Revisiting the Takings Issue

Unnoticed amid the suspense of the Presidential race, on November 7 the voters of Oregon adopted a landmark law for the protection of the human right of private property ownership.

Ballot Measure 7, entitled "landowner compensation", was a rebellion by Oregon voters against decades of expansion of governmental power to control the use of private land. Until the environmental revolution swept over Oregon (and Vermont) in the 1970s, the state and its subdivisions regulated land largely to prevent traditional nuisances. Local governments had used zoning since the practice was upheld by the U.S. Supreme Court in 1926, but it was usually not oppressive.

The enviro-revolution changed all that. Numerous well-funded and aggressive national, state and local environmental organizations advanced the theory of "social property". This theory held that land is a valuable resource belonging to society, not a commodity to be owned, used, and exchanged by individuals. "Owners" merely "hold" land as "stewards" subject to such conditions and restrictions as "society" (that is, the government) sees fit to impose.

This "social property" theory gave rise to a tidal wave of new land use regulations. In 1973 Oregon adopted a state land use plan, prohibiting land uses not approved by a state bureaucracy. Over the years that and other regulatory laws were ever more aggressively enforced. Oregon is full of outrageous examples of land regulations confiscating the rights of property owners and the value of their property.

This year a group called Oregonians in Action petitioned Measure 7 onto the ballot.. It provides that whenever a governmental restriction "has the effect of reducing the value of a property... the property owner shall be paid just compensation equal to the reduction in the fair market value of the property." The compensation requirement does not apply to regulation that restricts "historically and commonly recognized nuisances". It does not apply to property that was already subject to regulation when acquired by new owners. A government can escape liability for payment by rolling back the offending regulation.

The basic argument for Measure 7 is fairness. If society believes that a landowner's private property rights must be restricted in the name of some common good, then all of society ought to share in any resulting economic loss, not just the hapless landowner.

The 18th century authors of our constitutions firmly believed this. In fact, Vermont's 1777 constitution is the first one in the world to explicitly declare that when property is taken for public use, the owner has a right to receive "the equivalent in money". The enviros grudgingly accept this "takings" rule when the government actually takes possession of the property, as in highway construction. They vocally oppose it when land use regulation "merely" destroys the value of someone's property, leaving the owner with what may be a huge economic loss.

The Oregon enviros and their editorial page allies mounted a full bore attack on Measure 7. Every major editorial page in the state denounced it. The anti-Measure7 groups raised over a million dollars to defeat it, outspending its advocates 8 to 1. But on election day Oregon voters approved Measure 7 by a 55-45 margin. It was approved in 34 of the state's 36 counties, and is now part of the Oregon Constitution.

The same proposal has been offered several times in Vermont. A statutory version first offered in 1989 (S. 154) was far less protective of landowner's rights than Oregon's Measure 7. That bill set the "trigger" for landowner compensation at the point where the regulation destroyed 50% of the land's value. Frantic opposition from the Vermont Natural Resources Council beat down a 1990 House amendment containing this language, on a 64-65 vote.

Oregon has long been considered an environmental leadership state. Its land use control legislation was an important inspiration for Vermont's proposed Act 250 state land use plan (rejected by the legislature in 1974-76). Now that Oregonians have finally had enough of regulatory takings depriving land owners of the value of their land, maybe it's time to revisit the issue here. Better late than never.

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