If the government takes private property for public use under the power of eminent domain, both the U.S. and Wyoming Constitutions require the government to justly compensate the landowner(s) for the loss of the property.

"Regulatory takings" applies the same principle to the enactment of laws and regulations, meaning the government would be required to compensate a private property owner for damage or deprivation caused by the new law or regulation.

For example, if a new zoning ordinance prohibited large hog farms in a residential area, the city would have to compensate private landowners if the ordinance caused the value of their properties to decline, or caused a loss of anticipated profits.

HB 120 was the sixth regulatory takings bill to come before the House in recent years. The 1995 version, which passed the House 32-28 (after substantial amending) and the Senate 23-7, requires state government agencies to review a checklist when promulgating regulations to see if a taking might occur.

The 1997 bill extended the definition of government agencies to include county and municipal governments. It also added provisions requiring both state and local governments to prepare a "constitutional impact assessment" from the checklist, including:

• a description of how the action or regulation affects private property;
• alternatives to the action or regulation that would fulfill the government agency’s legal obligations but reduce the impact on the private property owner;
• an estimate of the financial cost to the agency for compensation and identification of a source of payment from the agency’s budget.

Proponents argued that the bill was modest and would merely require local authorities to "look before they leap" by preparing ahead of time an impact statement similar to a court defense.

Proponents also stressed that the 1995 takings law was not enough; they wished to enact specific language saying that when government policy limits the use or profitability of private property, the results shall be a taking, like real property condemnation under eminent domain.

Opponents countered that the bill would radically reinterpret the constitutional definition of takings, requiring payments by state and local governments to property owners for the financial cost of simply complying with laws and regulations.

HB 120 failed in Committee of the Whole (the first opportunity for full floor debate) in the House, 22-37 (1 excused).