Steve Calandrillo (Washington), Chryssa Deliganis (Independent), & Christina Elles (Independent) have posted The Vested Rights Doctrine: How a Shield Against Injustice Became a Sword for Opportunistic Developers (Ohio State Law Journal) on SSRN.  Here's the abstract:

In an era of pioneering environmental and land use laws, savvy developers are using the “vested rights” doctrine to circumvent and undermine critical public health, safety, and environmental regulations. This controversy pits two legitimate interests against each other: on the one hand, local governments must have the power to pass land use laws and regulations in the public interest to protect their community’s health, safety, welfare, and environment. On the other, developers who rely on the laws in existence at the time their project is approved should be protected from subsequent changes to the law that could increase transactional costs and impair their projects. In theory, the vested rights doctrine helps minimize these costs by “freezing” the law applicable to a permit application at a certain point in time. From developers’ perspective, the earlier the rights vest, the better.

While the vested rights doctrine is based on an understandable estoppel rationale, developers are increasingly using it as a sword to thwart reasonable regulation instead of as a shield against injustice. Common sense policy has too often been co-opted by opportunistic developers at the expense of the public interest – witness the unfettered explosion in fracking operations across America as well as new urban centers being installed in particularly inappropriate locations, oftentimes in contravention of sensible smart growth or growth management policies. The situation has become so perverse that one elected official argued that manipulation of the vested rights doctrine is “the least sexy but probably one of the most important aspects of environmental law” today.

It is past time that we restore balance to the vested rights doctrine in order to prevent the best intentions of legislatures and public policy makers from going awry. Local governments must have the power to update land use laws and regulations as new information becomes available and as public policy preferences change. This can be done without destroying private property rights as we know them, or imposing unreasonable transaction costs on the development community.