Libertarians and property-rights activists believe that a huge array of common government regulations on real estate, such as zoning or subdivision limits, "take" away property value. Therefore, they say, the government should compensate the owner, or back off. The extreme view of "regulatory takings" is really at the core of this campaign — not eminent domain.
The campaign to pass regulatory-takings laws began in the 1980s, when libertarians seized on the Fifth Amendment of the U.S. Constitution, which says: "Nor shall private property be taken for public use, without just compensation." They’ve tried to use Congress, state legislatures and ballot initiatives to pass laws that would treat most regulations as takings. Their first big win came in November 2004, when they persuaded Oregon’s voters to pass Measure 37. That initiative blew holes in the strictest land-use system in the country, allowing longtime landowners to escape many state, county and city regulations (HCN, 11/22/04: In Oregon, a lesson learned the hard way).
The impacts of Measure 37 have been delayed by court battles, and the libertarians are determined to turn the delays to their advantage. Before the fallout in Oregon can be fully understood, they are rushing to pass similar ballot initiatives in Montana, Idaho, Washington, Arizona, Nevada and California. While each initiative has its own sales pitch, they all deliberately tuck the notion inside the unrelated eminent domain controversy. The Los Angeles-based libertarian Reason Foundation mapped the strategy in a 64-page paper published in April, titled Statewide Regulatory Takings Reform: Exporting Oregon’s Measure 37 to Other States. It recommended pushing "Kelo-plus" initiatives, combining eminent domain reform with regulatory takings, to capitalize "on the tremendous public and political momentum generated in the aftermath of the Kelo ruling …"
The initiatives have titles like "Protect Our Homes," "The Home Owners Protection Effort" and "People’s Initiative to Stop the Taking of Our Land" — as if the government is about to come in with bulldozers to sweep everyone off their property. But here’s how the initiatives would work: If you could fit 20 houses on your land, plus a junkyard, a gravel mine, and a lemonade stand, and the government limits you to six houses and lemonade, then the government would have to pay you whatever profit you would have made on the unbuilt 14 houses, junkyard and mine. Generally, if the government can’t or won’t pay you, then it would have to drop the regulations.
Eventually, I traced the loose-knit libertarian command chain to the top. Dondero, who lives in Texas, told me he had come to Montana at the suggestion of Paul Jacob, a senior fellow at Americans for Limited Government, a Chicago-area libertarian activist group. Americans for Limited Government has provided loans and expertise to the Montana initiative, plus $827,000 to the Arizona initiative, $200,000 to Washington initiative, and $107,000 to the one in Nevada, according to the Nevada initiative’s leader. Americans for Limited Government has also given $2.5 million to another libertarian group, America at its Best, based in the Washington, D.C., area, which has in turn funneled $100,000 to the Idaho initiative.
One key figure is the chairman of the board of Americans for Limited Government, Howie Rich. A real estate mogul based in New York City, Rich is also on the board of the libertarian flagship Cato Institute in D.C., and heads his own Fund for Democracy. He and Jacob are famous in libertarian circles for funding initiatives in the 1990s that imposed term limits on the congressional delegations in 23 states — limits later struck down by the Supreme Court. This year, Rich says he has funneled nearly $200,000 through a group called Montanans in Action to back the Montana initiative, along with two related initiatives aimed at setting state tax limits and making it easier to recall liberal judges. The head of Montanans in Action, Trevis Butcher, says he doesn’t know Rich, but he declines to say whether he is getting money from the Fund for Democracy; he won’t reveal any of his backers. Records in other states show that Rich has put $1.5 million into the California regulatory-takings initiative, $230,000 into the Idaho one, and $25,000 into the Arizona version.
Rich was not easy to find. He has an unlisted phone number, and his Fund for Democracy has no Web site and is not listed as a business entity in the New York secretary of state’s database. When I found him and explained that I’d tracked all his donations to the campaign, he said, "You’ve done your homework."
On the phone, Rich was confident of the rightness of his cause. "I believe in the American Dream. … I believe in free markets. I believe that … government has been growing at an excessive rate, at the federal level and in many states," he said. "I’m happy to support local activists who are working to protect property rights in a whole bunch of states."
Although the campaign has local allies in each state, the out-of-state money is the driving force: As this story goes to press, it ranges from about 40 percent of the local campaign budget to as high as 99 percent. The exact numbers can be hard to come by, because the libertarians have covered their tracks as much as possible. Montanans in Action has funneled another $600,000 to the California initiative, for example. Montana’s loose campaign finance laws don’t require the group to divulge where that money came from, but it’s unlikely that it originated in a poor rural state like Montana.
The money has frequently paid professional signature gatherers like Dondero, who has worked for libertarian causes for more than 15 years, from Florida to Alaska. (In the midst of the Montana petition drive, just before I met him, he’d been called to Missouri for eight days to collect signatures for another libertarian initiative, one backed by a $1.3 million contribution from Rich.) Dondero was paid $15,428 for his signature gathering and expenses on the Montana initiatives, according to campaign spending reports. The California campaign reportedly paid its petitioners $1 per signature; in Nevada the rate was $1.65; in Idaho $2; and in Arizona as much as $3 per signature. The signature gatherers have a strong incentive to be persuasive.
Dondero and I left the Conoco and walked through Three Forks, tall shade trees giving us relief from the sun. Dondero prefers small towns. He’d already worked Anaconda, Dillon, Montana City, Hamilton. "People are much friendlier in small towns," he said. "They have time to listen to what you’re saying, and they tend to be more libertarian and anti-government."
Dondero grew up in Delaware with adoptive parents, the Rittbergs. (He used the name Eric Rittberg until recently.) He spent four years in the Navy, then earned a political science degree from Florida State. He claims to speak at least smidgens of 15 to 20 languages, and has self-published several language and travel books. For six months recently he held a "normal job" at a Houston insurance company, just to build up money for his political travels. He flew into Montana in April, set up his base camp in a Butte apartment, and bought a low-key 1984 Nissan for $700 at a local pawnshop. Then he picked up Montana plates and a bumper sticker: "Proud to be an American."
Dondero is a natural salesman, and he wielded his lines about eminent domain and the Kelo case to great effect. We came to a house where a woman was mowing her lawn. The machine was roaring and the woman intent on her task; I would not have approached her. But Dondero walked right up and began his rap about eminent domain. She shut off the mower, and shortly, she signed the petition. Walking on, he told me that people mowing lawns are good bets. They want to be interrupted; they’re grateful.