4.13 Land Use Regulation versus Property Rights: What Oregon's Recent Battles Could Mean for Sustainable Governance

Melissa Powers583


Abstract

Governance for sustainability requires a monumental shift in the way societies currently operate and structure themselves. If implemented as currently envisioned, governance for sustainability would no longer place localized economic interests above the needs of other communities, other life forms, and the world at large. Thus it would be perceived by many as a direct threat to private property rights and personal economic interests. If governance for sustainability is to succeed, citizens must have assurances that sustainable governance and economic prosperity go hand-in-hand. The State of Oregon's recent experiences with its comprehensive land use laws could serve as a cautionary tale for advocates of governance for sustainability.

4.13.1 Introduction

In 1973, the State of Oregon, located in the Pacific Northwest region of the United States, adopted a comprehensive land-use planning law that placed strict restrictions on development outside designated urban growth areas.584 Oregon adopted the law to abate concerns that unchecked urban sprawl would degrade both agricultural production and pristine natural areas.585 Oregon's land use regulations quickly earned the praise of many for their success in preventing suburban sprawl and preserving prime agricultural land and open spaces.

Others, however, regarded Oregon's laws as heavy-handed, inflexible, and possibly unconstitutional controls that impeded economic development and unduly restricted landowners' rights.586 The opponents' claims initially appeared to fall on deaf ears, as voters repeatedly rejected ballot initiatives to overturn Oregon's land-use laws.587 However, in 2004, voters passed Measure 37, a ballot initiative that required local governments to either compensate landowners for economic losses caused by land use regulations or else waive the offending land use laws.588 Within three years of the passage of Measure 37, property owners had filed more than 7,000 claims seeking compensation for or waivers from land-use laws on more than 750,000 acres of land.589 Oregon governments waived regulations for all but a few of the claims.590 Oregon's land-use planning system appeared to be on the brink of collapse.

In 2007, as the ramifications of Measure 37 became clear, Oregon voters passed Measure 49,591 which promised to clarify and correct some of the most problematic provisions of Measure 37. Many land-use planning advocates have hailed Measure 49 as restoring Oregon's land-use regulations.592 The voters' support for the measure, moreover, suggests that Oregonians continue to value the role governments play in directing and controlling development.593

However, some commentators believe Measure 49 maintains a flawed compensation scheme based on incorrect assumptions. Measure 49 is premised on the unfounded belief that government must compensate landowners for any losses they incur as a result of prospective government regulation.594 Measure 49 will thus unreasonably restrict governments from enacting future regulations designed to preserve biodiversity, protect agricultural and forest lands, prevent urban sprawl, or respond to climate change.595

Any conflict between land-use planning and private property interests could significantly undermine any initiative to govern for sustainability. At its heart, the concept of sustainable governance assumes private property owners will recognize the benefits they enjoy as a result of comprehensive and far-sighted government planning. However, the Oregon experience suggests that private property owners often focus only on the direct economic costs they may incur if a given development project cannot proceed as planned. For sustainable governance to succeed, governments must dispel the myth that property ownership rights necessarily clash with or are undermined by comprehensive governmental efforts to promote sustainability.

4.13.2 Description: The battle over Oregon's land-use laws

Oregon's land-use planning laws emerged in the 1960s and 1970s in response to local concerns regarding unchecked growth and as part of an ‘emerging national interest in land-use planning’.596 Senate Bill 100, passed in 1973, established the system by which Oregon's land-use decision- making process would proceed.597 Of foremost importance are a series of ‘goals’ that limit urban growth and mandate protection of agricultural and forest lands.598 Adherence to these goals has prevented widespread suburban sprawl and maintained a robust agricultural economy in the state.599 However, these goals also spurred opposition from property rights advocates who oppose development restrictions.600 These opponents never succeeded in their efforts to directly overturn Oregon's land-use laws.601 They did, however, convince Oregon voters to adopt Measure 37, which affords private property owners extraordinary rights to compensation for any economic losses resulting from a land-use regulation. While Oregon voters later withdrew support for many of its aspects, Measure 37 will have lasting effects on Oregon's land-use laws.

The land-use goals

Oregon's land-use laws require adherence to 19 land-use goals, which are divided into four broad categories related to the planning process, conservation, development, and coastal resources.602 The most restrictive, and thus contentious, goals are Goals 3, 4, and 14, which collectively limit most growth within urban areas and substantially restrict development of agricultural and forest lands.603

Goal 14 directs each local government to establish urban growth boundaries ‘to provide for an orderly and efficient transition from rural to urban land use’.604 The urban growth boundary establishes the allowable extent of urban development.605 Land within the urban growth boundary may be developed for urban uses, while lands beyond the urban growth boundary generally cannot.606 Local governments must establish and, where necessary, revise their urban growth boundaries to accommodate the anticipated residential, industrial, commercial, and recreational needs of their communities, consistent with a ‘20-year population forecast’.607 Thus, where urban populations are expected to increase, local governments may expand their urban growth boundaries.

Lands outside of the urban growth boundary are considered rural. Local governments have classified at least 95 percent of these rural lands as either agricultural or forest lands under Goals 3 and 4,608 which establish restrictions on development of such lands.

Goal 3, for agricultural lands, includes land outside urban-growth boundaries that exhibits certain soil characteristics appropriate for farming, ‘other land’ suitable for farming, and adjacent or nearby lands necessary to permit farm practices.609 In its current incarnation, Goal 3 establishes stringent development standards for agricultural lands designated as ‘high-value farmland’.610 Among other limitations, Goal 3 restricts the construction of dwellings on high-value farmlands unless the land generates at least $80,000 in annual farm income from the parcel over a limited time period.611 The purpose of this restriction is to prevent speculators from purchasing productive agricultural properties and converting them into residential estates or subdivisions. Goal 3 also restricts development on other types of farmland that do not qualify as ‘high value’, but the restrictions are far less onerous. In addition, Goal 3 allows at least 48 types of non-farm uses, including schools, parks, churches, and wineries, on certain agricultural lands.612 Thus, while Goal 3 imposes stringent restrictions on certain ‘high-value’ farmlands, it nonetheless allows limited development of other agricultural lands.

Goal 4, for forest lands, includes lands suitable for commercial forest uses, ‘other forested land that maintains soil, air, water and fish and wildlife resources’, and adjacent or nearby lands necessary to permit forest practices.613 Goal 4 allows limited residential and commercial development on designated forest lands, but it restricts property owners from subdividing or building multi-family housing developments on forest lands.614

The Oregon Legislature and the agencies charged with administering Oregon's land use laws have amended these goals many times since 1973.615 By and large, these amendments sought to lessen the restrictions on development while preserving, to the extent possible, Oregon's agricultural and forested lands.616 These amendments did little, however, to stifle the growing opposition to Oregon's land use system.

The property rights initiatives

Land-use planning opponents initially launched direct challenges to Oregon's land-use laws through citizen initiatives seeking to rescind the laws. Three separate measures brought between 1976 and 1982 all failed,617 and Oregon's land-use system appeared safe from direct challenge. In the late 1990s, however, land-use planning opponents launched a new strategy of using indirect means to restrict land use planning.618 When one moderate initiative met with success,619 the land use opponents turned to ‘takings’ laws to launch a broadside attack on Oregon's land use system.

The first citizen initiative proposed to amend the Oregon Constitution by requiring local governments to compensate private property owners whenever a land-use decision would reduce the economic value of the property.620 The ballot measure passed by a margin of 54 percent to 46 percent;621 however, the Oregon Supreme Court invalidated the measure in 2002, after finding that the text of the ballot initiative did not satisfy state constitutional requirements.622

Undeterred, property rights advocates advanced another ballot initiative, Measure 37, that required local governments to either compensate property owners whenever land-use regulations diminished the economic value of private property or else waive the offending land use regulation.623 This more sweeping initiative passed with approximately 60 percent of the vote624 and it ultimately survived court challenges.625

Measure 37 directed local governments to either pay compensation for or waive any land use regulation that ‘restricts the use of private real property .... and has the effect of reducing the fair market value of the property’.626 It applied to any resolution enacted or enforced against a property owner after the property owner – or his or her ancestors – acquired the property.627 Measure 37 thus operated retroactively. Measure 37 also applied to any prospective land-use regulations;628 landowners could receive compensation under Measure 37 even if they had no previous intention of using the property in a way prohibited by newly enacted or applied land-use regulations.629

Measure 37 exempted certain regulations from the compensation or waiver requirement. These exemptions applied to regulations 1) restricting ‘activities commonly and historically recognized as public nuisances under common law’; 2) enacted to protect public health and safety; 3) required to comply with federal law; 4) related to bans or restrictions on pornography and nude dancing; and 5) enacted before the current landowner or her ancestor acquired the land.630 While some commentators believed the exemptions would severely restrict the number of successful Measure 37 claims,631 they did not seem to have such an effect.

Measure 37 sent Oregon's land-use regulations into a tailspin. Between the initiative's passage in November 2004 and December 2007, property owners had filed more than 7,000 claims with the state, seeking nearly $20 billion in compensation for alleged economic losses resulting from application of Oregon's land-use laws.632 Time and again, local governments faced the ‘choice’ of either retaining their land use goals, but paying heavily for the decision, or waiving the laws designed to protect the nature of their communities and the landscape. In reality, though, the governments had no choice, as their budgets did not include sufficient funds to compensate landowners for the claims.633 In all but a few circumstances, governments agreed to waive the applicable regulations.634

Citizens who may not have understood the expansive scope of the waiver provisions suddenly found their neighbours proposing large-scale subdivisions or commercial developments in place of their agricultural fields or forests.635 As large timber companies filed claims seeking to subdivide their property,636 citizens learned that Measure 37 would undermine Oregon's land- use system. By 2007, many voters expressed an interest in overturning or modifying Measure 37.637

The legislature's response: Measure 49

Many observers had hoped the Oregon legislature would use the 2007 legislative session to repeal or limit Measure 37.638 In the end, though, Oregon's legislators made only moderate alterations to Measure 37.639 They referred the larger amendments to the voters by placing on the Oregon ballot yet another measure – Measure 49 – which promised to reform many troubling aspects of Measure 37.640 Specifically, among other reforms, Measure 49 limited compensation rights to regulations enacted after the date of acquisition by the current owners and not the ancestors.641 In addition, Measure 49 allowed claims only for laws ‘restrict[ing] the residential uses’ of property owners, and thus prohibited claims for laws restricting commercial or industrial uses.642 Finally, to thwart construction of subdivisions, Measure 49 limited the number of dwellings a claimant may build.643

At the same time, Measure 49 retained Measure 37's broad compensation and waiver provisions for any new regulation that would result in lost property values.644 Measure 49 thus requires local governments to compensate landowners for any reduction in fair market value of the property or to waive any new regulation ‘to the extent necessary to offset’ the reduction.645 Measure 49 further limits the ability of governments to adopt new regulations by narrowing the exemptions for health and safety and compliance with federal law – which would otherwise exempt a government from compensating a landowner for lost property values – on agricultural and forest lands.646 Thus, while Measure 49 likely restored a significant portion of the land use regulatory system that has existed in Oregon since 1973, it also constrained the ability of governments to adopt future land use controls and regulations.

4.13.3 Evaluation: Oregon's land-use experience and its implications for governance for sustainability

Oregon's recent experiences with Measures 37 and 49 provide hints of the hurdles proponents of governance for sustainability must surmount as they try to turn the concept into reality. Although Oregon's land-use laws are by no means as expansive or innovative as governance for sustainability proposes to be, they nonetheless could serve as a useful starting point for anticipating how the public might react to governmental planning aimed at achieving long-term sustainability. The majority of Oregonians had expressed continued support for Oregon's land-use system, even while supporting Measure 37. It may be that voters did not understand the impacts of Measure 37. It may also be that voters believed the claims that Oregon's land-use laws had decimated property values. Or perhaps some voters anticipated that they would personally benefit from filing their own Measure 37 claims. Whatever the reasons underlying the passage of Measure 37, it seems clear that Oregon's land-use proponents failed to make an economic case against Measure 37. It was only after Oregon voters experienced the impacts of Measure 37 that they seemed ready to limit property rights in favour of the common good.

By the time Oregonians had the chance to vote on Measure 49, they had three years' experience with Measure 37, during which time local governments waived land-use regulations in all but a few cases.647 Once voters understood the overall impacts of Measure 37's broad waiver provisions, they appeared to better appreciate the benefits that Oregon's longstanding land use laws.648 Oregonians' continued support of Oregon's land-use laws suggests that, even in jurisdictions where citizens highly value private property rights, citizens may also support innovative governmental measures that achieve broader goals.

However, Measure 49 perpetuates a distorted balance between governmental regulation and private property interests. It allows private landowners to seek compensation when new regulations reduce farm and forest land values. It will therefore likely impede local governments and the state from enacting new laws, even though future environmental conditions – including the likely impacts from climate change – may mandate wholesale revisions to governmental planning strategies.649 Perhaps worse, Measure 49 codifies a harmful assumption that private property owners should be entitled to compensation anytime the government's actions affect an individual's property values.650 Until this underlying assumption is overcome, innovative governmental initiatives will face significant hurdles.

Governance for sustainability would require a monumental shift in the way societies currently operate and structure themselves. If implemented as currently envisioned, governance for sustainability would not necessarily allow short-term economic interests of property owners to trump the broader needs of communities, other life forms, and the world at large. It would also be perceived by many as a direct threat to private-property rights and personal economic interests. If governance for sustainability is to succeed, governments and citizens must have assurances that sustainable governance and economic prosperity go hand-in-hand.

4.13.4 Conclusion: The implications for governance for sustainability

Oregon's experiences with Measures 37 and 49 raise questions about whether governance for sustainability could succeed within a system that so values private property rights. The initial passage of Measure 37 would have suggested that governance for sustainability simply could not succeed in a place such as Oregon. However, Measure 49 leaves open the possibility that, as citizens are educated about the benefits they receive through far-sighted environmental planning, they will embrace broader initiatives that benefit far more than any single parcel of property. For this possibility to become a reality, however, any advocate of governance for sustainability will need to convince private property owners of not just the moral, but also the economic, benefits they will derive from sustainable governance.


583 Melissa Powers is Assistant Professor of Law at Lewis & Clark Law School in Portland, Oregon, U.S.A.

584 1973 Or. Laws 80 (codified as OR. REV. STAT. § 197 (2005)).

585 See Blumm, M. C. and Grafe E. ‘Enacting Libertarian Property: Oregon's Measure 37 and Its Implications’ 2007 Denv. U. L. Rev. Vol. 85, No. 2, pp. 279, 286.

586 Hunnicutt, D. J. ‘Oregon Land-Use Regulation and Ballot Measure 37: Newton's Third Law at Work’ 2006, Envtl. L. Vol. 36, No. 1, pp. 33–34.

587 See Blumm and Grafe (supra note 585) pp. 296–97; see also ‘Oregon Repeals Land Use Planning Coordination Statutes’ Ballot Measure 10 (1976), availabale at www.bluebook.state.or.us/state/elections/elections19.htm (accessed 23 April 2008); ‘Ends State's Land Use Planning Powers in Oregon, Retains Local Planning’ Ballot Measure 6 (1982) available at bluebook.state.or.us/state/elections/elections20.htm (accessed 23 April 2008).

588 ‘Oregon Governments Must Pay Owners or Forego Enforcement When Certain Land Use Restrictions Reduce Property Value’ Ch. 197 Ballot Measure 37 (2007) (codified at OR. REV. STAT. § 197.352 (2005)) (hereinafter Measure 37).

589 Blumm and Grafe (supra note 585) 358; Sheila A. Martin et al., ‘What is Driving Measure 37 Claims in Oregon?’ (Institute of Portland Metropolitan Studies: Portland State University, 2007) available at www.pdx.edu/media/i/m/ims_M37/April07UAAppt.pdf (accessed 23 April 2008).

590 Blumm and Grafe (supra note 585) 359; Preusch, M., ‘Prineville Offers Measure 37 Pay’ Oregonian (Portland, OR, 26 October 2006) p. A1 (reporting that governments had waived land-use regulations in all cases except one, where the government offered the land owner compensation).

591 H.B. 3540, 74th Leg., Reg. Sess. (Or. 2007), available at www.leg.state.or.us/07reg/measpdf/hb3500.dir.pdf accessed 23 April 2008 (hereinafter Measure 49).

592 Yes on 49, ‘Oregonians Support Measure 49, Maintain Protections on Forests and Farmland’ (7 November 2007) available at www.yeson49.com (accessed 23 April 2008).

593 Sightline Institute, 2007, ‘Two Years of Measure 37: Oregon's Property Wrongs’ available at www.sightline.org/research/sprawl/res_pubs/property-fairness/measure-37-report/two-years-m37-report (accessed 23 April 2008).

594 Echeverria, J. D. ‘Analysis of Oregon House Bill Measure 3540/Measure 49’ (Georgetown Envtl. L. & Pol'y Institute: Washington D.C., 17 July 2007), p. 7.

595 Sullivan, E. J., ‘Year Zero: The Aftermath of Measure 37’ Urb. Law Vol. 38, 2006, pp. 266–267 (explaining that Measure 37 will result in ‘legislative sclerosis’ because governments will be unwilling to enact regulations that could expose the governments to compensation claims); Echeverria (supra note 594) p. 2 (predicting that Measure 49 will continue to ‘discourage adoption of new regulations needed to protect the public welfare’).

596 Blumm and Grafe (supra note 585) p. 286.

597 1973 Or. Laws 80 (codified as amended at OR. REV. STAT. s 197 (2005)).

598 1973 Or. Laws 80, s 11 (codified as amended at OR. REV. STAT. § 197.250 (2005)); see also Or. Admin. R. 660-015-000 (2006).)

599 See Brook, D., ‘How the West Was Lost’ Legal Affairs March/April 2005, pp. 44–48.

600 See Hunnicutt (supra note 586).

601 Blumm and Grafe (supra note 585) pp. 296–299.

602 See Or. Admin. R. 660-015-000 (2006); see also Blumm and Grafe (supra note 585) p. 290.

603 See Blumm and Grafe (supra note 585) p.291; Hunnicutt (supra note 586) p. 28.

604 Goal 14, Statewide Planning Goals, Oregon Department of Land Conservation & Development available at www.oregon.gov/LCD/goals.html (accessed 23 April 2008).

605 Blumm and Grafe (supra note 585) p. 291.

606 Ibid.

607 Goal 14 (supra note 604).

608 Hunnicutt (supra note 586) p. 3.

609 Goal 3, Statewide Planning Goals, Oregon Dep't of Land Conservation & Dev., available at www.oregon.gov/LCD/goals.html (accessed 23 April 2008).

610 Ibid. Goal 3 has undergone several revisions since 1983. Blumm and Grafe (supra note 585) p. 294, n.77. Oregon's land use regulatory agency added the ‘high-value farmland’ provisions in 1992 to increase conservation of prime commercial farmland. Department of Land Conservation and Development, Analysis and Recommendations of the Results and Conclusions of the Farm and Forest Research Project (1991) 1.

611 Goal 3 (supra note 609).

612 Ibid.; see also Blumm and Grafe (supra note 585) pp. 293–294.

613 Goal 4, Statewide Planning Goals, Oregon Dep't of Land Conservation & Dev., available at www.oregon.gov/LCD/goals.html (accessed 23 April 2008).

614 Ibid.

615 See generally Blumm and Grafe (supra note 585) pp. 285–296 and accompanying notes.

616 Ibid.

617 See (supra note 587).

618 Blumm and Grafe (supra note 585) p. 298 and accompanying notes.

619 This law required the state to notify by mail landowners of all proposed changes to land-use laws or regulations. ‘Expands Notice to Landowners Regarding Changes to Oregon Land Use Laws’ Ballot Measure 56 (1998) (codified as OR. REV. STAT. s 215.503 (1999)).

620 ‘Amends Oregon Constitution: Requires Payment to Landowner if Government Regulation Reduces Property Value’ Ballot Measure 7 (2000) available at www.sos.state.or.us/elections/nov72000/nov72000.htm (accessed 23 April 2008).

621 ‘Unofficial County Results on Measure 7 as of November 14, 2000’ (2000) available at www.orcities.org/Portals/17/A-Z/m7ns022.pdf (accessed 23 April 2008).

622 League of Or. Cities v. State, 56 P.3d 892, 896 (Or. 2002) (Oregon Supreme Court).

623 Measure 37 (supra note 588) s 1.

624 Hunnicutt (supra note 586) p. 41.

625 MacPherson v. Dep't of Admin. Serv., 130 P.3d 308 (Or. 2006) (Oregon Supreme Court).

626 Measure 37 (supra note 588) s 1.

627 Ibid; see also Blumm and Grafe (supra note 585) pp. 308–310.

628 Measure 37 (supra note 588) s 1.

629 Ibid.

630 Ibid s (3).

631 See Jeannie Lee, ‘Tying Up Loose Ends: Resolving Ambiguity in Ballot Measure 37's Public Health and Safety Exemption’ 2008 Envtl. L., Vol. 38, No. 1, p. 209.

632 Dep't of Land Conservation and Dev., ‘Measure 37, Summaries of Claims’ www.oregon.gov/LCD/MEASURE37/summaries_of_claims.shtml#Summaries_of_Claims_Filed_in_the_State (accessed 23 April 2008).

633 Blumm and Grafe (supra note 585) p.323.

634 See (supra note 590).

635 See Blumm and Grafe (supra note 585) pp. 358–359 and accompanying notes (noting that more than 60 percent of the Measure 37 claims filed as of April 2007 came from owners of forest and farm lands and 33 percent of those claims sought subdivision of lands into four or more home sites).

636 Ibid. 359 n. 455 (citing reports of timber companies filing Measure 37 claims covering thousands of acres and seeking millions of dollars in compensation).

637 Ibid. 359 n. 458.

638 Ibid. 360 n. 459; see also Oppenheimer, L., ‘Public Demands Land-Use Clarity’ Oregonian Portland, OR, 23 February 2007, p. A1.

639 H.B. 3546, 74th Leg., Reg. Sess. s 2(2)(a) (Or. 2007) www.leg.state.or.us/07reg/measpdf/hb3500.dir/hb3546.b.pdf (accessed 23 April, 2008).

640 Measure 49 (n 9).

641 Ibid. s 4(3).

642 Ibid. ss 4(1), 12(1)(b).

643 Ibid. ss 6, 7, 9(1) – (2).

644 Ibid. ss 12(1)(b), (4).

645 Ibid. ss 12(4)(b), (5)(b).

646 Ibid. ss 4(4)(b) – (c).

647 (supra note 590).

648 Edward J. Sullivan, ‘Through a Glass Darkly: Measuring Loss Under Oregon's Measure 37’ Urb. Law, Vol. 39, 2007, p. 563.

649 Blumm and Grafe (supra note 585) p. 365; Echeverria (supra note 594) p. 2.

650 Ibid.

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