Although eminent domain has dominated state political debates since the controversial Kelo decision in 2005, a more influential movement has quietly attached itself to property rights reform fueled by the Kelo fire. The partial regulatory takings movement—requiring governments to pay landowners for the impacts of regulations—is rapidly growing. The movement attempts to address unfairness created by regulatory burdens. Yet as U.S. communities, particularly low-income communities, face increasing challenges to land use planning in their neighborhoods, partial regulatory takings legislation decreases their opportunities to influence planning processes. This legislation therefore fails to proportionately redistribute the unfairness associated with land use decisions.

I. Recent Legislative Action

In 2005, the Supreme Court in Kelo v. New London held that a local government may use eminent domain to acquire private land and transfer the land to a private developer for a public purpose. This controversial decision pushed property rights, an issue that had already been gaining force, closer to the forefront of the political arena. States were the main leaders of the reactionary movement. After Kelo, at least forty-seven states revisited their eminent domain laws, and numerous states saw initiatives and referenda for revised eminent domain legislation in both the 2005 and 2006 elections.

Also in the November 2006 election, voters approved Arizona’s proposition 207, and California’s proposition 90 nearly succeeded. Both of these initiatives, as well as the advertising for these initiatives, focused largely on eminent domain and tucked regulatory takings into the folds of the eminent domain language. According to proponents of strong private property rights, the government’s “taking” of land through regulation (by limiting an owner’s right to develop property, for example) is, in effect, identical to the government’s physical appropriation of property through eminent domain, as occurred in Kelo. Yet the effects of partial regulatory takings legislation may be much larger than those of eminent domain reform.

Current judicial Fifth Amendment doctrine generally finds a taking only when a government regulation causes physical invasion of private property, removes all economic and beneficial use of a property, or reaches the vague threshold of harm to the landowner established by the Penn Central balancing test. The legislative partial regulatory takings movement would radically change this doctrine by requiring governments to pay private landowners whenever a regulation diminished the value of their land, even partially.

The movement to strengthen private property rights has been growing for the past two decades, although Kelo has helped to expand support for the cause. Several states began implementing partial regulatory takings legislation in the 1990s, with Florida and Texas passing the most comprehensive acts. More recently, Oregon’s Measure 37 (effective in 2004), created a more radical version of partial regulatory takings by requiring compensation for decreases in land value brought about by both existing and new regulations. In 2005 and 2006, western U.S. states saw a flurry of attempts at similar regulatory takings reform. Initiatives in Missouri, Montana, Nevada, and Oklahoma entered various stages of circulation for voter approval but did not reach the final ballot, whereas initiatives appeared on ballots in Arizona, California, Idaho, and Washington in 2006. Initiative supporters promised that their campaign would not end with the 2006 election.

II. Disproportionate Effects on Community Participation

The existing and recently proposed state partial regulatory takings legislation erases or substantially lowers any numerical threshold that was once required to trigger a landowner claim for compensation. Additionally, landowners need not prove the means by which they arrived at their requested compensation value. This has the potential to create (and has created, in the case of Oregon) a staggering number of claims for large amounts of compensation–an administrative and financial burden that the government alone must address. Under this takings framework, land use regulation, as the Tahoe Sierra Court worried, could become a “luxury [that] few governments could afford.”

The most likely government reactions to these increased costs of regulation will be two-fold. First, government agencies responsible for enforcing a land-use regulation will unilaterally exempt (i.e., “waive”) individual claimants from the regulation. This will leave neighbors of the “waived” properties, where landowners are able to move forward with their proposed development projects, with little recourse if they dislike the effect of nonregulation on bordering property. In Oregon under Measure 37, the state and local governments had received more than 6700 claims requesting $19.3 billion in compensation as of May 2007; unsurprisingly, governments in Oregon have waived nearly all of these claims. A second option, which is equally tempting for governments facing billions in compensation claims, is to avoid certain types of regulation altogether. In Florida, for example, city governments decided to not enact various development restrictions, zoning revisions, and conservation measures following the passage of a partial regulatory takings act.

Governmental inaction or waiver of regulations leaves residents of neighborhoods in a difficult position. The governmental land use planning process through zoning and similar measures provides an important venue for participation in community planning. Without these laws, residents may have to develop their own alternatives to land use planning if they wish to influence the character of their community. Wealthy communities can more easily launch campaigns and sponsor private neighborhood associations, or potentially pay off the landowners proposing unwanted land uses (though they may still face collective action problems). Although some lower-income communities have recently been successful in leading grassroots campaigns to combat poorly planned placement of undesirable land uses within their community, the official opportunities for participation and enforcement offered by land use regulations are an important tool for them. And partial regulatory takings legislation threatens to take away this important tool.

Regulations do place disproportionate burdens on landowners. Farmers who lose much of their agricultural land due to a conservation regulation, or developers who lose millions of dollars due to a new height restriction, have legitimate complaints about the effects of regulation. Yet stunting the ability of governments to regulate is not the solution to this problem. What is needed is a regulatory process bolstered by better participatory venues whereby all affected residents can voice their complaints addressing the impacts of regulation as well as government’s failure to regulate. Partial regulatory takings, by making land use regulation so costly as to nearly eliminate it in some areas, do just the opposite: they stifle vital community planning processes.

Hannah Jacobs Wiseman graduated from Yale Law School in 2007 and is now clerking for Judge Patrick Higginbotham.

Preferred Citation: Hannah Jacobs Wiseman, Partial Regulatory Takings: Stifling Community Participation Under the Guise of Kelo Reform, 117 Yale L.J. Pocket Part 60 (2007), http://yalelawjournal.org/forum/partial-regulatory-takings-stifling-community-participation-under-the-guise-of-kelo-reform.