Oregon Court Declares Measure 37 Unconstitutional
Charles F. Hudson
On October 14, the Marion County Circuit Court ruled that Oregon’s Measure 37 was
unconstitutional. The ruling, by Circuit Court Judge Mary Mertens James, marks the
latest chapter in a longstanding controversy over the reform of Oregon’s land use laws.
In 2002 a prior voter initiative, Measure 7, was invalidated by the Oregon Supreme Court
as an impermissible amendment of more than one portion of the Oregon Constitution in a
single ballot measure. In November 2004, the Oregon voters passed Measure 37, which
allows property owners to make claims for compensation if the value of the claimant’s
property has been reduced by land use regulations that are enacted or first enforced after
the claimant (or certain family members) came into ownership. While Measure 7 had
presented an amendment to the Oregon Constitution, Measure 37 created a purely
statutory scheme under which the government was required to compensate the affected
property owners unless it chose to “modify, remove, or not to apply” the regulation
within 180 days of the owner’s written demand for compensation.
Since its passage, Measure 37 has been the subject of extensive discussion concerning its
interpretation and implementation. Judge James’ opinion, however, is the first significant
substantive decision addressing the measure’s validity. The decision, which is certain to
be appealed, came in a declaratory judgment suit brought by 1000 Friends of Oregon and
a collection of individuals, businesses and Oregon farm bureaus, MacPherson, et al. v.
Dept. of Administrative Services, et al., Marion County Circuit Court Case No. 00C15769. In a 23-page opinion, the court granted the plaintiffs’ motion for summary
judgment on several grounds.
First, relying on previous state and federal case law, Judge James held that Measure 37
was an impermissible impairment of the state’s police, or plenary, legislative power to
regulate for public welfare. Noting that there was “no question that the land use
regulations themselves are valid, and no claim that the regulations rise to the level of a
taking” - for which the constitution would require compensation - the court reasoned that
Measure 37 could not, by statute, require the government to pay compensation in order to
enforce valid, previously enacted land use regulations.
Second, the court held that Measure 37 violated Article I, Section 20 of the Oregon
Constitution, which provides that no law may grant to “any citizen or class of citizens
privileges, or immunities, which, upon the same terms shall not equally belong to all
citizens.” Although recognizing that legislation that does not discriminate on the basis of
a suspect classification such as race, gender, or religious affiliation is not subject to “strict
scrutiny,” the court found that Measure 37 failed to satisfy even the more lenient
“rational basis” test. In light of its exclusion of property owners who purchased after the
enactment of a challenged land use regulation, the court found that Measure 37 was not
reasonably related to its stated purpose of compensating property owners for the
reduction in property value resulting from land use regulations. Rejecting the state’s
argument that such post-regulation purchasers would have taken their property with
knowledge of the regulations and therefore paid less, the court observed that most of the
properties affected by Measure 37 were too far removed from urban areas to have
significant value for non-farm use at the time of purchase. Relying in part on its analysis
of the equal privileges and immunities clause, the court also held that Measure 37
violated Article I, Section 22 of the Oregon Constitution, providing that “the operation of
the laws shall never be suspended, except by the Authority of the Legislative Assembly.”
Finally, the court held that Measure 37 violated the Due Process Clause of the Fourteenth
Amendment to the United States Constitution. The court reasoned that Measure 37
violated procedural due process because the decision to waive enforcement of a land use
regulation as to one property may have an adverse impact upon the value of other
properties in the vicinity, and that such affected owners typically receive no hearing
before such a decision is made. Moreover, in the court’s view, even if the government
elects to enforce the regulation and pay compensation, the neighboring owner will be
required to share in the tax burden imposed by that choice. Given its conclusion that
Measure 37’s impairment of the police power could not be a legitimate governmental
purpose, the court also found a violation of substantive due process.
The court’s decision identifies one set of issues for further proceedings in the appellate
courts; in the meantime, it creates another set of questions for local governments and
property owners involved with pending or prospective Measure 37 claims, who must now
decide how best to handle claims and preserve their rights in the interim. Although a
comprehensive resolution seems desirable, the 2005 legislative assembly was not
successful in its more modest efforts to address Measure 37 prior to MacPherson, and the
early responses to calls for a special session have not been positive. Even before the
decision in MacPherson, the proponents and opponents of Measure 37 were preparing
new ballot measures for 2006. Unfortunately, it appears that significant elements of
Oregon’s land use process will remain uncertain for some time to come.
A link to the MacPherson court’s opinion appears below.
Marion County Circuit Court No. 05C10444, MacPherson et. al. v. Department of
Administrative Services et. al., October 14, 2005 (Measure 37 Opinion)
The author of this article, Charles F. Hudson, represents individual and corporate
clients in a broad range of commercial litigation and alternative dispute resolution,
including real estate and eminent domain matters. He can be reached at
hudsonc@lanepowell.com or (503) 778-2178.
For more information on these or other business issues, please contact our Business
Lawyers at:
Lane Powell PC
(503) 778-2100 Portland
(206) 223-7000 Seattle
businesslaw@lanepowell.com
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