $5.4 billion in lost property values. Opponents used that figure to try to scare voters into voting down Measure 37 because it would result in a massive tax increase to pay for it. That hasn't happened. In fact, there have been approximately 7,500 claims filed under the law. Not one has been paid. Now so-called reformers claim that property owners were never really harmed in the first place, so it's OK to revise Measure 37. But then state and local governments have not seriously tested claimed losses. Governments simply plead poverty as they insist that waiving regulations is their only option.

Supreme Court Justice Hugo Black once noted that the U.S. Constitution's Fifth Amendment takings clause was necessary to "bar 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." That's just the point: Measure 37 passed because courts haven't provided much protection, and because in Oregon land-use regulators have been overzealous.

Of course, if Messrs. Merkley and Courtney and other Democrats believed Measure 37 was really a mistake, they could have simply repealed the law. They didn't because they feared a voter backlash. In the coming weeks and months as the campaign unfolds, we'll know whether those voters will come back and protect a law they pushed through to protect themselves.

Mr. Huffman, a professor at the Lewis & Clark Law School in Portland, Ore., represented the chief petitioners in defending Measure 37 before the Oregon Supreme Court.

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