Yesterday's California returns show that Proposition 98 - the referendum initiative that would have imposed real restrictions on eminent domain and also phased out rent control - has been overwhelmingly defeated by a 61% to 39% margin. The rival Proposition 99 - an initiative sponsored by local governments and other pro-condemnation interests that only pretends to protect property rights - passed easily by 62 to 38. I will have more to say about the failure of Prop 98 in a later post. Here, I focus on Prop 99. Unfortunately, it not only fails to protect property rights against takings, but is likely to make things worse than they were before.

For reasons I outlined in my LA Times op ed, Prop 99 won't actually give property owners any real protection. In brief, the protections of Prop 99 only apply to "owner-occupied homes" where the owners have resided for at least 1 year, thereby categorically excluding the 42 percent of California households that are renters. And even owner-occupied homes remain vulnerable to condemnation because of Prop 99's many loopholes. California is one of the nation's worst abusers of eminent domain, and Prop 99 will do nothing to change that. Instead, it has made things worse in four ways.

I. Blocking Effective Eminent Domain Reform by Fooling Voters into Believing that the Problem has been "Solved."

The passage of Proposition 99 might persuade at least some California voters that the eminent domain problem has been "solved" and that no further action is necessary. As I document in Part III of my forthcoming Minnesota Law Review article on post-Kelo eminent domain reform, the enactment of fake reform laws in other states has fooled many voters (about one third of all those who express any opinion at all about the effectiveness of eminent domain reform in their states) into believing that effective reforms have been enacted. When such deception succeeds, it can greatly reduce public demand for effective reform and make its enactment difficult or even impossible.

II. Contributing to the Defeat of Proposition 98.

Proposition 99 probably contributed to the defeat of Prop 98, an initiative that really would have protected property rights. Given the large margin of Prop 98's defeat, it is by no means certain that it would have passed had there not been also been a bogus anti-Kelo proposition on the ballot. But it is a possibility.

III. Forestalling Potential Judicial Protection for Property Rights.

Third, as Tim Sandefur astutely pointed out, Prop 99 will "make things far worse . . . because the courts would interpret it as meaning that Californians did not want more serious protections for property rights." This is a subtle point that I myself didn't understand the first time Tim made it. Proposition 99 is an amendment to the California Constitution, and as such has to be taken into account by state courts in interpreting the protection that Constitution gives property owners against eminent domain. Before the passage of Prop 99, the California Constitution - like most state constitutions - merely had a general requirement that takings must be for a "public use." California courts had usually interpreted this language broadly to allow the government to condemn property for almost any reason. However, the possibility still existed that they would revert to a narrower and more natural interpretation - that the term "public use" excludes many takings that transfer property from one private owner to another. Many other state supreme courts - including those in liberal states such as Illinois, Michigan, and Washington - have done precisely that. Over the last 15 years, state supreme courts have generally been moving in this direction, with half a dozen new states banning Kelo-style takings under their state constitutions, and only one new case (the Connecticut Supreme Court's ruling in Kelo itself) going the other way.

By defining the scope of protection for property owners as precisely as it does, Proposition 99 forecloses the possibility of such a judicial development in California. The state Supreme Court is unlikely to apply the generic term "public use" in a way that bans takings that would be permissible under the much more specific and detailed language of Proposition 99. In effect, Prop 99 incorporates into the California Constitution an extremely broad definition of "public use" that allows state and local officials to condemn almost any property they want.

IV. A Blueprint for the Defeat of Future Property Rights Initiatives.

Perhaps worst of all, Prop 99 is an extremely clever blueprint for the defeat of property rights referendum initiatives in other states. Recall that it was initially put on the ballot primarily - if not exclusively - for the purpose of defeating Proposition 98. In the end, Prop 98 was defeated at least in part because of its sponsors'own mistakes, such as the decision to package eminent domain restrictions with a phaseout of rent control.

But it is important to recognize that Proposition 99 would likely have nullified 98 even if the latter had been perfectly drafted and had passed with a strong majority. Section 9 of Prop 99 would have overridden 98 so long as Proposition 99 had passed with the larger majority of the two. As a practical matter, even the best possible eminent domain reform initiative in California would have found it difficult to beat the 62% of the vote that Proposition 99 received. Rationally ignorant voters would be unlikely to figure out the interconnection between the two initiatives, and the more effective of the two would have been the subjected to a well-funded "no" campaign backed by local governments and other interest groups. A well-drafted property rights initiative could still pass in the face of such opposition (as happened in ten other states). But it probably could not pass by as large a margin as a rival initiative that doesn't face such strong opposition.

Up until now, eminent domain reform laws passed by referendum have generally been far stronger than the often ineffective ones enacted by state legislatures. If the Proposition 99 model is copied by pro-condemnation interests in other states, that might well change.