[House Report 104-46]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     104-46
_______________________________________________________________________


 
                PRIVATE PROPERTY PROTECTION ACT OF 1995

_______________________________________________________________________


 February 23, 1995.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______


    Mr. Canady, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 925]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 925) to compensate owners of private property for 
the effect of certain regulatory restrictions, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                            TABLE OF CONTENTS

                                                                    Page
The Amendment.....................................................     2
Purpose and Summary...............................................     3
Background and Need for the Legislation...........................     3
Hearings..........................................................     5
Committee Consideration...........................................     5
Vote of the Committee.............................................     6
Committee Oversight Findings......................................     7
Committee on Government Reform and Oversight Findings.............     8
New Budget Authority and Tax Expenditures.........................     8
Congressional Budget Office Estimate..............................     8
Inflationary Impact Statement.....................................     9
Section-by-Section Analysis and Discussion........................     9
Dissenting Views..................................................    11

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Private Property Protection Act of 
1995''.

SEC. 2. RIGHT TO COMPENSATION.

  (a) In General.--The Federal Government shall compensate an owner of 
property whose use of that property has been limited by an agency 
action that diminishes the fair market value of that property by 10 
percent or more. The amount of the compensation shall equal the 
diminution in value of the property that resulted from the agency 
action.
  (b) Duration of Limitation on Use.--Property with respect to which 
compensation has been paid under this Act shall not thereafter be used 
contrary to the limitation imposed by the agency action, even if that 
action is later rescinded or otherwise vitiated. However, if that 
action is later rescinded or otherwise vitiated, and the owner elects 
to refund the amount of the compensation, adjusted for inflation, to 
the Treasury of the United States, the property may be so used.

SEC. 3. EFFECT OF STATE LAW.

  No compensation shall be made under this Act if the use limited by 
Federal agency action is proscribed under the law of the State in which 
the property is located (other than a proscription required by a 
Federal law, either directly or as a condition for assistance). If a 
use is a nuisance as defined by the law of a State or is prohibited 
under a local zoning ordinance, that use is proscribed for the purposes 
of this subsection.

SEC. 4. EXCEPTIONS.

  (a) Prevention of Hazard to Health and Safety or Damage to Specific 
Property.--No compensation shall be made under this Act with respect to 
an agency action the purpose of which is to prevent an identifiable--
          (1) hazard to public health or safety; or
          (2) damage to specific property other than the property whose 
        use is limited.
  (b) Navigational Servitude.--No compensation shall be made under this 
Act with respect to an agency action pursuant to the Federal 
navigational servitude.

SEC. 5. PROCEDURE.

  (a) Request of Owner.--An owner seeking compensation under this Act 
shall make a written request for compensation to the agency whose 
agency action resulted in the limitation. No such request may be made 
later than 180 days after the owner receives actual notice of that 
agency action.
  (b) Negotiations.--The agency may bargain with that owner to 
establish the amount of the compensation. If the agency and the owner 
agree to such an amount, the agency shall promptly pay the owner the 
amount agreed upon.
  (c) Choice of Remedies.--If, not later than 180 days after the 
written request is made, the parties do not come to an agreement, the 
owner may choose to take the issue to binding arbitration or seek 
compensation in a civil action.
  (d) Arbitration.--The procedures that govern the arbitration shall, 
as nearly as practicable, be those established under title 9, United 
States Code, for arbitration proceedings to which that title applies. 
An award made in such arbitration shall include a reasonable attorney's 
fee and appraisal fees. The agency shall promptly pay any award made to 
the owner.
  (e) Civil Action.--An owner who does not choose arbitration, or who 
does not receive prompt payment when required by this section, may 
obtain appropriate relief in a civil action against the agency. An 
owner who prevails in a civil action under this section shall be 
entitled to, and the agency shall be liable for, a reasonable 
attorney's fee and appraisal fees. The court shall award interest on 
the amount of any compensation from the time of the limitation.
  (f) Source of Payments.--Any payment made under this section to an 
owner, and any judgment obtained by an owner in a civil action under 
this section shall, notwithstanding any other provision of law, be made 
from the annual appropriation of the agency whose action occasioned the 
payment or judgment. If the agency action resulted from a requirement 
imposed by another agency, then the agency making the payment or 
satisfying the judgment may seek partial or complete reimbursement from 
the appropriated funds of the other agency. For this purpose the head 
of the agency concerned may transfer or reprogram any appropriated 
funds available to the agency. If insufficient funds exist for the 
payment or to satisfy the judgment, it shall be the duty of the head of 
the agency to seek the appropriation of such funds for the next fiscal 
year.

SEC. 6. DEFINITIONS.

  For the purposes of this Act--
          (1) the term ``property'' means land and includes the right 
        to use or receive water;
          (2) a use of property is limited by an agency action if a 
        particular legal right to use that property no longer exists 
        because of the action;
          (3) the term ``agency action'' has the meaning given that 
        term in section 551 of title 5, United States Code, but also 
        includes the making of a grant to a public authority 
        conditioned upon an action by the recipient that would 
        constitute a limitation if done directly by the agency;
          (4) the term ``agency'' has the meaning given that term in 
        section 551 of title 5, United States Code;
          (5) the term ``State'' includes the District of Columbia, 
        Puerto Rico, and any other territory or possession of the 
        United States; and
          (6) the term ``law of the State'' includes the law of a 
        political subdivision of a State.

                          purpose and summary

    The purpose of H.R. 925, the ``Private Property Rights 
Protection Act of 1995,'' is to ensure that private property 
owners are compensated when the use of their property is 
limited by overreaching Federal regulations. H.R. 925 requires 
the Federal government to compensate an owner of property when 
a limitation placed on the use of that owner's property by a 
Federal agency action causes the fair market value of the 
property to be reduced by ten percent or more.
    The Act expressly prohibits compensation for any agency 
action that limits the use of an owner's property if the action 
is undertaken to prevent an identifiable hazard to public 
health or safety or to prevent identifiable damage to any other 
specific property. No compensation is allowed under the Act if 
the use which has been limited by Federal agency action is also 
prohibited under the law of the State where the property is 
located or would be considered a nuisance under State law. 
However, the Federal government is required to compensate an 
owner of property for State action if the State action is 
required by Federal law or is imposed as a condition for 
Federal assistance.
     H.R. 925 establishes a procedural mechanism for 
compensation. If the owner and the agency are unable to come to 
an agreement regarding compensation for the diminution in the 
value of the property, the owner may seek compensation through 
binding arbitration or a civil action and can obtain reasonable 
attorney's fees and appraisal fees.

                  background and need for legislation

    The concept of private property is generally recognized as 
a ``bundle'' of rights including the right to possess property 
and exclude others from that property, the right to freely use 
property in one's possession unless that use will cause harm to 
others or constitute a public nuisance, and the right to 
transfer the property. Presbytery of Seattle v. King County, 
114 Wash. 2d 320, 787 P. 2d 907, 1990.
    The Takings Clause in the Bill of Rights limits government 
encroachment on private property rights. The clause is included 
in the Fifth Amendment to the United States Constitution and 
states, ``* * * [N]or shall private property be taken for 
public use, without just compensation.'' The Takings Clause 
prohibits the government from taking private property, unless 
the property is taken for public use, and the owner receives 
compensation equal to the value of the property.
    In Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 
(1922), the Supreme Court recognized that regulation of 
property could be considered a taking if it ``goes too far.'' 
Unfortunately, there are no bright lines to guide the courts in 
determining whether a government regulation ``goes too far.'' 
Courts must engage in ad hoc factual inquiry on a case-by-case 
basis to determine whether a compensable taking has occurred as 
a result of regulation.
    Both proponents and opponents of property rights 
legislation seem to agree that Takings Clause jurisprudence is 
complicated and unclear. During the February 10, 1995 hearing 
before the Subcommittee on the Constitution, J. Peter Byrne, a 
Georgetown Law School professor who opposes property rights 
legislation, testified that current takings law is ``confused'' 
and called the regulatory takings doctrine ``nuanced and fact-
specific.''
    This ``nuanced and fact-specific'' doctrine leaves both 
government officials and property owners confused and uncertain 
regarding the extent to which regulations can limit the use of 
private property without compensation being required. In fact, 
Chief Judge Loren Smith of the Court of Federal Claims recently 
voiced his concern over the inadequacy of the law of takings in 
addressing the impact of regulations on private property 
rights. In Bowles v. United States, he stated:

          This case presents in sharp relief the difficulty 
        that current takings law forces upon both the federal 
        government and the private citizen. The government here 
        had little guidance from the law as to whether its 
        action was a taking in advance of a long and expensive 
        course of litigation. The citizen likewise had little 
        more precedential guidance than faith in the justice of 
        his cause to sustain a long and costly suit in several 
        courts. There must be a better way to balance 
        legitimate public goals with fundamental individual 
        rights. Courts, however, cannot produce comprehensive 
        solutions. They can only interpret the rather precise 
        language of the fifth amendment to our Constitution in 
        very specific factual circumstances. * * * Judicial 
        decisions are far less sensitive to societal problems 
        than the law and policy made by the political branches 
        of our great constitutional system. At best courts 
        sketch the outlines of individual rights, they cannot 
        hope to fill in the portrait of wise and just social 
        and economic policy. 31 Fed.Cl. 37 (1994).

    The burden of the uncertainty of takings law falls most 
heavily on small property owners who are intimidated by the 
power of bureaucrats. Takings litigation is a long and 
expensive process which only the most well-financed and 
dedicated property owner can endure. Small property owners do 
not have the time or money to bring a lawsuit against the 
Federal government.
    H.R. 925 establishes clear guidance for property owners and 
government officials as to when agency actions go too far and 
infringe on property rights. The Act will force agencies to 
recognize that when they limit the use of an owner's property, 
there are costs imposed on that owner. Agencies will have to 
weigh the benefits and costs of their actions carefully, paying 
close attention to the impact of those actions on individuals 
and the general public. Agencies will also be more accountable 
to Congress, and therefore, be more likely to carry out the 
true intent of the statutes they are charged with enforcing 
rather than continually extending their bureaucratic reach.
    Supreme Court Justice Joseph Story stated that, ``One of 
the fundamental objects of every good government must be the 
due administration of justice; and how vain it would be to 
speak of such an administration, when all property is subject 
to the will or caprice of the legislature and the rulers.'' 
``Commentaries on the Constitution of the United States,'' 2nd 
ed., vol. II (Boston, 1851), 534-535. H.R. 925 will help to 
ensure that property is not subjected ``to the will or caprice 
of'' Federal agencies.

                                hearings

    The Committee's Subcommittee on the Constitution held one 
day of hearings on the need to protect private property rights 
from regulatory takings on February 10, 1995. Testimony was 
received from eleven witnesses: The Honorable John Schmidt, 
Associate Attorney General, U.S. Department of Justice; James 
Ely, Jr., Professor of Law and History, Vanderbilt University 
School of Law; Peter Byrne, Associate Professor, Georgetown Law 
School; Nancy Cline, a property owner from Sonoma, California; 
Reverend Joan Campbell, General Secretary, National Council of 
Churches of Christ; Roger Pilon, Director of the Center for 
Constitutional Studies, the CATO Institute; Roger Marzulla, 
Chairman, Defenders of Property Rights; Honorable Alletta 
Belin, Assistant Attorney General of New Mexico, on behalf of 
the Honorable Tom Udall, Attorney General of New Mexico; Jim 
Miller, Counselor, Citizens For A Sound Economy; the Honorable 
Richard L. Russman, Chairman, New Hampshire Senate Environment 
Committee; Jonathan H. Adler, Associate Director of 
Environmental Studies, Competitive Enterprise Institute; with 
additional material submitted by seven individuals and 
organizations: Representative Karen McCarthy; R. Bruce Josten, 
Senior Vice President of the Membership Policy Group, Chamber 
of Commerce of the United States of America; Dr. Thom White 
Wolf Fassett, on behalf of the General Board of Church and 
Society of the United Methodist Church; Reverend Elenora 
Giddings Ivory, Director of the Washington Office, on behalf of 
the Presbyterian Church (USA); Dr. Patrick W. Grace Cooper, 
Policy Advocate, on behalf of the Office For Church in Society, 
United Church of Christ; Evangelical Lutheran Church in 
America; and the Mennonite Central Committee U.S.

                        committee consideration

    On February 16, 1995, the Committee met in open session and 
ordered reported the bill H.R. 925 with amendments by voice 
vote, a quorum being present.

                         vote of the committee

    The Committee then considered the following with recorded 
votes:
    1. Mr. Frank made a motion to postpone Committee 
consideration of H.R. 925 until Wednesday, February 22, 1995. 
Mr. Frank's motion was defeated by a 12-19 rollcall vote.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mrs. Schroeder                      Mr. Moorhead
Mr. Frank                           Mr. Sensenbrenner
Mr. Boucher                         Mr. McCollum
Mry Bryant (TX)                     Mr. Gekas
Mr. Reed                            Mr. Coble
Mr. Nadler                          Mr. Smith (TX)
Mr. Scott                           Mr. Schiff
Mr. Watt                            Mr. Gallegly
Mr. Serrano                         Mr. Canady
Ms. Lofgren                         Mr. Inglis
Ms. Jackson-Lee                     Mr. Goodlatte
                                    Mr. Hoke
                                    Mr. Bono
                                    Mr. Heineman
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Flanagan
                                    Mr. Barr

    2. Mrs. Schroeder offered an amendment to decrease the 
amount of compensation paid to an owner under the Act by an 
amount equal to any increase in the value of the owner's 
property that resulted from an agency action other than the 
action that caused the limitation for which the owner was 
compensated. The Schroeder amendment was defeated by a rollcall 
vote of 10-12.
        AYES                          NAYS
Mrs. Schroeder                      Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Boucher                         Mr. Gekas
Mr. Bryant (TX)                     Mr. Coble
Mr. Reed                            Mr. Smith (TX)
Mr. Nadler                          Mr. Canady
Mr. Scott                           Mr. Inglis
Mr. Watt                            Mr. Heineman
Ms. Jackson-Lee                     Mr. Bryant (TN)
Mr. Goodlatte                       Mr. Chabot
                                    Mr. Flanagan
                                    Mr. Barr

    3. Mr. Frank offered an amendment to bar an owner from 
receiving any compensation under the Act if at the time he 
acquired the property he knew or should have known that the 
property was or would be limited by an agency action. The Frank 
amendment was defeated by a rollcall vote of 8-16.
        AYES                          NAYS
Mrs. Schroeder                      Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Boucher                         Mr. McCollum
Mr. Bryant (TX)                     Mr. Gekas
Mr. Reed                            Mr. Coble
Mr. Nadler                          Mr. Smith (TX)
Mr. Watt                            Mr. Schiff
Ms. Jackson-Lee                     Mr. Canady
                                    Mr. Inglis
                                    Mr. Goodlatte
                                    Mr. Bono
                                    Mr. Heineman
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Flanagan
                                    Mr. Barr

    4. Mr. Watt offered an amendment to bar compensation under 
the Act unless the agency action that imposed the limitation on 
the use of property is not reasonably related to or in 
furtherance of the purposes of the statute under which the 
action is taken. The amendment also would eliminate the 
requirement that compensation be paid from the appropriated 
funds of the agency. The Watt amendment was defeated by a roll 
call vote of 6-16.
        AYES                          NAYS
Mr. Schroder                        Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Boucher                         Mr. McCollum
Mr. Reed                            Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Jackson-Lee                     Mr. Smith (TX)
                                    Mr. Schiff
                                    Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Hoke
                                    Mr. Bono
                                    Mr. Heineman
                                    Mr. Bryant (TN)
                                    Mr. Chabot
                                    Mr. Flanagan
                                    Mr. Barr

                      committee oversight findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               new budget authority and tax expenditures

    Clause 2(l)(3)(B) of House Rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               congressional budget office cost estimate

    In compliance with clause 2(l)(C)(3) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 925, the following 
estimate and comparison prepared by the Director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 22, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
reviewed H.R. 925, the Private Property Protection Act of 1995, 
as ordered reported by the House Committee on the Judiciary on 
February 16, 1995. Based on our analysis of the language of the 
bill and the legal practice governing payments for takings of 
private property, CBO estimates that enactment of the bill 
would not affect direct spending or receipts. Therefore, pay-
as-you-go procedures would not apply. We have not yet completed 
our analysis of the costs of this legislation, which could be 
significant but would depend on the appropriation of the 
necessary amounts.
    H.R. 925 would address the protection of private property 
rights that may be affected by federal or federally mandated 
regulatory activities. In general, the legislation would 
require the federal government to compensate a private property 
owner whose use of his or her land (or water rights) has been 
limited by an agency's action in a manner that diminishes the 
property's fair market value by 10 percent or more. The amount 
of the compensation owed to the owner would equal the loss of 
market value resulting from the agency's action.
    The bill would provide an alternative to litigation over 
takings by allowing disputes to be resolved through settlement 
or arbitration. Property owners who choose to do so may seek 
compensation, including interest, legal, and other costs, in a 
civil action against the agency. Finally, the bill would 
specify that any compensation, whether awarded by court 
judgment, settlement, or arbitration, must be paid from 
appropriated funds by the agency that caused the taking. The 
agency would be permitted to reprogram or transfer funds from 
any appropriated source available to it and to seek 
reimbursements from other agencies where appropriate.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis.
            Sincerely,
                                              James L. Blum
                              (For Robert D. Reischauer, Director).

                     inflationary impact statement

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that H.R. 925 
will have no significant inflationary impact on prices and 
costs in the national economy.

               section-by-section analysis and discussion

Section 1. Short title

    This section states the short title of the bill as the 
``Private Property Rights Protection Act of 1995.''

Section 2. Right to compensation

    This section requires the Federal government to compensate 
an owner of property when a limitation placed on the use of 
that owner's property by a Federal agency action causes the 
fair market value of the property to be reduced by ten percent 
or more. When determining whether a diminution in value has 
occurred, the interested parties should look to that portion of 
the property which is affected by the agency action. Ownership 
of adjacent unaffected lands is inconsequential for determining 
the diminution in the value of the portion of the property 
affected. This measurement of diminution in value is consistent 
with the court's analysis of whether there had been a denial of 
economically viable use of property in the case of Loveladies 
v. United States, 28 F.3d 1171 (Fed. Cir. 1994).
    The diminution in value of property is measured by 
subtracting the fair market value of the property after the 
agency action from the fair market value of the property before 
the agency action. The situation where an agency action both 
benefits and burdens a parcel of property is clearly taken into 
account in the fair market value of the property after the 
agency action because the fair market value measures the net 
affect of the agency action on the parcel of property.
    Section 2 also prohibits a compensated owner from engaging 
in the use for which he has been compensated, even if the 
agency action that limited the use is later rescinded or 
vitiated, unless the owner elects to refund the compensation to 
the Federal government.

Section 3. Effect of State law

    This section bars compensation under the Act if the use 
which has been limited by Federal agency action is also 
prohibited by a local zoning ordinance or any other law of the 
State where the property is located or if the use would be 
considered a nuisance under State law. There is no provision in 
the Act requiring a State to compensate a property owner for 
State action. However, the Federal government is required to 
compensate a property owner for State action where the State 
action is directly required by Federal law or is a condition of 
Federal assistance.

Section 4. Exceptions

    This section bars compensation under the Act with respect 
to agency action which is undertaken to prevent an identifiable 
hazard to public health or safety or to prevent identifiable 
damage to specific property other than the property whose use 
is limited. In addition, no compensation is permitted with 
respect to an agency action pursuant to the Federal 
navigational servitude.
    The Federal navigational servitude allows the Federal 
government to protect the navigable capacity of rivers and 
lakes open to navigation.

Section 5. Procedure

    This section establishes a procedure by which an owner may 
obtain compensation. An owner seeking compensation under the 
Act is required to make a written request for compensation to 
the agency whose action resulted in the limitation within 180 
days of receiving actual notice of the agency action.
    The section allows the agency to bargain with the owner to 
establish the amount of compensation. If they agree on an 
amount of compensation, the agency is required to promptly pay 
the owner the amount agreed upon. If the agency and the owner 
cannot come to an agreement within 180 days after the written 
request is made, the owner may seek compensation through 
binding arbitration or a civil action and can obtain reasonable 
attorney fees and appraisal fees.
    The section requires any compensation to an owner to be 
paid from the annual appropriation of the agency whose action 
resulted in the limitation on the use of the property. If the 
agency action was required by another agency, the acting agency 
may seek reimbursement from the other agency. If an agency does 
not have sufficient funds to compensate an owner, the agency 
head is required to seek the appropriation of such funds in the 
next fiscal year.
                            DISSENTING VIEWS

    We are strongly opposed to H.R. 925, the Private Property 
Protection Act, which advocates an extremist view of 
compensating private property owners under the Constitution's 
``takings'' clause when government regulations result in 
reducing the fair market value of private property by more than 
10 percent. This is a radical departure from long-settled 
Supreme Court doctrine in an effort to undermine the 
Government's ability to promote the common good by providing 
for ``clean skies, fresh water [and] safe and fair workplaces 
that [the American people] have come to expect.'' \1\
    \1\ Statement of John R. Schmidt, Associate Attorney General, House 
Judiciary Committee's Subcommittee on the Constitution, at page 3 
(February 10, 1995).
---------------------------------------------------------------------------
    The result will be, as a Justice Department official 
testified, ``hardworking American taxpayers * * * will be 
forced to watch as their hard-earned wages are collected by the 
government as taxes and paid out to corporations and large 
landowners as takings compensation.'' \2\
    \2\ Id.
---------------------------------------------------------------------------
    At a time when government downsizing is a rallying cry, 
H.R. 925 senselessly creates a vast new bureaucracy and a new 
entitlement program with so much uncertainty that endless 
litigation is a distinct likelihood.
    There is another motivation for ``takings'' legislation: to 
undermine enforcement on the nation's civil rights laws, such 
as the Americans with Disabilities Act.
I. H.R. 925 radically expands settled Supreme Court law, leading to 
        absurd results and windfalls to investors
    For two centuries the courts have grappled with essential 
questions arising from the few words in the 5th Amendment which 
drive takings law: what uses are ``public,'' how much 
compensation is ``just,'' what is ``property,'' and what 
amounts to a ``taking.'' In the seminal case of Armstrong v. 
United States, the Court described the ``takings'' clause's 
underlying purposes:

          The 5th Amendment's guarantee that private property 
        shall not be taken * * * without just compensation was 
        designed to bar Government from forcing some people 
        alone to bear burdens which, in all fairness and 
        justice, should be borne by the public as a whole.\3\
    \3\ 364 U.S. 40, 49 (1960).

    In several subsequent cases, the Court has further defined 
how to determine whether a ``taking'' has occurred:
          Elimination of the most profitable use of the 
        property is not a taking; \4\
    \4\ Andrus v. Allard, 444 U.S.C. 51 (1979).
---------------------------------------------------------------------------
          A reduction of property value occasioned by 
        government regulation must generally be severe or total 
        for there to be a taking; \5\
    \5\ Penn Central Transportation Co. v. New York City, 438 U.S. 104, 
131 (1978).
---------------------------------------------------------------------------
          A ``mere diminution in the value of property, however 
        serious, is insufficient to demonstrate a taking.'' \6\
    \6\ Concrete Pipe and Products v. Construction Laborers Pension 
Trust, 113 S.Ct. 2264 (1993).
---------------------------------------------------------------------------
    In the landmark Penn Central Transportation Co. v. New York 
City case affirming that communities have the authority to 
adopt laws and regulations designed to protect and enhance the 
quality of life of its citizens,\7\ the Court established that 
regulation of private property is not a taking if:
    \7\ 438 U.S. 104 (1978).
---------------------------------------------------------------------------
          (i) the regulation advances a legitimate governmental 
        interest,
          (ii) the property owner retains some viable use of 
        the property (as measured by the owner's reasonable 
        investment backed expectations).
    The Court in Penn Central also held that property owners 
may not establish a taking ``by showing that they have been 
denied the ability to exploit a property interest that they 
heretofore had believed was available for development,'' and 
that a reviewing court must examine the effect of the 
regulation on the entire property, and not focus on any one 
specific segment or interest.
    Proponents of H.R. 925 have replaced this entire body of 
law with wholly new doctrines, and they have done so with a 
revolutionary fervor. The Cato Institute's Roger Pilon, a 
strong supporter of H.R. 925, bluntly described his views:

          None of us would have any difficulty in saying that 
        if a thief took some of your property, he had taken 
        your property and yet if the government does it, we say 
        that is not a taking. That is the kind of errant 
        nonsense that must be brought to an end by a clear 
        definition of property.\8\
    \8\ Transcript of hearing, Subcommittee on the Constitution, 
February 10, 1995, at page 53.
---------------------------------------------------------------------------
            A. Absurd results
    Because the ``takings'' clause is triggered by any broadly 
defined ``agency action,'' which includes ``a rule, order, 
license, sanction * * * or the failure to act,'' private 
property owners in a variety of absurd situations may be 
emboldened to claim compensation from the government.
    The threshold of 10 percent loss of property value is an 
invitation to every property owner in the country to at least 
try to make a ``takings'' claim which only requires submitting 
a written request to the agency which took some action, such as 
issue a regulation, directive or license.
    The legislation invites property owners and land 
speculators to submit claims to agencies based not on the 
existence of a limitation on an owners' actual intended use of 
that property, rather an alleged denial of the most 
speculatively profitable use of that property.
    Assume a farmer, profitably farming her land, wants to 
build condominiums. It is a wetland, and the Corps permits only 
single family homes. Under H.R. 925 the owner would be 
compensated for the difference in value of the projected use 
and the permitted use even though both uses are profitable. 
This is an absurd result.
    Assume an isolated, inaccessible property worth $1,000 
until a major federal highway and interchange was built nearby, 
thereby increasing the value to $200,000. An agency regulation 
that has the effect of limiting the property's value by an 
additional 10% would entitle the owner to takings compensation. 
Even though the net increase in value resulting from government 
action far exceeds the amount of the limitation, the agency 
would have to pay.
            B. Windfalls
    H.R. 925 also invites compensation of windfalls to 
speculating landowners who purchase property even with notice 
of pending or actual Federal regulations. The Committee 
majority rejected an amendment offered by Representative Frank 
(D.-MA), Ranking Member of the Subcommittee on the 
Constitution, which would have prevented fraudulent claims from 
speculating developers.
    The proposed amendment provides that ``no compensation 
shall be made under this Act to an owner who acquired property 
that owner knew or should have known is or would be limited by 
the agency action.'' The amendment would have denied property 
owners the right to purchase property with knowledge of an 
existing or proposed limitation on use, and then claim 
compensation for denial of the right to so use the property.
    Under H.R. 925 a mining company could buy property in an 
area knowing that mining is prohibited on the land by Federal 
regulation. The Constitution would not permit a claim for 
compensation, because the company was on notice of the 
restriction. If the law reduced the value of the property, the 
company presumably paid ``fair market value'', i.e., the value 
with the restriction intact.
    In rejecting the foreseeability amendment offered by 
Representative Frank, the Committee majority permits the mining 
company to seek a claim for compensation equal to the 
difference in value of the land with and without the 
restriction. Not only would the compensation be a pure 
windfall, it would be a sham.
    The majority also defeated an amendment offered by 
Representative Schroeder (D.-CO) which would have prevented 
agricultural property owners from double dipping by receiving 
crop subsidies which increase the value of their land, and then 
under H.R. 925 claiming compensation for the inability to 
cultivate that same land because it is a wetland, or for some 
other limitation.

II. H.R. 925 creates a new bureaucracy

    H.R. 925 would create a new, unnecessary level of 
bureaucracy to establish and administer mechanisms to review 
claims against each federal agency and to arbitrate disputes 
which arise. The administrative costs alone would be 
staggering.
    For instance, because there are few regulatory activities 
involving restrictions on land use that could be undertaken 
without potential requests for compensation, new bureaucracies 
would have to be created to assess the expected requests for 
compensation.
    As Tom Udall, Attorney General of New Mexico, testified:

          [The bill] would require government lawyers and 
        bureaucrats to devote a great deal of time and 
        resources to determining the fair market value of every 
        piece of property potentially affected by government 
        action and then estimating the dollar impact on all 
        such properties. This is a daunting task--one that is 
        guaranteed to bog down agencies in mounds of paperwork 
        and ensure that they get so involved in the trees that 
        they cannot see the forest. In addition, a whole new 
        workforce of government lawyers would have to be hired 
        just to defend all the claims filed under the 
        provision.\9\
    \9\ Transcript of hearing of House Judiciary Committee's 
Subcommittee on the Constitution, at page 4, (February 10, 1995).

    The result, as a Justice Department witness testified, 
``may well be more government, not less.'' \10\
    \10\ Statement of John R. Schmidt, at page 10.
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    A 1992 assessment by the Congressional Budget Office of a 
related bill, H.R. 1330, which would have required compensation 
by the U.S. Army Corps of Engineers for actions affecting 
wetlands, estimated these costs at between $10 and $15 billion.
    The bill does not limit the amount of any one required 
payment. The bill does not limit the total amount of all 
payments. The bill is a blank check binding taxpayers that 
could bankrupt the Government.

III. H.R. 925's proponents aim to utilize ``takings'' to undermine 
        civil rights laws

    Testifying on behalf of the National Council of the 
Churches of Christ in the USA, the Rev. Dr. Joan Brown 
Campbell, General Secretary, remarked that:

          [t]hirty years ago, the churches became engaged in an 
        earlier debate over the `takings' provisions * * * At 
        that time, it was a ruse used to block racial 
        inclusiveness. Allowing persons of color to live next 
        door, it was argued, would reduce the value of their 
        white neighbor's property and amount to `taking' 
        something away. Overlooked was what racism `took away' 
        from its victims, an issue at the heart of the common 
        good. As one who participated in the civil rights 
        debates I am not surprised to see the issue raised 
        again as a way to avoid the claims of the common 
        good.\11\
    \11\ Statement of Dr. Joan Brown Campbell, House Judiciary 
Subcommittee on the Constitution, at page 4 (February 10, 1995).

    Actions taken under the Fair Housing Act and the Americans 
with Disabilities Act, to cite two examples, could result in 
compensation entitlement because compliance might reduce the 
value of property. An owner could show that a Federal 
prohibition on a restrictive covenant which the owner wishes to 
enforce lowers the value of her land.
    Richard Pilon of the Cato Institute revealed in his 
testimony to the Subcommittee on the Constitution one strong 
motivation of the legislation: a takings bill in this form is a 
first step toward repealing the Americans with Disabilities 
Act. (Transcript at pp. 63-5.)

                               conclusion

    We dissent because H.R. 925 is a poorly drafted bill which 
promotes an extremist view of compensation and is little more 
than a vehicle to shut down important functions of government. 
As the Administration testified at the one subcommittee hearing 
on this issue, ``hardworking American taxpayers will be the 
losers. Either they will no longer be able to enjoy the clean 
skies, fresh water, safe and fair workplaces that they have 
come to expect or they will be forced to watch as their hard-
earned wages are collected by the government as taxes and paid 
out to corporations and large landowners as takings 
compensation.''

                                   John Conyers, Jr.
                                   Jose E. Serrano.
                                   Howard L. Berman.
                                   Pat Schroeder.
                                   Melvin L. Watt.
                                   Bobby Scott.
                                   Barney Frank.
                                   Jerrold Nadler.
                                   Zoe Lofgren.
                                   Sheila Jackson-Lee.
                                   Jack Reed.
                                   Xavier Becerra.