AUGUSTA, Maine — A controversial regulatory takings bill was dealt a significant setback Thursday when lawmakers moved to replace it with a standing committee to address onerous land-use regulations.

Fearing a rash of lawsuits and increased costs for the Maine Office of the Attorney General, a majority of lawmakers on the Legislature’s Judiciary Committee voted against LD 1810, a bill designed to compensate landowners if a state regulation diminished more than half the market value of their property.

The vote was 6-5 but is likely to increase to 8-5-1 once absent lawmakers log their votes.

The bill was drafted by Catherine Connors, a Pierce Atwood takings attorney. Critics of the legislation argued that Connors could financially benefit from a new takings law due to an increase in caseload and because her potential clients would have an easier path to victory in court.

Property rights activists said the bill was long overdue because the state has gone too far with regulations that restrict landowners’ ability to use their property.

The majority of the committee was sympathetic to that argument. However, they worried about the complexity and the impact of the original proposal, which allowed landowners to sue the state, yet didn’t provide funds to compensate aggrieved property owners or litigate cases.

The original proposal had been assailed by environmental groups, who feared it would effectively freeze regulations. Representatives for the Attorney General’s Office argued that their budget would also increase because the office would have to hire more staff to defend state agencies that had been sued.

The bill also ran into opposition from the Maine Municipal Association, which feared towns could be sued by landowners. Although the bill was amended to ensure that municipalities could not be defendants in a dispute, AG representatives said there would be many cases when towns would be called in to help the state during a case.

Rather than vote to kill the bill outright, Rep. Bradley Moulton, R-York, and Rep. Charlie Priest, D-Brunswick, crafted a bipartisan amendment that would essentially make last year’s Regulatory Fairness Committee a standing legislative committee. The panel would meet at least twice a year to hear complaints about regulations that were affecting landowners. It would also have the power to recommend legislation to address those issues.

Moulton, an attorney, said the original bill was “flawed from the outset” and could have dangerous implications. Other lawmakers agreed, including Rep. Michael Beaulieu, R-Auburn, who said the bill would have “a chilling effect” on regulations.

Sen. David Hastings, R-Fryeburg, said the bipartisan bill didn’t go far enough to address the problem. Hastings noted that a 1995 takings bill had produced a study group and a regulation mitigation panel within the State Planning Office. However, he said, the problem of regulatory takings hadn’t disappeared.

Priest noted that state agencies have granted 99 percent of land-use permits and that nobody had complained about the mitigation panel process, either. The panel is expected to disappear as Gov. Paul LePage’s implements his plan to dismantle the State Planning Office.

Although a majority of lawmakers supported the amended bill creating the regulatory fairness committee, the original takings proposal isn’t dead. Hastings and Republican Reps. Ralph Sarty of Denmark, Joan Nass of Acton, and Paul Waterhouse of Bridgton, each voted for a minority report, which will allow the original bill to be considered on the floor of the House of Representatives.

The Legislature resoundingly rejected a takings bill 17 years ago, as have a host of other states. A few states like Florida, however, have adopted takings laws.

Proponents of the LD 1810 say the bill is closely modeled after the Florida law, which they say, hasn’t produced the deluge of lawsuits that opponents claim will occur in Maine. Environmental groups, however, say there have been enough lawsuits to cause concern. They also note that Florida has witnessed a freeze in land-use regulations.

Similar takings bills have been advanced by the American Legislative Exchange Council, a national group funded by corporations that drafts model legislation.

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