Legislature is devaluing private forestland

By Dave Hunnicutt
Oregon Property Owners Association

On January 1, 2024, the Oregon Department of Forestry (ODF) implemented a series of new regulations that significantly limit the ability of forestland owners to harvest timber on their land.  We’ve been getting quite a few calls on these changes, and if there are steps that property owners can take to reduce the impact of the new rules.

Oregon’s Private Forest Accord.

If you’re not familiar with the new ODF rules, they are a direct result of the Private Forest Accord (PFA), an agreement reached between environmental groups, the timber industry, the Oregon legislature, and former Governor Kate Brown.  There are many provisions in the PFA that impact property owners, but one particular change has a direct and immediate impact and has generated significant controversy.

The PFA is implemented by ODF through their new regulations.  The most controversial new rules establish “no cut” buffers adjacent to streams.  These buffer areas range from 30 feet to 110 feet on each side of a stream, depending on a variety of factors, including stream size, location, flow patterns, the presence of fish habitat, and the types of fish detected.  Timber within each designated buffer zone (or Riparian Management Area (RMA)) must be maintained and cannot be harvested as part of a timber operation.

Depending on the size and shape of a parcel, the new RMA harvest prohibitions have significantly devalued thousands of acres of privately held timberland, most of which is zoned by Oregon law as forestland, with timber production being the primary use, and in many cases the only use, allowed on the land.

PFA is decreasing private property values.

We’ve talked to timber owners across the state who report that the new ODF rules have resulted in a significant decrease in their property’s value, with ranges from 15% to 50% of value loss.  The question we’re often asked is, “is there anything I can do about this?”  Answering this question requires an understanding of two significant provisions of law – the United States Constitution’s “Takings Clause” and Oregon’s Ballot Measure 49, codified in part at ORS 195.305.

The Takings Clause is found in the Fifth Amendment to the United States Constitution, and states:

“nor shall private property be taken for public use, without just compensation.”

Interpretation of this deceptively simple language has proven challenging for government and courts, particularly in the modern age of zoning and an increasing regulatory government.  There are, however, some basic guidelines to assist government, courts, and property owners.

First, it is universally acknowledged that when government wishes to take ownership of private property, they must acquire the property through the power of eminent domain, and pay just compensation for the value of the property being acquired.  There is nothing controversial about this, although condemnation claims can become quite heated if the government body acquiring the land and the property owner being forced to sell the land cannot agree on the value of the land being taken.

Second, when government passes a regulation that requires a private property owner to allow a public or private body to physically occupy a portion of the private property (no matter how small), courts recognize that a Fifth Amendment taking has occurred.  This is known as a physical occupation taking.  In these cases, the regulatory body must compensate the property owner or the regulation will be held to be invalid.

The third type of taking is known as an exaction.  This occurs when a governing body imposes a condition on obtaining approval of a government permit that requires the property owner to give the government private property (typically land or payment of a fee) in exchange for the permit.  For example, if the government refuses to issue a building permit to a property owner unless the property owner gives the government a portion of the owner’s property, an exaction has occurred.  In those circumstances, the government must demonstrate that the exaction is needed to offset the impacts resulting from the development proposed by the permit.

Regulatory takings explained. 

The final type of taking is a regulatory taking.  This type of taking occurs when the government adopts a regulation that limits or prohibits the use of private property, without physically occupying the property.  In today’s world, this happens all the time – zoning is a primary example. Nearly all private property (all in Oregon) is subject to regulations which limit its use to some extent.  That does not mean, however, that there has been a regulatory taking.

There are two types of regulatory takings – partial takings and total takings.  A total taking occurs when a government regulation deprives property of all economic use.  For example, a regulation that prohibits a property owner from making any use on a property would result in a total taking.  In situations where a regulation, or series of regulations combined, result in a total taking, the Takings Clause requires just compensation.  Fortunately, total takings are exceedingly rare.

A partial regulatory taking is exceedingly common.  For example, nearly all zoning laws result in partial regulatory takings.  A zoning law will generally impose some limits on how private property can be used, but rarely will a zoning law(s) take away all uses of property.

As you can see from the foregoing, the new RMA harvest provisions are almost universally going to result in partial regulatory takings.  The RMA provisions do not require private property owners to deed their streamside areas to the government.  They are not exactions.  And in most (and maybe all) cases, they are not going to completely devalue a property, because there will still be timberland on the parcel that is far enough away from the stream that the RMA rules won’t apply to limit harvest.

Current law providing inadequate protections. 

Unfortunately, in cases where there is a partial regulatory taking, the law is very unclear about when compensation is due under the Takings Clause of the Fifth Amendment.  The primary case on partial regulatory takings is Penn Central Transportation Company v. New York, 438 US 104 (1978).  In that case, the United States Supreme Court announced a series of vague tests to determine whether or not a regulation that limits some but not all uses of a private parcel amounts to a taking.

According to the Court, in a partial regulatory takings case, a court must consider 1) the economic impact of the regulation on the property owner, 2) the extent to which the regulation interferes with the property owner’s investment-backed expectations, and 3) the character of the government action.  Seems pretty simple, right?

Unfortunately, courts, governments, and private property owners have struggled figuring out how to apply the Penn Central analysis to most regulatory takings claims.  Using the RMA as an example, if the new streamside setbacks devalue a property by 15%, has a regulatory taking under Penn Central occurred?  Probably not, but maybe.

What if the devaluation is 30%?  What if it’s 90%?  Can we really be sure?  Unfortunately, the answer under Penn Central is no, and it depends in large part on the judge (or jury) you get and how much sympathy they have for you or loathing they have for the government body imposing the regulation.

This is why judges and scholars have bitterly complained about the Penn Central test from the moment it was first announced by the Court.  Recently, Justice Clarence Thomas wrote a dissent from the denial of certiorari (the Court decided not to take a case that had been presented to it, and Justice Thomas wrote to express his disappointment that the Court had not taken the case) addressing Penn Central and the Court’s other regulatory takings claims.  According to Justice Thomas:

“The current doctrine is so vague and indeterminate that it invites unprincipled, subjective decisionmaking dependent upon the decisionmaker.  A know-it-when-you-see-it test is no good if one court sees it and another does not.”

Bridge Aina Le’a v. Haw. Land Use Comm’n, 144 S.Ct. 731 (2021).

Regulatory Takings doctrine needs fixing. 

Justice Thomas is correct.  The partial regulatory taking doctrine must be fixed so it is understandable to government, courts, and private property owners.  Under current law, it is really difficult to tell a forestland owner who is impacted by the RMA regulations whether they have a valid regulatory takings claim, and even if they did, by the time they litigated the claim, it would take years and significant litigation costs to get an answer.

We’re not sharing any secrets with this history of the Takings Clause.  Any government lawyer will understand that takings claims (especially regulatory takings claims) are difficult for the property owner to prove, thereby making the Takings Clause a poor remedy for a partial regulatory taking.

Cue Oregon’s Measure 49.

Fortunately, OPOA did something about this problem in 2004.  In 2004, OPOA gathered the signatures and placed Ballot Measure 37 on the Oregon ballot, where it was approved overwhelmingly by Oregon voters.  Measure 37 required the government to waive any land use regulations (including forestry regulations like the RMA regulations) enacted after the current property owner acquired their land or provide compensation if they refused to waive the regulations.

Think of Measure 37 like a grandfather clause.  The idea was that a property owner should be free to use their land for all the uses that were lawful when they purchased the property, because the value of the land is based upon the uses that can be made upon it.

Measure 37 was approved, survived a legal challenge to its validity, but proved controversial.  Consequently, the 2007 Oregon legislature referred Ballot Measure 49 to the voters.

Measure 49 modified Measure 37 as it applied to laws that were already in effect when Measure 37 was passed but kept most of the same protections as Measure 37 for new regulations that were enacted after 2004.  In fact, one type of regulations which Measure 49 (which is now codified in ORS Chapter 195) limits are regulations which limit forest practices under the Oregon Forest Practices Act.

And what do you think the RMA regulations are?  They are regulations which limit forest practices under the Oregon Forest Practices Act.  That means they are regulations covered by Measure 49, meaning every private forestland owner who is impacted by the new RMA regulations has a claim under Measure 49, and ODF must either compensate the property owner for the decrease in property value, or grandfather the current owner against the new regulation. This is precisely why voters approved Measure 49.  Sounds good, right?

Oregon legislation eliminated protections.

Well it is good, except for one thing.  When negotiating the PFA, the parties at the negotiating table agreed to eliminate Measure 49 claims for the new RMA regulations.  In other words, knowing that the new regulations would hurt private property owners and trigger Measure 49 claims, the negotiating parties added language that prohibits all private property owners from making claims.  And the Oregon legislature signed off on these changes.

Measure 49 has been in effect for 16 years, and this is the only time that the legislature has ignored the public and prohibited property owners from using the Measure to protect their property.  It’s bad precedent, and another slap in the face to property owners in a state already known for being tough on property rights.

We can change this so it doesn’t happen again, but we need your help.  If you’re impacted by the new RMA regulations, call or email us.  We’re keeping track of the impact on property owners statewide.  We want to hear from you.

The opinions expressed in this post are those of the author and do not represent the opinions or positions of any party represented by the OPOA Legal Center on any particular matter.