[Congressional Record Volume 143, Number 123 (Tuesday, September 16, 1997)]
[Senate]
[Pages S9423-S9426]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KEMPTHORNE:
  S. 1181. A bill to amend the Internal Revenue Code of 1986 to provide 
Federal tax incentives to owners of environmentally sensitive lands to 
enter into conservation easements for the protection of endangered 
species habitat, to allow a deduction from the gross estate of a 
decedent in an amount equal to the value of real property subject to an 
endangered species conservation agreement, and for other purposes; to 
the Committee on Finance.


         the endangered species habitat protection act of 1997

  Mr. KEMPTHORNE. Mr. President, I am introducing legislation today 
which is intended to provide private property owners additional tools 
in their dealings with the Endangered Species Act. For both those who 
wish to participate in the conservation of land for the preservation of 
endangered, threatened, and other species and those whose participation 
is involuntary, this legislation will add to the already substantial 
means provided to property owners in the Endangered Species Recovery 
Act of 1997.
  For too long the Federal Government has used its enforcement 
procedures and it regulatory authority to dictate conservation in aid 
of endangered and threatened species. This method has failed to produce 
the kind of results we want. The Endangered Species Act as currently 
written is almost all stick and no carrot. I would like to begin to 
change that today.
  For 18 months I have negotiated a bill to reauthorize the Endangered 
Species Act with the Democrats and the administration. Those 
negotiations have been successfully completed. We have introduced a 
bill that will provide a variety of incentives to property owners to 
preserve habitat through conservation agreements and plans, prelisting 
agreements and other preservation tools. I also have a number of ideas 
on how to provide tax incentives to private property owners to preserve 
habitat.
  Let me emphasize that inclusion of these new tax incentives will 
truly benefit both species and people. I have met with many property 
owners who have said, ``we would be happy to step forward and preserve 
habitat for species and we would grant a conservation easement if there 
was an incentive.'' Well with adoption of the ideas included in this 
bill there will be.
  I have had critics that have said that we should not provide these 
kinds of incentives to private property owners because we will have too 
many people coming forward and saying, ``I have an endangered species 
on my land.'' What is wrong with that? To my mind, that would be a 
welcome reversal from the current prevailing attitude that some have 
about the presence of an endangered species on their property. Right 
now you have a situation that some land owners believe that if they do 
have an endangered species, or if it's suggested that they might, 
they're just as likely to try to remove the habitat to avoid a problem 
down the road. We need to change that attitude if we're going to 
recover endangered species.
  We are currently at the crossroads of two systems. One where you have 
Government overregulation that tells people what they can and cannot do 
on their land, and the other a system that encourages property owners 
to step forward and do something good for species because it's good for 
them too.
  We can depend on our property owners to do what's right and what is 
good for species. I know that our farmers and ranchers know how to be 
innovative and creative. They know how to help species. And they know 
how to manage land.
  The right system is one where we encourage active involvement of 
landowners through incentives. Certainly, I know that if I were an 
endangered species, I would much rather have a friendly and willing 
landlord--one that viewed me as an asset--than a reluctant one who 
viewed me as a threat and a liability because of some bureaucrats and 
regulations handed down from Washington, DC.
  That is what this legislation will do. It is going to make the people 
active partners.
  The legislation I am introducing also includes a provision designed 
to safeguard the property rights of individuals. The Endangered Species 
Recovery Act of 1997 will do much to improve and enhance the rights of 
property owners. The bill limits the ability of the Federal Government 
and environmental groups to restrict otherwise legal activities on 
private lands. Under the law today, the Government and environmental 
groups have used the take prohibition to try to prohibit logging and 
development on private lands and a city's pumping of an aquifer for 
drinking water, even where there was no scientific evidence that the 
activity would in fact harm an endangered species. Our bill will change 
that, reaffirming that the Federal Government, or an environmental 
group, has the burden of demonstrating that an activity will actually 
harm a species and they must meet that burden using real science, not 
just assumptions or speculation.
  ESRA '97 will protect the rights of property owners by making them a 
part of the process--a process that has excluded them for years. Now 
citizens, business people and State and local government 
representatives will be at the table for the development of recovery 
plans. Furthermore, the recovery plans developed will analyze the cost 
on the public and private sectors and the impact on jobs and property 
values for any recovery plan selected.

[[Page S9424]]

  Under ERSA '97 we will substantially reduce the number of 
consultations under section 7 of the act. But if a consultation is 
necessary under the act, property owners will have both a seat at the 
table and the information they need to meaningfully participate in the 
consultation.
  Throughout ERSA '97 we have kept our bond with the property owners of 
Idaho and America. But there is always more that should be done.
  The Endangered Species Habitat Protection Act contains strong 
property rights language. That language was developed in conjunction 
with some of the best minds in the property rights movement. Private 
property rights is a cornerstone of our democracy. As such it is 
incumbent on this Congress to address the issue in this Congress. The 
Endangered Species Habitat Protection Act contains my contribution to 
the effort.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1181

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Endangered 
     Species Habitat Protection Act of 1997''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Nonrefundable credit for the agreement to manage land to 
              preserve endangered species.
Sec. 4. Enhanced deduction for the donation of a conservation easement.
Sec. 5. Additional deduction for certain State and local real property 
              taxes imposed with respect to property subject to an 
              endangered species conservation agreement.
Sec. 6. Exclusion from estate for real property subject to endangered 
              species conservation agreement.
Sec. 7. Exclusion of 75 percent of gain on sales of land to certain 
              persons for the protection of habitat.
Sec. 8. Right to compensation.

     SEC. 2. FINDINGS.

       The Senate finds and declares the following:
       (1) The majority of American property owners recognize the 
     importance of protecting the environment, including the 
     habitats upon which endangered and threatened species depend.
       (2) Current Federal tax laws discourage placement of 
     privately held lands into endangered and threatened species 
     conservation agreements.
       (3) The Federal Government should assist landowners in the 
     goal of conserving endangered and threatened species and 
     their habitat.
       (4) If the environment is to be protected and preserved, 
     existing Federal tax laws must be modified or changed to 
     provide tax incentives to landowners to attain the goal of 
     conservation of endangered and threatened species and the 
     habitats on which they depend.

     SEC. 3. NONREFUNDABLE CREDIT FOR THE AGREEMENT TO MANAGE LAND 
                   TO PRESERVE ENDANGERED SPECIES.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25A the following new section:

     ``SEC. 25B. CREDIT FOR AGREEMENT TO MANAGE LAND TO PRESERVE 
                   ENDANGERED SPECIES.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter for the 
     taxable year an amount equal to the lesser of--
       ``(1) the applicable acreage rate of the qualified acreage, 
     or
       ``(2) $50,000.
       ``(b) Applicable Acreage Rate.--For purposes of subsection 
     (a), the applicable acreage rate is the rate established by 
     the Secretary of the Interior for the taxable year utilizing 
     rates comparable to rental payments under the conservation 
     reserve program under section 1234 of the Food Security Act 
     of 1985 (16 U.S.C. 3834).
       ``(c) Qualified Acreage.--For purposes of this section, the 
     term `qualified acreage' means any acreage--
       ``(1) which is subject to an endangered species 
     conservation agreement under the Endangered Species Act (16 
     U.S.C. 1531 et seq.) and accepted into the expanded 
     conservation reserve program pursuant to section 1231(d)(2) 
     of the Food Security Act of 1985 (16 U.S.C. 3831(d)(2)),
       ``(2) which is owned by one or more individuals directly or 
     indirectly through a partnership or S corporation that is 
     held entirely by individuals, and
       ``(3) subject to a perpetual restriction that is valued 
     pursuant to section 170(h)(7).
       ``(d) Credit Recapture.--If, during the period of the 
     endangered species conservation agreement, the taxpayer 
     transfers the qualified acreage without also transferring the 
     taxpayer's obligations under the expanded conservation 
     reserve program under subchapter B of chapter 1 of subtitle D 
     of the Food Security Act of 1985 (16 U.S.C. 3831 et seq.) and 
     the endangered species conservation agreement, then the 
     taxpayer's tax under this chapter for the taxable year shall 
     be increased by the amount of the credit received under this 
     section during all prior years by such taxpayer, plus 
     interest at the overpayment rate established under section 
     6621 on such amount for each prior taxable year for the 
     period beginning on the due date for filing the return for 
     the prior taxable year involved. No deduction shall be 
     allowed under this chapter for interest described in the 
     preceding sentence, and any increase in tax under the 
     preceding sentence shall not be treated as a tax imposed by 
     this chapter for purposes of determining the amount of any 
     credit under subpart A, B, D, or G of this part.
       ``(e) Joint Owners.--For purposes of this section, the 
     amount of credit under this section that any joint owner is 
     entitled to constitutes the total credit allowable under this 
     section with respect to the qualified acreage multiplied by 
     the individual's percentage ownership in the qualified 
     acreage. Each joint owner shall include on the return of tax 
     in which the credit is claimed the names and taxpayer 
     identification numbers of all other joint owners in the 
     property.
       ``(f) Regulatory Authority.--
       ``(1) Treasury department.--The Secretary shall promulgate 
     regulations to ensure that a taxpayer cannot subdivide 
     property to determine such taxpayer's qualified acreage 
     unless all of the acreage such taxpayer owns within a 
     significant region is submitted to the expanded conservation 
     reserve program, whether or not such acreage is eligible for 
     a credit under this section.
       ``(2) Secretary of the interior.--As necessary, the 
     Secretary of the Interior shall determine the applicable 
     acreage rate for regions within the United States based on 
     rates comparable to those under the expanded conservation 
     reserve program. Once a rate is prescribed under an 
     endangered species conservation agreement, however, such rate 
     shall remain in effect for the duration of that agreement.''
       (b) Conforming Amendments.--Subchapter B of chapter 1 of 
     subtitle D of the Food Security Act of 1985 (16 U.S.C. 3831 
     et seq.) is amended--
       (1) in section 1231(b)--
       (A) by striking the period at the end and inserting ``; 
     or''; and
       (B) by adding at the end the following new paragraph:
       ``(5) lands with respect to which the owner or operator and 
     the Secretary of the Interior or the Secretary of Commerce 
     have entered into an endangered species conservation 
     agreement.'';
       (2) in section 1231(d), by striking ``(d)'' and inserting 
     ``(d)(1)'' and by adding at the end the following new 
     paragraph:
       ``(2) The Secretary of the Interior and the Secretary of 
     Commerce shall enter into endangered species conservation 
     agreements under this section to enroll acreage, in addition 
     to the 38,000,000 acres authorized by paragraph (1), into the 
     expanded conservation reserve, for which no payment is due 
     under section 3834, totaling 5,000,000 acres during calendar 
     years [1997 through 2002]. In enrolling such acres, the 
     Secretary of the Interior and the Secretary of Commerce shall 
     reserve 1,000,000 acres for enrollment under this section in 
     calendar year [1997].'';
       (3) in section 1232, by adding at the end the following new 
     subsection:
       ``(f) This section shall not apply to owners and operators 
     subject to endangered species conservation agreements.'';
       (4) in section 1234, by adding at the end the following new 
     subsection:
       ``(i) This section shall not apply to owners and operators 
     subject to endangered species conservation agreements.''; and
       (5) by inserting after section 1234 the following new 
     section:

     ``SEC. 1234A. NO PAYMENTS TO PROPERTIES FOR WHICH AN INCOME 
                   TAX CREDIT OR DEDUCTION IS TAKEN.

       ``The Secretary shall ensure that no payment be made under 
     this subchapter to any owner if that owner has indicated an 
     intention to claim an income tax credit (under section 25B of 
     the Internal Revenue Code of 1986) for participation in this 
     program, or an income tax deduction (under section 
     170(h)(4)(A)(iii) of such Code).''
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part IV of subchapter A of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 25A the following new item:

``Sec. 25B. Credit for agreement to manage land to preserve endangered 
              species.''
       (d) Effective Dates.--
       (1) Credit.--The amendments made by subsections (a) and (c) 
     shall apply to taxable years beginning after December 31, 
     [1995].
       (2) Conforming amendments.--The amendments made by 
     subsection (b) shall take effect on the date of enactment of 
     the Endangered Species Habitat Protection Act of 1997.

     SEC. 4. ENHANCED DEDUCTION FOR THE DONATION OF A CONSERVATION 
                   EASEMENT.

       (a) In General.--Subparagraph (A) of section 170(h)(4) of 
     the Internal Revenue Code of

[[Page S9425]]

     1986 (defining conservation purpose) is amended by striking 
     ``or'' at the end of clause (iii), by striking the period at 
     the end of clause (iv) and inserting ``, or'', and by adding 
     at the end the following new clause:
       ``(v) the protection of a species designated endangered by 
     the Secretary of the Interior or the Secretary of Commerce.''
       (b) Enhanced Valuation.--Section 170(h) of the Internal 
     Revenue Code of 1986 (defining qualified conservation 
     contribution) is amended by adding at the end the following 
     new paragraph:
       ``(7) Enhanced valuation of property with endangered 
     species.--For purposes of this section, the valuation of a 
     perpetual restriction granted to the Secretary of the 
     Interior or the Secretary of Commerce or to a State agency 
     implementing an endangered species program for the purpose 
     described in paragraph (4)(A)(iii) shall be made by comparing 
     the value of the property after the restriction is granted 
     with the value of that same property without either the 
     encumbrance of such restriction or any of the restrictions 
     placed on such property by the Endangered Species Act of 1973 
     (16 U.S.C. 1531 et seq.).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made after the date of the 
     enactment of this Act.

     SEC. 5. ADDITIONAL DEDUCTION FOR CERTAIN STATE AND LOCAL REAL 
                   PROPERTY TAXES IMPOSED WITH RESPECT TO PROPERTY 
                   SUBJECT TO AN ENDANGERED SPECIES CONSERVATION 
                   AGREEMENT.

       (a) In General.--Section 164 of the Internal Revenue Code 
     of 1986 (relating to deductions for taxes) is amended by 
     redesignating subsection (g) as subsection (h) and by 
     inserting after subsection (f) the following new subsection:
       ``(g) Additional Deduction for Certain State and Local Real 
     Property Taxes Imposed With Respect to Property Subject to an 
     Endangered Species Conservation Agreement.--
       ``(1) General rule.--Except as provided in paragraph (3), 
     in the case of property--
       ``(A) which, on the last day of the taxable year, is 
     described in section 25B(c)(1), and
       ``(B) with respect to which no recapture event described in 
     section 25B(d) has occurred, a deduction in the amount 
     determined under paragraph (2) shall be allowed for all State 
     and local real property taxes paid or accrued with respect to 
     such property during such year. The deduction allowed by this 
     subsection shall be in addition to any other deduction 
     allowed by this section.
       ``(2) Amount of additional deduction.--The deduction 
     allowed by this subsection shall equal 25 percent of the 
     amount of State and local real property taxes that are 
     otherwise deductible under this section without regard to 
     this subsection.
       ``(3) Deduction not allowed.--No deduction shall be allowed 
     under this subsection for taxes imposed upon real property--
       ``(A) with respect to which a credit under section 25B is 
     allowable, or
       ``(B) subject to a perpetual restriction that is valued 
     pursuant to section 170(h)(7).''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     [1995].

     SEC. 6. EXCLUSION FROM ESTATE FOR REAL PROPERTY SUBJECT TO 
                   ENDANGERED SPECIES CONSERVATION AGREEMENT.

       (a) In General.--Part IV of subchapter A of chapter 11 of 
     the Internal Revenue Code of 1986 (relating to taxable 
     estate) is amended by adding at the end the following new 
     section:

     ``SEC. 2057. CERTAIN REAL PROPERTY SUBJECT TO ENDANGERED 
                   SPECIES CONSERVATION AGREEMENT.

       ``(a) General Rule.--For purposes of the tax imposed by 
     section 2001, the value of the taxable estate shall be 
     determined by deducting from the value of the gross estate an 
     amount equal to the adjusted value of real property included 
     in the gross estate which is subject to an endangered species 
     conservation agreement.
       ``(b) Property Subject to an Endangered Species 
     Conservation Agreement.--For purposes of this section--
       ``(1) In general.--Real property shall be treated as 
     subject to an endangered species conservation agreement if--
       ``(A) each person who has an interest in such property 
     (whether or not in possession) has entered into--
       ``(i) an endangered species conservation agreement with 
     respect to such property, and
       ``(ii) a written agreement with the Secretary consenting to 
     the application of subsection (d), and
       ``(B) the executor of the decedent's estate--
       ``(i) elects the application of this section, and
       ``(ii) files with the Secretary such endangered species 
     conservation agreement.
       ``(2) Adjusted value.--The adjusted value of any real 
     property shall be its value for purposes of this chapter, 
     reduced by any amount deductible under section 2053(a)(4) or 
     2055(f) with respect to the property.
       ``(c) Endangered Species Conservation Agreement.--For 
     purposes of this section--
       ``(1) In general.--The term `endangered species 
     conservation agreement' means a written agreement entered 
     into with the Secretary of the Interior or the Secretary of 
     Commerce--
       ``(A) which commits each person who signed such agreement 
     to carry out on the real property activities or practices not 
     otherwise required by law or to refrain from carrying out on 
     such property activities or practices that could otherwise be 
     lawfully carried out,
       ``(B) which is certified by such Secretary as assisting in 
     the conservation of any species which is--
       ``(i) designated by such Secretary as an endangered or 
     threatened species under the Endangered Species Act of 1973 
     (16 U.S.C. 1531 et seq.),
       ``(ii) proposed for such designation, or
       ``(iii) officially identified by such Secretary as a 
     candidate for possible future protection as an endangered or 
     threatened species, and
       ``(C) which applies to at least one-half of the total area 
     of the property.
       ``(2) Annual certification to the secretary by the 
     secretary of the interior or the secretary of commerce of the 
     status of endangered species conservation agreements.--If the 
     executor elects the application of this section, the executor 
     shall promptly give written notice of such election to the 
     Secretary of the Interior or the Secretary of Commerce. The 
     Secretary of the Interior or the Secretary of Commerce shall 
     thereafter annually certify to the Secretary that the 
     endangered species conservation agreement applicable to any 
     property for which such election has been made remains in 
     effect and is being satisfactorily complied with.
       ``(d) Recapture of Tax Benefit in Certain Cases.--
       ``(1) Disposition of interest or material breach.--
       ``(A) In general.--Except as provided in subparagraph (C), 
     an additional tax in the amount determined under subparagraph 
     (B) shall be imposed on any person on the earlier of--
       ``(i) the disposition by such person of any interest in 
     property subject to an endangered species conservation 
     agreement (other than a disposition described in subparagraph 
     (C)),
       ``(ii) the failure by such person to comply with the terms 
     of the endangered species conservation agreement, or
       ``(iii) the termination of the endangered species 
     conservation agreement.
       ``(B) Amount of additional tax.--The amount of the 
     additional tax imposed by subparagraph (A) shall be an amount 
     that bears the same ratio to the fair market value of the 
     real property at the time of the event described in 
     subparagraph (A) as the ratio of the amount by which the 
     estate tax liability was reduced by virtue of this section 
     bore to the fair market value of such property at the time 
     the executor filed the agreement under subsection (b)(1). For 
     purposes of this subparagraph, the term `estate tax 
     liability' means the tax imposed by section 2001 reduced by 
     the credits allowable against such tax.
       ``(C) Exception if transferee assumes obligations of 
     transferor.--Subparagraph (A)(i) shall not apply if the 
     transferor and the transferee of the property enter into a 
     written agreement pursuant to which the transferee agrees--
       ``(i) to assume the obligations imposed on the transferor 
     under the endangered species conservation agreement,
       ``(ii) to assume personal liability for any tax imposed 
     under subparagraph (A) with respect to any future event 
     described in subparagraph (A), and
       ``(iii) to notify the Secretary of the Treasury and the 
     Secretary of the Interior or the Secretary of Commerce that 
     the transferee has assumed such obligations and liability.

     If a transferee enters into an agreement described in clauses 
     (i), (ii), and (iii), such transferee shall be treated as 
     signatory to the endangered species conservation agreement 
     the transferor entered into.
       ``(2) Due date of additional tax.--The additional tax 
     imposed by paragraph (1) shall become due and payable on the 
     day that is 6 months after the date of the disposition 
     referred to in paragraph (1)(A)(i) or, in the case of an 
     event described in clause (ii) or (iii) of paragraph (1)(A), 
     on April 15 of the calendar year following any year in which 
     the Secretary of the Interior or the Secretary of Commerce 
     fails to provide the certification required under subsection 
     (c)(2).
       ``(e) Statute of Limitations.--If a taxpayer incurs a tax 
     liability pursuant to subsection (d)(1)(A), then--
       ``(1) the statutory period for the assessment of any 
     additional tax imposed by subsection (d)(1)(A) shall not 
     expire before the expiration of 3 years from the date the 
     Secretary is notified (in such manner as the Secretary may by 
     regulation prescribe) of the incurring of such tax liability, 
     and
       ``(2) such additional tax may be assessed before the 
     expiration of such 3-year period notwithstanding the 
     provisions of any other law or rule of law that would 
     otherwise prevent such assessment.
       ``(f) Election and Filing of Agreement.--The election under 
     this section shall be made on the return of the tax imposed 
     by section 2001. Such election, and the filing under 
     subsection (a) of an endangered species conservation 
     agreement, shall be made in such manner as the Secretary 
     shall by regulation provide.
       ``(g) Application of This Section to Interests in 
     Partnerships, Corporations, and Trusts.--The Secretary shall 
     prescribe regulations setting forth the application of this 
     section in the case of an interest in a partnership, 
     corporation, or trust which, with respect to a decedent, is 
     an interest in

[[Page S9426]]

     a closely held business (within the meaning of paragraph (1) 
     of section 6166(b)). For purposes of the preceding sentence, 
     an interest in a discretionary trust all the beneficiaries of 
     which are heirs of the decedent shall be treated as a present 
     interest.''
       (b) Carryover Basis.--Section 1014(a)(4) of the Internal 
     Revenue Code of 1986 (relating to basis of property acquired 
     from a decedent) is amended by inserting ``or 2057'' after 
     ``section 2031(c)''.
       (c) Clerical Amendment.--The table of sections for part IV 
     of subchapter A of chapter 11 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

``Sec. 2057. Certain real property subject to endangered species 
              conservation agreement.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 7. EXCLUSION OF 75 PERCENT OF GAIN ON SALES OF LAND TO 
                   CERTAIN PERSONS FOR THE PROTECTION OF HABITAT.

       (a) In General.--Part I of subchapter P of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to treatment of 
     capital gains) is amended by adding at the end the following 
     new section:

     ``SEC. 1203. 75 PERCENT EXCLUSION FOR GAIN ON SALES OF LAND 
                   TO CERTAIN PERSONS FOR THE PROTECTION OF 
                   HABITAT.

       ``(a) Exclusion.--Gross income shall not include 75 percent 
     of any gain from the sale of any land to a conservation 
     purchaser if--
       ``(1) such land was owned by the taxpayer or a member of 
     the taxpayer's family (as defined in section 2032A(e)(2)) at 
     all times during the 3-year period ending on the date of the 
     sale, and
       ``(2) such land is being acquired by a conservation 
     purchaser for the purpose of protecting the habitat of any 
     species listed by the Secretary of the Interior or the 
     Secretary of Commerce under the Endangered Species Act as 
     endangered or threatened, proposed for listing as endangered 
     or threatened, or which is a candidate for such listing.
       ``(b) Conservation Purchaser.--For purposes of this 
     section--
       ``(1) Conservation purchaser.--The term `conservation 
     purchaser' means--
       ``(A) any agency of the United States or of any State or 
     local government, and
       ``(B) any qualified organization.
       ``(2) Qualified organization.--The term `qualified 
     organization' has the meaning given such term by section 
     170(h)(3) (determined without regard to section 
     170(b)(1)(A)(v)).''
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter P of chapter 1 of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new item:

``Sec. 1203. 75-percent exclusion for gain on sales of land to certain 
              persons for the protection of habitat.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to sales after December 31, [1997].

     SEC. 8. RIGHT TO COMPENSATION.

       (a) Prohibition.--No agency action affecting privately 
     owned property under this section shall result in the 
     diminishment of the value of any portion of that property by 
     30 percent or more unless compensation is offered in 
     accordance with this section.
       (b) Compensation for Diminishment.--Any agency that takes 
     an action the economic impact of which exceeds the amount 
     provided in subsection (a)--
       (1) shall compensate the property owner for the diminution 
     in value of the portion of that property resulting from the 
     action; or
       (2) if the diminution in value of a portion of that 
     property is greater than 50 percent, at the option of the 
     owner, such agency shall buy that portion of the property and 
     shall pay fair market value based on the value of the 
     property before the diminution.
       (c) Request of Owner.--A property owner seeking 
     compensation under this section shall make a written request 
     for compensation to the agency whose action would limit the 
     otherwise lawful use of property. The request shall, at a 
     minimum, identify the affected portion of the property, the 
     nature of the diminution, and the amount of compensation 
     claimed.
       (d) Choice of Remedies.--If the parties have not reached an 
     agreement on compensation within 180 days after the written 
     request is made, the owner may elect binding arbitration 
     through alternative dispute resolution or seek compensation 
     due under this section in a civil action. The parties may by 
     mutual agreement extend the period of negotiation on 
     compensation beyond the 180-day period without loss of remedy 
     to the owner under this section. In the event the extension 
     period lapses the owner may elect binding arbitration through 
     alternative dispute resolution or seek compensation due under 
     this section in a civil action.
       (e) Alternative Dispute Resolution.--
       (1) In general.--In the administration of this section--
       (A) arbitration procedures shall be in accordance with the 
     alternative dispute resolution procedures established by the 
     American Arbitration Association; and
       (B) in no event shall arbitration be a condition precedent 
     or an administrative procedure to be exhausted before the 
     filing of a civil action under this section.
       (2) Review of arbitration.--
       (A) Appeal of decision.--Appeal from arbitration decisions 
     shall be to the United States District Court for the district 
     in which the property is located or the United States Court 
     of Federal Claims in the manner prescribed by law for the 
     claim under this section.
       (B) Rules of enforcement of award.--The provisions of title 
     9, United States Code (relating to arbitration), shall apply 
     to enforcement of awards rendered under this section.
       (f) Civil Action.--An owner who prevails in a civil action 
     against any agency pursuant to this section shall be entitled 
     to, and such agency shall be liable for, just compensation, 
     plus reasonable attorney's fees and other litigation costs, 
     including appraisal fees.
       (g) Source of Payments.--Any payment made under this 
     section shall be paid from the responsible agency's annual 
     appropriation supporting the agency's activities giving rise 
     to the claim for compensation. If insufficient funds are 
     available to the agency in the fiscal year in which the award 
     becomes final the agency shall pay the award from 
     appropriations available in the next fiscal year.
       (h) Definitions.--For the purposes of this section--
       (1) the term ``agency'' has the meaning given that term in 
     section 551 of title 5, United States Code;
       (2) the term ``agency action'' means any action or decision 
     taken by any agency that at the time of such action or 
     decision adversely affects private property rights;
       (3) the term ``fair market value'' means the likely price 
     at which property would change hands, in a competitive and 
     open market under all conditions requisite to fair sale, 
     between a willing buyer and willing seller, neither being 
     under any compulsion to buy or sell and both having 
     reasonable knowledge of relevant facts, prior to occurrence 
     of the agency action;
       (4) the term ``just compensation''--
       (A) means compensation equal to the full extent of a 
     property owner's loss, including the fair market value of the 
     private property taken, whether the taking is by physical 
     occupation or through regulation, exaction, or other means; 
     and
       (B) shall include compounded interest calculated from the 
     date of the taking until the date the United States tenders 
     payment;
       (5) the term ``owner'' means the owner or possessor of 
     property or rights in property at the time the taking occurs, 
     including when--
       (A) the statute, regulation, rule, order, guideline, 
     policy, or action is passed or promulgated; or
       (B) the permit, license, authorization, or governmental 
     permission is denied or suspended;
       (6) the term ``property'' means land, an interest in land, 
     proprietary water rights, and any personal property that is 
     subject to use by the Federal Government or to a restriction 
     on use;
       (7) the term ``private property'' or ``property'' means all 
     interests constituting real property, as defined by Federal 
     or State law, protected under the fifth amendment to the 
     United States Constitution, any applicable Federal or State 
     law, or this section, and more specifically constituting--
       (A) real property, whether vested or unvested, including--
       (i) estates in fee, life estates, estates for years, or 
     otherwise;
       (ii) inchoate interests in real property such as remainders 
     and future interests;
       (iii) personalty that is affixed to or appurtenant to real 
     property;
       (iv) easements;
       (v) leaseholds;
       (vi) recorded liens; and
       (vii) contracts or other security interests in, or related 
     to, real property;
       (B) the right to use water or the right to receive water, 
     including any recorded liens on such water right; or
       (C) rents, issues, and profits of land, including minerals, 
     timber, fodder, crops, oil and gas, coal, or geothermal 
     energy.
                                 ______