Measure 37: paying people for what we take.

• Author: Gieseler, Steven Geoffrey
• Position: Regulatory takings - Oregon

1. INTRODUCTION II. THE CONCEPT OF REGULATORY TAKINGS A. Of Form and Substance B. How Far is too Far? C. The Illusion of Compensation III. MEASURE 37 (AND WHY OREGON NEEDS IT) A. Oregon's Regulatory Nightmare B. The Birth of Measure 37. IV. MEASURE 37 LITIGATION A. MacPherson v. Department of Administrative Services B. Crook County v. All Electors V. CONCLUSION "It is wrong to use some constitutional provisions as springboards for major social change while treating others like senile relatives to be cooped up in a nursing home until they quit annoying us" (1)

1. INTRODUCTION

   In October 2005, an Oregon circuit court struck down Measure 37, one of the state's primary safeguards against government abrogation of the rights of property owners. (2) Enacted in 2004 by an initiative garnering more votes than any other in Oregon's history, (3) Measure 37 requires state and local governments to compensate owners when burdensome land-use regulations result in a diminution of their properties' values. In declaring Measure 37 unconstitutional, Judge Mary Mertens James added her name to a long list of American jurists who have relegated property rights to the lowest rung on the constitutional ladder. Ordinary--although unfortunate--on this count, the decision is remarkably novel for its underlying theory--that the citizens of Oregon are precluded from cabining the power of their elected officials.

   For decades, in Oregon and across America, courts have neglected their duty to protect the rights that federal and state constitutions guarantee to owners of private property. Weary of improper deference to legislatures and the opaque convolution of multi-pronged tests, the people of Oregon took upon themselves the role abdicated by the judiciary and passed Measure 37. Less than a year later, a court has held this effort invalid by claiming that some government powers--including the power to regulate the use of private property--are not beholden to the consent of the governed. Under the court's formulation, there exist facets of a sovereign that are impervious to the will of the people. Thus, imperiling not only the rights guaranteed to property owners by the Constitution, but also the very philosophical underpinnings of that Constitution.

   This essay will chronicle the legal and political developments that led to and resulted from the passage of Oregon's Measure 37. In Part II we will examine the concept of regulatory takings, and detail the doctrinal confusion and jurisprudential inefficacy that led Oregon's voters to seek a different avenue by which to ensure their constitutional rights. Part HI will focus on Oregon's decades-long debate on the interaction of property rights and government regulation that culminated in Measure 37's 2004 victory. In Part IV we will survey legal challenges that have followed Measure 37's enactment, including the audacious decision that, for now, has rendered the statute invalid. In sum, we will show why Measure 37 is necessary, and why it is not unconstitutional.

2. THE CONCEPT OF REGULATORY TAKINGS

   1. Of Form and Substance

      Both the Oregon (4) and United States Constitutions (5) require governments to pay owners just compensation when the government takes private property. This rule applies not only to out-and-out transfers of title through eminent domain, but also to regulations that deprive owners of the economic value of their property while leaving them in possession of the land. The concept of regulatory takings reflects the common sense observation that governments should not be allowed to escape the duty to compensate simply through the legalistic trick of co-opting the use of land without seizing the actual title to the land. If governments must compensate property owners for actual de jure condemnations, so too should they compensate for de facto seizures effected through regulation. Recognizing the equivalence of these two forms of takings is based on a respect for substance over form, and rejects the kind of fealty to legal artifice Roscoe Pound famously described as "mechanical jurisprudence." (6)

      Contrary to popular legal myth, regulatory takings law was not invented in the 1920s. (7) The Michigan Supreme Court explained the concept considerably earlier, in 1874:

      It is a transparent fallacy to say that this is not a taking of his property, because the land itself is not taken, and [the owner] utterly excluded from it, and because the title, nominally, still remains in him, and he is merely deprived of its beneficial use, which is not the property, but simply an incident of property. Such a proposition ... cannot be rendered sound, nor even respectable.... Of what does property practically consist, but of the incidents which the law has recognized as attached to the title, or right of property? Is not the idea of property in, or title to lands, apart from, and stripped of all its incidents, a purely metaphysical abstraction, as immaterial and useless to the owner as "the stuff that dreams are made of?." Is it not a much less injury to him, if it can injure him at all, to deprive him of this abstraction, than of the incidents of property, which alone render it practicably valuable to him? And among the incidents of property in land, or anything else, is not the right to enjoy its beneficial use ... the one most real and practicable idea of property, of which it is a much greater wrong to deprive a man, than of the mere abstract idea of property without incidents? [U]se ... constitutes, in fact, all that is beneficial in ownership, except the right to dispose of it; and this latter right or incident would be rendered barren and worthless, stripped of the right to the use. Property does not consist merely of the right to the ultimate particles of matter of which it may be composed,--of which we know nothing,--but of those properties of matter which can be rendered manifest to our senses, and made to contribute to our wants or our enjoyments. (8) To regard private property simply as physical matter, rather than in terms of the fights that comprise, and are incident to, its ownership, empties the concept of property of its relevance and meaning. As the Michigan Court recognized, property is not merely a tangible thing. (9) It is "a basic trait of the human personality, for which achievements and acquisitions are means of self-fulfillment." (10) Property is part of a familiar triad--along with life and liberty--that has as its essence the right to serf-actualization. The reason that a traditional condemnation requires compensation is that it unfairly deprives a person, without her consent, of the right to use her faculties as she sees fit. Regulatory takings are no different. (11)

      There is another, more practical problem with regulatory takings. While the outright condemnation of property is usually a well-publicized, visible event resulting in public deliberation over policy, regulatory takings are more disguised. They allow political leaders to shift the cost of burdensome programs onto isolated (and often politically unpopular) groups, rather than onto the general public. As the New York Court of Appeals characterized it, taking away the value of a person's property "under the guise of an exercise of the police power" commits the additional wrong of "forc[ing] the owner to assume the cost of providing a benefit to the public without recoupment." (12) Although society at large might benefit from the regulation, society is not required "to share the cost of the benefit.... Instead, the accident of ownership determines who shall bear the cost initially." (13) This is not only unfair to the party singled out, (14) but it also means that "the ultimate economic cost of providing the benefit is hidden from those who in a democratic society are given the power of deciding whether or not they wish to obtain the benefit despite the ultimate economic cost." (15) This allows government to conceal the true social cost of government regulations, and since the public is unaware, "it is not likely to have any objection to the 'cost-free' benefit." (16)

      This reality of regulation means that courts face a dilemma when applying regulatory takings theory. Government regulates the use of property all the time, and legitimately so. Distinguishing those regulations that are tantamount to condemnation from those that are not is the challenge of regulatory takings law. Although early courts regarded these groups of regulations as categorically distinct, the Supreme Court's decision in Pennsylvania Coal Co. v. Mahon declared that the difference between compensable and noncompensable regulation was one of degree and not of kind. (17) Regulation will always diminish the value of property in some way or other, but this alone does not require compensation, the Court opined. Only when a regulation "goes too far" is it effectively a condemnation. (18)

      Mahon is an imperfect opinion. Most importantly, the Mahon theory of regulatory takings assumes that all government coercion is of the same type, and rejects the notion that police power regulations can be qualitatively distinguished from other government actions. As Richard Epstein and others have convincingly argued, police power regulations rightly understood--that is, laws that protect individuals' rights to use their land and their faculties without interference from others--should never require compensation at all, whereas regulations that provide public goods to society in general should always require compensation. (19) Mahon, however, recognized only one type of regulation and held that at some point a regulation's burden on private property becomes so severe that compensation is required.

      Despite this considerable flaw, Mahon at least recognized that the compensation requirement cannot be evaded by simply disguising as a regulation what is in substance a condemnation. To contend, as some do, that the concept of regulatory takings is illegitimate per...