Colorado voters this fall will consider Colorado constitutional Amendment 74 , which suggests that property owners will receive just compensation when government reduces the fair market value of their property. Government checks any time regulation reduces the value of my property… who wouldn’t want that? Yet, like Pandora’s box, this seems like a gift at first, but comes with terrible consequences.
Amendment 74 would dramatically change the law. Although the impacts are uncertain, they would likely be disastrous for Colorado. This amendment would either bankrupt state and local governments or cause them to abandon all regulation of private property.
In no scenario would the promised benefits of the amendment come to pass, because taxpayers simply do not have the money to pay for every conceivable takings claim. So much for those checks from the government!
More likely, the amendment would cause chaos and confusion as long-standing regulatory schemes vanish virtually overnight. Nobody would benefit — not property owners, not developers, and not the public. The sole possible exception would be lawyers, who would have a field day litigating over the new law.
What regulations might be at risk under Amendment 74? Pretty much any regulation that balances competing or neighboring uses of property. Because taxpayers cannot afford to pay one side, or the other, or likely both, it will have to stop regulating. Restrictions on marijuana dispensaries or strip clubs near schools – gone. Noise ordinances that keep bars from disturbing their neighbors at all hours of the night – gone. Restrictions on the height or density of development – gone. Laws that ensure you can find parking when new retail businesses are built – gone. Zoning laws that keep factories out of neighborhoods – gone.
Although nominally supported by the Colorado Farm Bureau, Amendment 74 is largely funded by the oil and gas industry. Industry has pushed this measure in response to Proposition 112, which would create a buffer between oil and gas development and schools, homes, and sensitive areas. Ironically, however, even the oil and gas industry could lose out from this radical change in the law. Oil and gas is currently a highly regulated industry. The industry causes harm to surface property and to neighbors under a complex regulatory system. But Amendment 74 would make government pay any time it approves an oil and gas permit. Neighboring property owners could sue for reduction in the fair market value. Thus, taxpayers would not be able to afford approving new permits for oil and gas, unless government requires industry to indemnify it for any takings claims under Amendment 74.
Amendment 74 would also threaten another regulatory scheme that oil and gas relies heavily upon: forced pooling. Forced pooling allows the oil and gas industry to take minerals from private owners, even against their will. Amendment 74 could end this practice, increasing costs on the industry and allowing property owners to actually say “no” to development. Be careful what you wish for.
The only people who would benefit from Amendment 74 would be lawyers. Initially there would be a wave of litigation claiming takings by all sorts of government regulations. This happened when Oregon passed a similar measure. The experience in Oregon was so bad that their law was overturned a few years later. Amendment 74 will create a wildfire of litigation between neighbors in Colorado, who would sue each other under nuisance or other legal claims for all sorts of harms that are now balanced by government through regulation of land use. Courts would be bogged down with lawsuits, and property owners would be forced to pay all these lawyers.
The realization that Amendment 74 would wreak havoc upon the state prompted the extraordinary reversal of the Colorado Gazette’s editorial board, which had earlier endorsed the measure as a victory for property right. However, and fortunately, the board recently walked that back, arguing “We Were Wrong on Amendment 74.”
Resist the temptation. Do not open this Pandora’s box of property rights. Courts crafted a well-developed and carefully balanced system for compensation when regulation goes too far. The political process can scale back regulations that don’t work in practice. Simply put, this measure is a disaster waiting to happen. Vote no on Amendment 74.
Kevin J. Lynch is an Associate Professor at the University of Denver Sturm College of Law whose scholarship focuses on whether regulation of fracking is a taking and the problems of valuing takings claims for oil and gas.
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