SALEM, Ore. -- The Oregon Supreme Court on Tuesday upheld a voter-approved property rights law that requires governments to either pay landowners for losses caused by state land-use regulations or waive the regulation and allow development.

Opponents of the 2004 law, known as Measure 37, contended it threatened state and local efforts to control development. Supporters said it protected property rights and that it was only fair to compensate property owners for such losses.

Tuesday's ruling reversed a decision issued in October by Marion County Circuit Judge Mary James, who said the measure violated the state and federal constitutions. She said it stripped the Legislature of its power, gave longtime landowners an unfair advantage and failed to give their neighbors a voice in the process.

The Supreme Court justices said they found "none of these arguments persuasive."

The state and federal constitutions don't require such compensation to landowners, but they don't prohibit it, either, the court said.

Measure 37 resulted from a property-rights revolt against Oregon's 1973 land-use policies that are often regarded as a model for protecting farmland and open space. The combination of local, county and state regulations has confined most new housing to already built-up areas.

The group that sponsored Measure 37 hailed Tuesday's ruling as a victory for property owners.

"We hope the lawsuits end, the delaying tactics stop and that the claims can proceed. These people have waited for years to get back the use of their property," said Dave Hunnicutt, executive director of Oregonians in Action.

However, the land-use planning advocacy group 1000 Friends of Oregon said Tuesday that the court did not rule that Measure 37 was fair.

"It is not fair to put a gravel pit next to someone's home, and that is what Measure 37 allows," said Bob Stacey, executive director of the group. "The government needs to find a way to pay those people who experienced a loss without sacrificing our quality of life and hurting neighbors."

More than 2,000 claims have been filed under the measure. Without money to compensate claimants, many counties and state agencies instead waived the development restrictions.