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Oregon Attorney General Opinion OP-8277

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Oregon Attorney General Opinion OP-8277 February 13, 2001 No. 8277 This opinion is issued in response to questions from Governor Kitzhaber concerning Ballot Measure 7, which was proposed through an initiative petition and approved by the people at the general election held on November 7, 2000.i/ Measure 7 amended Article I, section 18, of the Oregon Constitution to require state and local governments to pay compensation to property owners if a government regulation restricts the use of their property in a manner that reduces its value.ii/ FIRST QUESTION PRESENTED Do any state agencies have authority to adopt rules governing the procedures for claims against the state under Measure 7, or is legislation required? Specifically, may agencies adopt rules addressing: (1) the proper form and content of a claim, (2) the time limitations within which a claim must be filed, (3) where a claim must be submitted, (4) the adjudication of claims, and (5) the substantive interpretation of Measure 7? ANSWER GIVEN The Department of Administrative Services (DAS) has authority to prescribe forms and procedures for claims for payment from moneys in the State Treasury. ORS 293.306. DAS’s authority encompasses claims for compensation under Measure 7, but it is limited to establishing procedural requirements that do not require substantive interpretation of Measure 7. Within this restriction, DAS may adopt rules specifying the proper form and content of a claim against the state, including a requirement that the claimant provide evidence sufficient to support the elements of the claim. DAS may specify the agency with which a claim must be filed, although under current law, this agency must either be DAS or the agency responsible for adopting or enforcing the regulation at issue in the claim. The time limitation for filing a claim against the state is established by ORS 293.321; DAS may not adopt an inconsistent rule. DAS has the authority to adopt rules that establish an adjudicatory process for Measure 7 claims. If DAS exercises its authority under ORS 293.306 to prescribe forms and procedures for Measure 7 claims, the use of such forms and compliance with those procedures will be mandatory. ORS chapter 293 does not cover all of the issues that will be relevant to Measure 7 claims. SECOND QUESTION PRESENTED Under Measure 7, compensation is due to a property owner only if there is a government “regulation” that “restricts the use of private real property.” The Measure does not require compensation due to a government regulation “prohibiting the use of a property for the purpose of selling pornography, performing nude dancing, selling alcoholic beverages or other controlled substances, or operating a casino or gaming parlor.” (a) What is a “regulation”? (b) When does a regulation “restrict[ ] the use of private real property”? (c) Does the exception for regulations that prohibit the use of property for “selling pornography, performing nude dancing, selling alcoholic beverages or other controlled substances, or operating a casino or gaming parlor” mean that regulations that merely restrict those same activities require compensation? ANSWER GIVEN (a) For purposes of Measure 7, a “regulation” is any law, rule, ordinance or other enforceable legislative or quasi-legislative action of government. A “goal” or “resolution” is a regulation only if it is enforceable. (b) A regulation “restricts the use of private real property” under subsection (a) of Measure 7 if it permanently or temporarily: (1) limits or bars the exclusive right of the owner to possess or dispose of the property, (2) limits or bars the purposes for which property may be employed or occupied, including prohibitions of particular uses as well as limitations on the circumstances in which a particular use may be established or expanded, (3) limits or governs the physical extent to which or the conditions under which property may be employed (whether generally or for a particular purpose), or (4) limits or bars the benefit or profit arising from the employment or occupation of the property. Regulations that burden the use of property but that do not directly limit or prescribe what uses are allowed or how allowed uses are carried out, such as ad valorem taxes, general laws governing occupations without regard to how private real property is used, and other civil and criminal laws that generally prohibit or restrict a person’s conduct not involving the use of property, do not come within subsection (a) of Measure 7 even if they may affect or place a burden on private property owners. 2 (c) The exception from compensation for a regulation that prohibits the use of property for “selling pornography, performing nude dancing, selling alcoholic beverages or other controlled substances, or operating a casino or gaming parlor” covers only those regulations that expressly prohibit the use of property for those activities. Regulations that merely restrict those same activities are not within the exception. THIRD QUESTION PRESENTED Subsection (a) of Measure 7 creates a right to compensation when state or local “government passes or enforces a regulation” that restricts the use of private real property in a manner that reduces its value. Subsection (d) of Measure 7 states that compensation is due if the regulation “was adopted, first enforced or applied” after the current property owner became the owner and if the regulation “continues to apply to the property” 90 days after the owner applies for compensation. (a) Does Measure 7 create a right to compensation for government actions taken before the effective date of Measure 7? (b) What types of government action come within the phrase “government passes or enforces a regulation” in subsection (a) of the Measure? (c) Does Measure 7 create a right to compensation if, after the effective date of Measure 7, the government “enforces” a regulation that “was adopted” before the effective date of Measure 7? (d) Under what circumstances will the requirement in subsection (d) of Measure 7 that the regulation “was adopted, first enforced or applied after the current owner of the property became the owner” be met? (e) What is the meaning of the phrase “continues to apply to the property” in subsection (d) of Measure 7? (f) If a regulation requires an owner to apply to the government for authorization for the desired use of the property, must the owner complete the government’s application process before the owner has a claim for compensation? ANSWER GIVEN The text of subsections (a) and (d) of Measure 7 must be read together so as to give effect to both provisions. Subsection (a) establishes which government actions create a potential right to compensation, and subsection (d) establishes the conditions necessary for that potential right to be exercised by a particular current owner of private real property. 3 (a) Measure 7 does not create a right to compensation for government actions taken before the effective date of the Measure. Government must either pass or enforce a regulation after the Measure’s effective date. (b) Two types of government action come within the phrase “government passes or enforces” in subsection (a) of Measure 7. Government “passes” a regulation when it enacts or approves the regulation. Government “enforces” a regulation when it acts in any way to give force or effect to the regulation in question by any means other than adopting or passing the regulation. The government may give effect to a law in a wide variety of ways, not all of which necessarily involve direct compulsion. For purposes of subsection (a), once government “enforces” the regulation as to any property, the owners of all properties subject to the regulation have a right to compensation if they satisfy the conditions of subsection (d) of Measure 7. (c) Measure 7 creates a right to compensation for the enforcement of regulations adopted before the effective date of Measure 7 if the act of enforcing those regulations occurs after the Measure’s effective date. (d) If the current owner of a property became the owner before the regulation was adopted, the owner will qualify for compensation under the first part of subsection (d) of Measure 7. While the answer is not free from doubt, we believe that if the current owner of a property became the owner after the regulation was adopted, the owner will qualify for compensation only if the owner became the owner before the regulation was “first enforced or applied” as to any property subject to the regulation. (e) The phrase “continues to apply to the property” means that the regulation is still in general legal effect and is capable of being enforced as to the property either by the government or, where the law includes a means for a third party to require compliance with the regulation, by a third party. (f ) Measure 7 requires compensation only to the extent a regulation actually restricts the use of private real property and that restriction reduces the value of that property. If a regulation requires a property owner to apply to the government for authorization for the desired use of the property, the owner may seek compensation under Measure 7 at any time, but the decision when to file a claim may affect the extent of actual restrictions and thus the amount of compensation that would be due. For example, if a regulation, on its face, definitively prohibits particular uses, limits uses or imposes conditions on uses, an owner need not complete an application process in order to establish that these restrictions exist. And an owner does not need to complete the government’s application process in order to seek compensation based solely on the restriction of having to apply for authorization. If government may restrict the use depending on the outcome of an application process involving governmental discretion, however, the owner must complete that process in order to establish that there is a restriction on use beyond the mere requirement to apply for authorization.
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