Out of Control Policy Blog

House Passes Bill to Protect Regulatory Takings Victims

In case you missed it, a few weeks ago, the U.S. House passed a bill -- The Private Property Rights Implementation Act of 2006 -- that, if ultimately approved, would give private property owners increased protection from regulatory takings. Here's an excerpt from yesterday's Cincinnati Enquirer article on the bill:

A property-rights bill written by U.S. Rep. Steve Chabot - and recently passed by the U.S. House - would allow developers and other property owners to sue in federal court if local zoning regulations restrict the use of their property.

The bill expands the national debate over eminent domain - the principle that allows government to take private property for public use - into a related but more obscure area of the law known as "regulatory takings," in which the government doesn't take the property but decreases its value by restricting what the owner can do with it.

. . .

Chabot said citizens should be allowed to go to federal court when their rights guaranteed by the U.S. Constitution are violated. And the Fifth Amendment says "no person shall ... be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

"People deserve the same protections as they would any other constitutional protection, like freedom of speech, freedom of religion - and freedom from having your property taken from you," he said.

. . .

The decision to sue in state or federal court would be a case-by-case decision made by property owners and their lawyers, and there are many practical and legal reasons why zoning disputes would continue to stay in state courts. And Ohio tends to give more weight to property rights, as evidenced by the July decision that found Norwood had violated the constitutional rights of three owners by taking their properties by eminent domain for a shopping and office complex.

. . .

But Chabot said the legislation is less a reaction to Kelo and more in response to a 2004 case, San Remo Hotel v. City and County of San Francisco. The city had told the hotel it couldn't convert a residential hotel for use by tourists, and the ordinance was upheld in the California courts. The hotel took the case to federal court - but both the district court and an appeals court ruled that the federal courts couldn't even take up the issue because it had already been decided by the state courts.

This bill would address a serious issue related to regulatory takings, but not the one you might expect. Chabot's bill does not deal with the issue of just compensation for regulatory takings, a la Oregon's Measure 37 and the four measures on the ballot in Arizona, California, Idaho, and Washington this November.

Instead, it would address a serious procedural hurdle that regulatory takings victims face -- the denial of federal court review of their takings claims. In the SCOTUS decision in Williamson County Regional Planning Cammission v. Hamilton Bank, the Court ruled that federal takings claimants had to raise and lose their just compensation claims in state courts before their claims could be reviewed (i.e. were "ripe") in federal court. But this leads to several problems. First, state courts rarely rule in favor of regulatory takings victims. But even worse is that the Williamson County ruling conflicts with the provisions of the Full Faith and Credit Act that require federal courts to follow the decisions of state courts; this involves the legal concept of preclusion, which basically says that a court's final decision on an issue is final and will not be revisited.

So this conflict has trapped regulatory takings victims seeking just compensation through the courts. They can't go to federal court without exhausting the remedies through the state courts, but if the state courts ultimately rule against them, then the federal courts won't hear them, making the victim's only hope that SCOTUS will hear the case, which is unlikely given the limited number of cases they agree to hear in any given year.

Of course, this situation places victims of property rights infringement in a terrible spot. In fact, it singles them out -- others bringing suits based on the infringement of other Constitutional rights (speech, religion, etc.) have the option of pursuing remedies in state or federal courts.

This just provides another illustration of how far the erosion of property rights has gone. We'll defend vigourously our rights to free speech, religion, press, etc., but when it comes to defending THE foundational right underlying our constitutional republic and free market system, we as a society have sat back, turned a blind eye, and let the courts and elected officials run roughshod over them.

Kudos to Rep. Chabot for taking a step to push back against the erosion of property rights protections.

Leonard Gilroy is Director of Government Reform


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