Proposed State Law Creates a Cause of Action for Regulatory Takings

A bill identified as L.D. 1810 was introduced in the current legislative session that would provide a new cause of action for landowners who feel that a State law or regulation has diminished the value of their real estate. Under current law, landowners are entitled to receive “just compensation” from the State only when there has been a physical taking of a portion of the property or a property interest like an easement. Currently, there is no right to compensation when environmental or other regulations merely diminish the value of the property, except in extreme circumstances. L.D. 1810 would provide a cause of action whenever “the right to use, divide, sell, occupy or possess real property is reduced by the enactment or application of any regulation.” The term “regulation” includes any “law, rule, ordinance or other governmental limitation imposed by the State or a state agency on the use of real property.” Certain regulations are exempt, including those that prohibit activities for the protection of public health and safety. Municipal actions that diminish property values would also be exempt, except municipal actions taken “in conformance with a state regulation that imposes a mandate on the municipality.”The property owner would be required to submit an appraisal showing that the regulation has diminished the fair market value of the property by 50% or more. If the owner prevails, the State would have the option to choose the form of relief: 1) take the property and pay just compensation; 2) pay damages; or 3) grant a variance providing relief from the regulation. A claim under the new law would have to be filed within three years of the date when the regulation first limited the use of the property.A public hearing is scheduled on L.D. 1810 on February 21, 2012 at 1:00 pm. in Senate Hearing room 438.