[Senate Report 104-239]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 301
104th Congress                                                   Report
                                 SENATE
 2d Session                                                     104-239
_______________________________________________________________________


 
            THE OMNIBUS PROPERTY RIGHTS ACT OF 1995--S. 605

                                _______


                 March 1, 1996.--Ordered to be printed

_______________________________________________________________________


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

                              R E P O R T

                             together with

              SUPPLEMENTAL, ADDITIONAL, AND MINORITY VIEWS

                         [To accompany S. 605]

    The Committee on the Judiciary, to which was referred the 
bill (S. 605) to establish a uniform and more efficient Federal 
process for protecting property owners' rights guaranteed by 
the fifth amendment, having considered the same, reports 
favorably thereon with an amendment in the nature of a 
substitute and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Legislative history.............................................12
 II. The need for S. 605.............................................13
          A. Current Takings Clause jurisprudence................    15
          B. Explanation of the bill.............................    20
          C. Answers to criticism of the bill....................    26
III. Vote of the committee...........................................30
 IV. Section-by-section analysis.....................................31
  V. Cost estimate...................................................39
 VI. Regulatory impact statement.....................................46
VII. Supplemental views of Senator Grassley..........................47
VIII.Additional views of Senator Heflin..............................49

 IX. Minority views of Senators Biden, Kennedy, Leahy, Simon, Kohl, 
     Feinstein, and Feingold.........................................53
  X. Additional views of Senator Leahy...............................78
 XI. Additional views of Senator Feingold............................82
XII. Changes in existing law.........................................85

    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 ``Omnibus Property Rights Act of 
1995''.

                     TITLE I--FINDINGS AND PURPOSES

SEC. 101. FINDINGS.

    The Congress finds that--
          (1) the private ownership of property is essential to a free 
        society and is an integral part of the American tradition of 
        liberty and limited government;
          (2) the framers of the United States Constitution, in order 
        to protect private property and liberty, devised a framework of 
        Government designed to diffuse power and limit Government;
          (3) to further ensure the protection of private property, the 
        fifth amendment to the United States Constitution was ratified 
        to prevent the taking of private property by the Federal 
        Government, except for public use and with just compensation;
          (4) the purpose of the takings clause of the fifth amendment 
        of the United States Constitution, as the Supreme Court stated 
        in Armstrong v. United States, 364 U.S. 40, 49 (1960), is ``to 
        bar Government from forcing some people alone to bear public 
        burdens, which in all fairness and justice, should be borne by 
        the public as a whole'';
          (5) the Federal Government has singled out property holders 
        to shoulder the cost that should be borne by the public, in 
        violation of the just compensation requirement of the takings 
        clause of the fifth amendment of the United States 
        Constitution;
          (6) there is a need both to restrain the Federal Government 
        in its overzealous regulation of the private sector and to 
        protect private property, which is a fundamental right of the 
        American people; and
          (7) the incremental, fact-specific approach that courts now 
        are required to employ in the absence of adequate statutory 
        language to vindicate property rights under the fifth amendment 
        of the United States Constitution has been ineffective and 
        costly and there is a need for Congress to clarify the law and 
        provide an effective remedy.

SEC. 102. PURPOSE.

    The purpose of this Act is to encourage, support, and promote the 
private ownership of property by ensuring the constitutional and legal 
protection of private property by the United States Government by--
          (1) the establishment of a new Federal judicial claim through 
        which to vindicate and protect property rights;
          (2) the simplification and clarification of court 
        jurisdiction over property right claims;
          (3) the establishment of an administrative procedure that 
        requires the Federal Government to assess the impact of 
        government action on holders of private property;
          (4) the minimization, to the greatest extent possible, of the 
        taking of private property by the Federal Government and to 
        ensure that just compensation is paid by the Government for any 
        taking; and
          (5) the establishment of administrative compensation 
        procedures involving the enforcement of the Endangered Species 
        Act of 1973 and section 404 of the Federal Water Pollution 
        Control Act.

              TITLE II--PROPERTY RIGHTS LITIGATION RELIEF

SEC. 201. FINDINGS.

    The Congress finds that--
          (1) property rights have been abrogated by the application of 
        laws, regulations, and other actions by the Federal Government 
        that adversely affect the value of private property;
          (2) certain provisions of sections 1346 and 1402 and chapter 
        91 of title 28, United States Code (commonly known as the 
        Tucker Act), that delineate the jurisdiction of courts hearing 
        property rights claims, complicates the ability of a property 
        owner to vindicate a property owner's right to just 
        compensation for a governmental action that has caused a 
        physical or regulatory taking;
          (3) current law--
                  (A) forces a property owner to elect between 
                equitable relief in the district court and monetary 
                relief (the value of the property taken) in the United 
                States Court of Federal Claims;
                  (B) is used to urge dismissal in the district court 
                on the ground that the plaintiff should seek just 
                compensation in the Court of Federal Claims; and
                  (C) is used to urge dismissal in the Court of Federal 
                Claims on the ground that plaintiff should seek 
                equitable relief in district court;
          (4) property owners cannot fully vindicate property rights in 
        one court;
          (5) property owners should be able to fully recover for a 
        taking of their private property in one court;
          (6) certain provisions of sections 1346 and 1402 and chapter 
        91 of title 28, United States Code (commonly known as the 
        Tucker Act) should be amended, giving both the district courts 
        of the United States and the Court of Federal Claims 
        jurisdiction to hear all claims relating to property rights; 
        and
          (7) section 1500 of title 28, United States Code, which 
        denies the Court of Federal Claims jurisdiction to entertain a 
        suit which is pending in another court and made by the same 
        plaintiff, should be repealed.

SEC. 202. PURPOSES.

    The purposes of the title are to--
          (1) establish a clear, uniform, and efficient judicial 
        process whereby aggrieved property owners can obtain 
        vindication of property rights guaranteed by the fifth 
        amendment to the United States Constitution and this Act;
          (2) amend the Tucker Act, including the repeal of section 
        1500 of title 28, United States Code;
          (3) rectify the constitutional imbalance between the Federal 
        Government and the States; and
          (4) require the Federal Government to compensate property 
        owners for the deprivation of property rights that result from 
        State agencies' enforcement of federally mandated programs.

SEC. 203. DEFINITIONS.

    For purposes of this title the term--
          (1) ``agency'' means a department, agency, independent 
        agency, or instrumentality of the United States, including any 
        military department, Government corporation, Government-
        controlled corporation, or other establishment in the executive 
        branch of the United States Government;
          (2) ``agency action'' means any action, inaction, or decision 
        taken by an agency or State agency that at the time of such 
        action, inaction, or decision adversely affects private 
        property rights;
          (3) ``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;
          (4) ``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;
          (5) ``private property'' or ``property'' means all property 
        protected under the fifth amendment to the United States 
        Constitution, any applicable Federal or State law, or this Act, 
        and includes--
                  (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 lines on such water 
                right;
                  (C) rents, issues, and profits of land, including 
                minerals, timber, fodder, crops, oil and gas, coal, or 
                geothermal energy;
                  (D) property rights provided by, or memorialized in, 
                a contract, except that such rights shall not be 
                construed under this title to prevent the United States 
                from prohibiting the formation of contracts deemed to 
                harm the public welfare or to prevent the execution of 
                contracts for--
                          (i) national security reasons; or
                          (ii) exigencies that present immediate or 
                        reasonably foreseeable threats or injuries to 
                        life or property;
                  (E) any interest defined as property under State law; 
                or
                  (F) any interest understood to be property based on 
                custom, usage, common law, or mutually reinforcing 
                understandings sufficiently well-grounded in law to 
                back a claim of interest;
          (6) ``State agency'' means any State department, agency, 
        political subdivision, or instrumentality that--
                  (A) carries out or enforces a regulatory program 
                required under Federal law;
                  (B) is delegated administrative or substantive 
                responsibility under a Federal regulatory program; or
                  (C) receives Federal funds in connection with a 
                regulatory program established by a State,
        if the State enforcement of the regulatory program, or the 
        receipt of Federal funds in connection with a regulatory 
        program established by a State, is directly related to the 
        taking of private property seeking to be vindicated under this 
        Act; and
          (7) ``taking of private property'', ``taking'', or ``take''--
                  (A) means any action whereby private property is the 
                object of that action and is taken so as to require 
                compensation under the fifth amendment to the United 
                States Constitution or under this Act, including by 
                physical invasion, regulation, exaction, condition, or 
                other means; and
                  (B) shall not include--
                          (i) a condemnation action filed by the United 
                        States in an applicable court; or
                          (ii) an action filed by the United States 
                        relating to criminal forfeiture.

SEC. 204. COMPENSATION FOR TAKEN PROPERTY.

    (a) In General.--No agency or State agency, shall take private 
property except for public use and with just compensation to the 
property owner. A property owner shall receive just compensation if--
          (1) as a consequence of an action of any agency, or State 
        agency, private property (whether all or in part) has been 
        physically invaded or otherwise taken without the consent of 
        the owner; and
          (2)(A) such action does not substantially advance the stated 
        governmental interest to be achieved by the legislation or 
        regulation on which the action is based;
          (B) such action exacts or affects the owner's constitutional 
        or otherwise lawful right to use the property or a portion of 
        such property as a condition for the granting of a permit, 
        license, variance, or any other agency action without a rough 
        proportionality between the stated need for the required 
        dedication and the impact of the proposed use of the property;
          (C) such action results in the property owner being deprived, 
        either temporarily or permanently, of all or substantially all 
        economically beneficial or productive use of the property or 
        that part of the property affected by the action without a 
        showing that such deprivation inheres in the title itself;
          (D) such action diminishes the fair market value of the 
        property or the affected portion of the property which is the 
        subject of the action by 33 percent or more with respect to the 
        value immediately prior to the governmental action; or
          (E) under any other circumstance where a taking has occurred 
        within the meaning of the fifth amendment of the United States 
        Constitution.
    (b) No Claim Against State or State Instrumentality.--No action may 
be filed under this section against a State agency for carrying out the 
functions described under section 203(6). Claims arising from the 
action, inaction, or decision of a State agency are properly filed 
against the Federal agency which administers the relevant Federal 
program.
    (c) Burden of Proof.--(1) The Government shall bear the burden of 
proof in any action described under--
          (A) subsection (a)(2)(A), with regard to showing the nexus 
        between the stated governmental purpose of the governmental 
        interest and the impact on the proposed use of private 
        property;
          (B) subsection (a)(2)(B), with regard to showing the 
        proportionality between the exaction or affect and the impact 
        of the proposed use of the property; and
          (C) subsection (a)(2)(C), with regard to showing that such 
        deprivation of value inheres in the title to the property.
    (2) The property owner shall have the burden of proof in any action 
described under subsection (a)(2)(D), with regard to establishing the 
diminution of value of property.
    (d) Compensation and Nuisance Exception to Payment of Just 
Compensation.--(1) No compensation shall be required by this Act if the 
owner's use or proposed use of the property is a nuisance as commonly 
understood and defined by background principles of nuisance and 
property law, as understood within the State in which the property is 
situated. To bar an award of damages under this Act, the United States 
shall have the burden of proof to establish that the use or proposed 
use of the property is a nuisance.
    (2)(A) Subject to paragraph (1), if an agency action directly takes 
property or a portion of property under subsection (a), compensation to 
the owner of the property that is affected by the action shall be 
either the greater of an amount equal to the difference between--
          (i) the fair market value of the property or the affected 
        portion of the property before such property or the affected 
        portion of such property became the object of the agency 
        action; and
          (ii) the fair market value of the property or the affected 
        portion of the property when such property or the affected 
        portion of such property becomes subject to the agency action.
    (B) Where appropriate, the calculation of fair market value shall 
include business losses.
    (e) Transfer of Property Interest.--The United States shall take 
title to the property interest for which the United States pays a claim 
under this Act.
    (f) Source of Compensation.--Awards of compensation referred to in 
this section, whether by judgment, settlement, or administrative 
action, shall be promptly paid by the agency out of currently available 
appropriations supporting the activities giving rise to the claims for 
compensation. If the agency action resulted from a requirement imposed 
by another agency, the agency making the payment or satisfying the 
judgment may seek partial or complete reimbursement from the 
appropriated funds of the other agency. If insufficient funds are 
available to the agency in the fiscal year in which the award becomes 
final, the agency shall either pay the award from appropriations 
available in the next fiscal year of promptly seek additional 
appropriations for such purpose.

SEC. 205. JURISDICTION AND JUDICIAL REVIEW.

    (a) In General.--A property owner may file a civil action under 
this Act to challenge the validity of any agency action that adversely 
affects the owner's interest in private property in either the United 
States District Court or the United States Court of Federal Claims. 
This section constitutes express waiver of the sovereign immunity of 
the United States. Notwithstanding any other provision of law and 
notwithstanding the issues involved, the relief sought, or the amount 
in controversy, each court shall have concurrent jurisdiction over both 
claims for monetary relief and claims seeking invalidation of any Act 
of Congress or any regulation of an agency as defined under this Act 
affecting private property rights. The plaintiff shall have the 
election of the court in which to file a claim for relief.
    (b) Appeals.--In any appeal resulting from a claim under this 
section, the United States Court of Appeals for the Federal Circuit 
shall have exclusive jurisdiction--
          (1) of an appeal from a final decision of a district court of 
        the United States, the United States District Court of Guam, 
        the United States District Court of the Virgin Islands, or the 
        District Court for the Northern Mariana Islands, if the 
        jurisdiction of that court was based, in whole or in part, on 
        subsection (a); and
          (2) of an appeal from a final decision of the United States 
        Court of Federal Claims if that jurisdiction was based, in 
        whole or in part, on subsection (a).
    (c) Standing.--Persons adversely affected by an agency action taken 
under this Act shall have standing to challenge and seek judicial 
review of that action.
    (d) Amendments to Title 28, United States Code.--(1) Section 
1491(a) of title 28, United States Code, is amended--
          (A) in paragraph (1) by amending the first sentence to read 
        as follows: ``The United States Court of Federal Claims shall 
        have jurisdiction to render judgment upon any claim against the 
        United States for monetary relief founded either upon the 
        Constitution or any Act of Congress or any regulation of an 
        executive department, or upon any express or implied contract 
        with the United States, in cases not sounding in tort, or for 
        invalidation of any Act of Congress or any regulation of an 
        executive department that adversely affects private property 
        rights in violation of the fifth amendment of the United States 
        Constitution'';
          (B) in paragraph (2) by inserting before the first sentence 
        the following: ``In any case within its jurisdiction, the Court 
        of Federal Claims shall have the power to grant injunctive and 
        declaratory relief when appropriate.''; and
          (C) by adding at the end thereof the following new 
        paragraphs:
          ``(4) In cases otherwise within its jurisdiction, the Court 
        of Federal Claims shall also have supplemental jurisdiction, 
        concurrent with the courts designated in section 1346(b) of 
        this title, to render judgment upon any related tort claim 
        authorized under section 2674 of this title.
          ``(5) In proceedings within the jurisdiction of the Court of 
        Federal Claims which constitute judicial review of agency 
        action (rather than de novo proceedings), the provisions of 
        section 706 of title 5 shall apply.''.
    (2)(A) Section 1500 of title 28, United States Code, is repealed.
    (B) The table of sections for chapter 91 of title 28, United States 
Code, is amended by striking out the item relating to section 1500.

SEC. 206. STATUTE OF LIMITATIONS.

    The statute of limitation for actions brought under this title 
shall be 6 years from the date of the taking of private property.

SEC. 207. ATTORNEYS' FEES AND COSTS.

    The court, in issuing any final order in any action brought under 
this title, shall award costs of litigation (including reasonable 
attorney and expert witness fees) to any prevailing plaintiff.

SEC. 208. RULES OF CONSTRUCTION.

    Nothing in this title shall be construed to interfere with the 
authority of any State to create additional property rights.

SEC. 209. EFFECTIVE DATE.

    The provisions of this title and amendments made by this title 
shall take effect on the date of the enactment of this Act and shall 
apply to any agency action that occurs after such date.

               TITLE III--ALTERNATIVE DISPUTE RESOLUTION

SEC. 301. ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--Either party to a dispute over a taking of private 
property as defined under title II of this Act or litigation commenced 
under such title may elect to resolve the dispute through settlement or 
arbitration. In the administration of this section--
          (1) such alternative dispute resolution may only be 
        effectuated by the consent of all parties;
          (2) arbitration procedures shall be in accordance with the 
        alternative dispute resolution procedures established by the 
        American Arbitration Association; and
          (3) 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 Act.
    (b) Compensation as a Result of Arbitration.--The amount of 
arbitration awards shall be paid from the responsible agency's 
currently available appropriations 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 either pay the award from appropriations 
available in the next fiscal year or promptly seek additional 
appropriations for such purpose.
    (c) Review of Arbitration.--(1) Appeal from arbitration decisions 
shall be to the United States District Court or the United States Court 
of Federal Claims in the manner prescribed by law for the claim under 
this Act.
    (2) The provisions of title 9, United States Code (relating to 
arbitration), shall apply to enforcement of awards rendered under this 
section.
    (d) Payment of Certain Compensation.--In any appeal under 
subsection (c), the amount of the award of compensation shall be 
promptly paid by the agency from appropriations supporting the 
activities giving rise to the claim for compensation currently 
available at the time of final action on the appeal. If insufficient 
funds are available to the agency in the fiscal year in which the award 
becomes final, the agency shall either pay the award from 
appropriations available in the next fiscal year or promptly seek 
additional appropriations for such purpose.

           TITLE IV--PRIVATE PROPERTY TAKING IMPACT ANALYSIS

SEC. 401. PURPOSES.

    The purposes of this title are--
          (1) to protect the health, safety, welfare, and rights of the 
        public; and
          (2) to the extent practicable, avoid takings of private 
        property by assessing the effect of government action on 
        private property rights.

SEC. 402. DEFINITIONS.

    For purposes of this title the term--
          (1) ``agency'' means an agency as defined under section 203 
        of this Act, but shall not include the General Accounting 
        Office;
          (2) ``rule'' has the same meaning as such term is defined 
        under section 551(4) of title 5, United States Code; and
          (3) ``taking of private property'' has the same meaning as 
        such term is defined under section 203 of this Act.

SEC. 403. PRIVATE PROPERTY TAKING IMPACT ANALYSIS.

    (a) In General.--(1) The Congress authorizes and directs that, to 
the fullest extent possible--
          (A) the policies, regulations, and public laws of the United 
        States shall be interpreted and administered in accordance with 
        the policies under this title; and
          (B) subject to paragraph (2), all agencies of the Federal 
        Government shall complete a private property taking impact 
        analysis before issuing or promulgating any policy, regulation, 
        proposed legislation, or related agency action which is likely 
        to result in a taking of private property.
    (2) The provisions of paragraph (1)(B) shall not apply to--
          (A) an action in which the power of eminent domain is 
        formally exercised;
          (B) an action taken--
                  (i) with respect to property held in trust by the 
                United States; or
                  (ii) in preparation for, or in connection with, 
                treaty negotiations with foreign nations;
          (C) a law enforcement action, including seizure, for a 
        violation of law, of property for forfeiture, or as evidence in 
        a criminal proceeding;
          (D) a study or similar effort or planning activity;
          (E) a communication between an agency and a State or local 
        land-use planning agency concerning a planned or proposed State 
        or local activity that regulates private property; regardless 
        of whether the communication is initiated by an agency or is 
        undertaken in response to an invitation by the State or local 
        authority;
          (F) the placement of a military facility or a military 
        activity involving the use of solely Federal property;
          (G) any military or foreign affairs function (including a 
        procurement function under a military or foreign affairs 
        function), but not including the civil works program of the 
        Army Corps of Engineers; and
          (H) any case in which there is an immediate threat to health 
        or safety that constitutes an emergency requiring immediate 
        response or the issuance of a regulation under section 
        553(b)(B) of title 5, United States Code, if the taking impact 
        analysis is completed after the emergency action is carried out 
        or the regulation is published.
    (3) A private property taking impact analysis shall be a written 
statement that includes--
          (A) the specific purpose of the policy, regulation, proposal, 
        recommendation, or related agency action;
          (B) an assessment of the likelihood that a taking of private 
        property will occur under such policy, regulation, proposal, 
        recommendation, or related agency action;
          (C) an evaluation of whether such policy, regulation, 
        proposal, recommendation, or related agency action is likely to 
        require compensation to private property owners;
          (D) alternatives to the policy, regulation, proposal, 
        recommendation, or related agency action that would achieve the 
        intended purposes of the agency action and lessen the 
        likelihood that a taking of private property will occur; and
          (E) an estimate of the potential liability of the Federal 
        Government if the Government is required to compensate a 
        private property owner.
    (4) Each agency shall provide an analysis required under this 
section as part of any submission otherwise required to be made to the 
Office of Management and Budget in conjunction with a proposed 
regulation.
    (b) Guidance and Reporting Requirements.--(1) The Attorney General 
of the United States shall provide legal guidance in a timely manner, 
in response to a request by an agency, to assist the agency in 
complying with this section.
    (2) No later than 1 year after the date of enactment of this Act 
and at the end of each 1-year period thereafter, each agency shall 
submit a report to the Director of the Office of Management and Budget 
and the Attorney General of the United States identifying each agency 
action that has resulted in the preparation of a taking impact 
analysis, the filing of a taking claim, or an award of compensation 
under the just compensation clause of the fifth amendment of the United 
States Constitution. The Director of the Office of Management and 
Budget and the Attorney General of the United States shall publish in 
the Federal Register, on an annual basis, a compilation of the reports 
of all agencies submitted under this paragraph.
    (c) Public Availability of Analysis.--An agency shall--
          (1) make each private property taking impact analysis 
        available to the public; and
          (2) to the greatest extent practicable, transmit a copy of 
        such analysis to the owner or any other person with a property 
        right or interest in the affected property.
    (d) Presumptions in Proceedings.--For the purpose of any agency 
action or administrative or judicial proceeding, there shall be a 
rebuttable presumption that the costs, values, and estimates in any 
private property takings impact analysis shall be outdated and 
inaccurate, if--
          (1) such analysis was completed 5 years or more before the 
        date of such action or proceeding; and
          (2) such costs, values, or estimates have not been modified 
        within the 5-year period preceding the date of such action or 
        proceeding.

SEC. 404. DECISIONAL CRITERIA AND AGENCY COMPLIANCE.

    (a) In General.--No final rule shall be promulgated if enforcement 
of the rule could reasonably be construed to require an uncompensated 
taking of private property as defined by this Act.
    (b) Compliance.--In order to meet the purposes of this title as 
expressed in section 401, all agencies shall--
          (1) review, and where appropriate, re-promulgate all 
        regulations that result in takings of private property under 
        this Act, and reduce such takings of private property to the 
        maximum extent possible within existing statutory requirements;
          (2) prepare and submit their budget requests consistent with 
        the purposes of this title as expressed in section 401 for 
        fiscal year 1997 and all fiscal years thereafter; and
          (3) within 120 days of the effective date of this section, 
        submit to the appropriate authorizing and appropriating 
        committees of the Congress a detailed list of statutory changes 
        that are necessary to meet fully the purposes of section 401, 
        along with a statement prioritizing such amendments and an 
        explanation of the agency's reasons for such prioritization.

SEC. 405. RULES OF CONSTRUCTION.

    Nothing in this title shall be construed to--
          (1) limit any right or remedy, constitute a condition 
        precedent or a requirement to exhaust administrative remedies, 
        or bar any claim of any person relating to such person's 
        property under any other law, including claims made under this 
        Act, section 1346 or 1402 of title 28, United States Code, or 
        chapter 91 of title 28, United States Code; or
          (2) constitute a conclusive determination of--
                  (A) the value of any property for purposes of an 
                appraisal for the acquisition of property, or for the 
                determination of damages; or
                  (B) any other material issue.

SEC. 406. STATUTE OF LIMITATIONS.

    No action may be filed in a court of the United States to enforce 
the provisions of this title on or after the date occurring 6 years 
after the date of the submission of the applicable private property 
taking impact analysis to the Office of Management and Budget.

     TITLE V--PRIVATE PROPERTY OWNERS ADMINISTRATIVE BILL OF RIGHTS

SEC. 501. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that--
          (1) a number of Federal environmental programs, specifically 
        programs administered under the Endangered Species Act of 1973 
        (16 U.S.C. 1531 et seq.) and section 404 of the Federal Water 
        Pollution Control Act (33 U.S.C. 1344), have been implemented 
        by employees, agents, and representatives of the Federal 
        Government in a manner that deprives private property owners of 
        the use and control of property;
          (2) as Federal programs are proposed that would limit and 
        restrict the use of private property to provide habitat for 
        plant and animal species, the rights of private property owners 
        must be recognized and respected;
          (3) private property owners are being forced by Federal 
        policy to resort to extensive, lengthy, and expensive 
        litigation to protect certain basic civil rights guaranteed by 
        the United States Constitution;
          (4) many private property owners do not have the financial 
        resources or the extensive commitment of time to proceed in 
        litigation against the Federal Government;
          (5) a clear Federal policy is needed to guide and direct 
        Federal agencies with respect to the implementation of 
        environmental laws that directly impact private property;
          (6) all private property owners should and are required to 
        comply with current nuisance laws and should not use property 
        in a manner that harms their neighbors;
          (7) nuisance laws have traditionally been enacted, 
        implemented, and enforced at the State and local level where 
        such laws are best able to protect the rights of all private 
        party owners and local citizens; and
          (8) traditional pollution control laws are intended to 
        protect the general public's health and physical welfare, and 
        current habitat protection programs are intended to protect the 
        welfare of plant and animal species.
    (b) Purposes.--The purposes of this title are to--
          (1) provide a consistent Federal policy to encourage, 
        support, and promote the private ownership of property; and
          (2) to establish an administrative process and remedy to 
        ensure that the constitutional and legal rights of private 
        property owners are protected by the Federal Government and 
        Federal employees, agents, and representatives.

SEC. 502. DEFINITIONS.

    For purposes of this title the term--
          (1) ``the Acts'' means the Endangered Species Act of 1973 (16 
        U.S.C. 1531 et seq.) and section 404 of the Federal Water 
        Pollution Control Act (33 U.S.C. 1344);
          (2) ``agency head'' means the Secretary or Administrator with 
        jurisdiction or authority to take a final agency action under 
        the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.) or 
        section 404 of the Federal Water Pollution Control Act (33 
        U.S.C. 1344).
          (3) ``non-Federal person'' means a person other than an 
        officer, employee, agent, department, or instrumentality of--
                  (A) the Federal Government; or
                  (B) a foreign government;
          (4) ``private property owner'' means a non-Federal person 
        (other than an officer, employee, agent, department, or 
        instrumentality of a State, municipality, or political 
        subdivision of a State, acting in an official capacity or a 
        State, municipality, or sub-division of a State) that--
                  (A) owns property referred to under paragraph (5)(A) 
                or (B); or
                  (B) holds property referred to under paragraph 
                (5)(C);
          (5) ``property'' means--
                  (A) land;
                  (B) any interest in land; and
                  (C) the right to use or the right to receive water; 
                and
          (6) ``qualified agency action'' means an agency action (as 
        that term is defined in section 551(13) of title 5, United 
        States Code) that is taken--
                  (A) under section 404 of the Federal Water Pollution 
                Control Act (33 U.S.C. 1344); or
                  (B) under the Endangered Species Act of 1973 (16 
                U.S.C. 1531 et seq.).

SEC. 503. PROTECTION OF PRIVATE PROPERTY RIGHTS.

    (a) In General.--In implementing and enforcing the Acts, each 
agency head shall--
          (1) comply with applicable State and tribal government laws, 
        including laws relating to private property rights and privacy; 
        and
          (2) administer and implement the Acts in a manner that has 
        the least impact on private property owners' constitutional and 
        other legal rights.
    (b) Final Decisions.--Each agency head shall develop and implement 
rules and regulations for ensuring that the constitutional and other 
legal rights of private property owners are protected when the agency 
head makes, or participates with other agencies in the making of, any 
final decision that restricts the use of private property in 
administering and implementing this Act.

SEC. 504. PROPERTY OWNER CONSENT FOR ENTRY.

    (a) In General.--An agency head may not enter privately owned 
property to collect information regarding the property, unless the 
private property owner has--
          (1) consented in writing to that entry;
          (2) after providing that consent, been provided notice of 
        that entry; and
          (3) been notified that any raw data collected from the 
        property shall be made available at no cost, if requested by 
        the private property owner.
    (b) Nonapplication.--Subsection (a) does not prohibit entry onto 
property for the purpose of obtaining consent or providing notice 
required under subsection (a).

SEC. 505. RIGHT TO REVIEW AND DISPUTE DATA COLLECTED FROM PRIVATE 
                    PROPERTY.

    An agency head may not use data that is collected on privately 
owned property to implement or enforce the Acts, unless--
          (1) the agency head has provided to the private property 
        owner--
                  (A) access to the information;
                  (B) a detailed description of the manner in which the 
                information was collected, and
                  (C) an opportunity to dispute the accuracy of the 
                information; and
          (2) the agency head has determined that the information is 
        accurate, if the private property owner disputes the accuracy 
        of the information under paragraph (1)(C).

SEC. 506. RIGHT TO AN ADMINISTRATIVE APPEAL OF WETLANDS DECISIONS.

    Section 404 of the Federal Water Pollution Control Act (33 U.S.C. 
1344) is amended by adding at the end of the following new subsection:
    ``(u) Administrative Appeals.--
          ``(1) The Secretary or Administrator shall, after notice and 
        opportunity for public comment, issue rules to establish 
        procedures to allow private property owners or their authorized 
        representatives an opportunity for an administrative appeal of 
        the following actions under this section:
                  ``(A) A determination of regulatory jurisdiction over 
                a particular parcel of property.
                  ``(B) The denial of a permit.
                  ``(C) The terms and conditions of a permit.
                  ``(D) The imposition of an administrative penalty.
                  ``(E) The imposition of an order requiring the 
                private property owner to restore or otherwise alter 
                the property.
          ``(2) Rules issued under paragraph (1) shall provide that any 
        administrative appeal of an action described in paragraph (1) 
        shall be heard and decided by an official other than the 
        official who took the action, and shall be conducted at a 
        location which is in the vicinity of the property involved in 
        the action.
          ``(3) An owner of private property may receive compensation, 
        if appropriate, subject to the provisions of section 508 of the 
        Omnibus Property Rights Act of 1995.''.

SEC. 507. RIGHT TO ADMINISTRATIVE APPEAL UNDER THE ENDANGERED SPECIES 
                    ACT OF 1973.

    Section 11 of the Endangered Species Act of 1973 (16 U.S.C. 1540) 
is amended by adding at the end the following new subsection:
    ``(i) Administrative Appeals.--
          ``(1) The Secretary shall, after notice and opportunity for 
        public comment, issue rules to establish procedures to allow 
        private property owners or their authorized representatives an 
        opportunity for an administrative appeal of the following 
        actions:
                  ``(A) A determination that a particular parcel of 
                property is critical habitat of a listed species.
                  ``(B) The denial of a permit for an incidental take.
                  ``(C) The terms and conditions of an incidental take 
                permit.
                  ``(D) The finding of jeopardy in any consultation on 
                an agency action affecting a particular parcel of 
                property under section 7(a)(2) or any reasonable and 
                prudent alternative resulting from such finding.
                  ``(E) Any incidental `take' statement, and any 
                reasonable and prudent measures included therein, 
                issued in any consultation affecting a particular 
                parcel of property under section 7(a)(2).
                  ``(F) The imposition of an administrative penalty.
                  ``(G) The imposition of an order prohibiting or 
                substantially limiting the use of the property.
          ``(2) Rules issued under paragraph (1) shall provide that any 
        administrative appeal of an action described in paragraph (1) 
        shall be heard and decided by an official other than the 
        official who took the action, and shall be conducted at a 
        location which is in the vicinity of the parcel of property 
        involved in the action.
          ``(3) An owner of private property may receive compensation, 
        if appropriate, subject to the provisions of section 508 of the 
        Omnibus Property Rights Act of 1995.''.

SEC. 508. COMPENSATION FOR TAKING OF PRIVATE PROPERTY.

    (a) Eligibility.--A private property owner that, as a consequence 
of a final qualified agency action of an agency head, is deprived of 33 
percent or more of the fair market value of the affected portion of the 
property as determined by a qualified appraisal expert, is entitled to 
receive compensation in accordance with the standards set forth in 
section 204 of this Act.
    (b) Time Limitation for Compensation Request.--No later than 90 
days after receipt of a final decision of an agency head that deprives 
a private property owner of fair market value or viable use of property 
for which compensation is required under subsection (a), the private 
property owner may submit in writing a request to the agency head for 
compensation in accordance with subsection (c).
    (c) Offer of Agency Head.--No later than 180 days after the receipt 
of a request for compensation, the agency head shall provide to the 
private property owner, where appropriate under the standards of this 
Act--
          (1) an offer to purchase the affected property of the private 
        property owner at a fair market value assuming no use 
        restrictions under the Acts; and
          (2) an offer to compensate the private property owner for the 
        difference between the fair market value of the property 
        without those restrictions and the fair market value of the 
        property with those restrictions.
    (d) Private Property Owner's Response.--(1) No later than 60 days 
after the date of receipt of the agency head's offers under subsection 
(c) (1) and (2) the private property owner shall accept one of the 
offers or reject both offers.
    (2) If the private property owner rejects both offers, the private 
property owner may submit the matter for arbitration to an arbitrator 
appointed by the agency head from a list of arbitrators submitted to 
the agency head by the American Arbitration Association. The 
arbitration shall be conducted in accordance with the real estate 
valuation arbitration rules of that association. For purposes of this 
section, an arbitration is binding on--
          (A) the agency head and a private property owner as to the 
        amount, if any, of compensation owed to the private property 
        owner; and
          (B) whether the private property owner has been deprived of 
        fair market value or viable use of property for which 
        compensation is required under subsection (a).
    (e) Payment.--An agency head shall pay a private property owner any 
compensation required under the terms of an offer of the agency head 
that is accepted by the private property owner in accordance with 
subsection (d), or under a decision of an arbitrator under that 
subsection, out of currently available appropriations supporting the 
activities giving rise to the claim for compensation. The agency head 
shall pay to the extent of available funds any compensation under this 
section not later than 60 days after the date of the acceptance or the 
date of the issuance of the decision, respectively. If insufficient 
funds are available to the agency in the fiscal year in which the award 
becomes final, the agency shall either pay the award from 
appropriations available in the next fiscal year or promptly seek 
additional appropriations for such purpose.
    (f) Type of Payment.--At the election of the property owner, 
payment under this section shall be provided for in accordance with the 
standard set forth in section 204(d)(2) or in the amount equal to the 
fair market value of the property before the date of the final 
qualified agency action with respect to which the property or interest 
is acquired.

SEC. 509. PRIVATE PROPERTY OWNER PARTICIPATION IN COOPERATIVE 
                    AGREEMENTS.

    Section 6 of the Endangered Species Act of 1973 (16 U.S.C. 1535) is 
amended by adding at the end the following new subsection:
    ``(j) Notwithstanding any other provision of this section, when the 
Secretary enters into a management agreement under subsection (b) with 
any non-Federal person that establishes restrictions on the use of 
property, the Secretary shall notify all private property owners or 
lessees of the property that is subject to the management agreement and 
shall provide an opportunity for each private property owner or lessee 
to participate in the management agreement.''.

SEC. 510. ELECTION OF REMEDIES.

    Nothing in this title shall be construed to--
          (1) deny any person the right, as a condition precedent or as 
        a requirement to exhaust administrative remedies, to proceed 
        under title II or III of this Act;
          (2) bar any claim of any person relating to such person's 
        property under any other law, including claims made under 
        section 1346 or 1402 of title 28, United States Code, or 
        chapter 91 of title 28, United States Code; or
          (3) constitute a conclusive determination of--
                  (A) the value of property for purposes of an 
                appraisal for the acquisition of property, or for the 
                determination of damages; or
                  (B) any other material issue.

                        TITLE VI--MISCELLANEOUS

SEC. 601. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of the provisions 
of such to any person or circumstance shall not be affected thereby.

SEC. 602. EFFECTIVE DATE.

    Except as otherwise provided in this Act, the provisions of this 
Act shall take effect on the date of enactment and shall apply to any 
agency action of the United States Government after such date.

                         I. Legislative History

     S. 605 was introduced into the 104th Congress by Senate 
Republican Leader Robert Dole on March 23, 1995. Thirty-one 
Senators joined Senator Dole as original cosponsors: Senators 
Hatch, Heflin, Lott, Gramm, Brown, Craig, Shelby, Nickles, Kyl, 
Abraham, Thurmond, Inhofe, Packwood, Warner, Coats, Burns, 
Thomas, Pressler, Hutchison, Hatfield, Grams, Frist, McConnell, 
Ashcroft, Mack, Murkowski, Bennett, Kempthorne, Grassley, Bond, 
and Stevens. Subsequently, three Senators joined as cosponsors: 
Senators Simpson, Cochrane, and Faircloth. The bill was 
referred to the Committee on the Judiciary.
     The Judiciary Committee held 3 days of hearings on S. 605. 
The first hearing was held in Washington, DC, on April 6, 1995. 
The Committee heard testimony from Senator Phil Gramm of Texas; 
Mrs. Nellie Edwards, a property owner from Provo, UT; Associate 
Attorney General John R. Schmidt; the Honorable Loren A. Smith, 
chief judge of the U.S. Court of Federal Claims; Mr. Raymond 
Ludwiszewski, former general counsel to the Environmental 
Protection Agency; Mrs. Nancie Marzulla, president of the 
Defenders of Property Rights; Mr. Roger Marzulla, a partner 
with the law firm of Akin, Gump, Strauss, Hauer & Feld; Prof. 
Carol Rose of Yale Law School; and Mr. John Chaconas, a 
property owner from St. Amant, LA. The second hearing was held 
on July 3, 1995, in Salt Lake City, UT. The Committee heard 
testimony from Mrs. Nellie Edwards, a property owner from 
Provo, UT; Mr. Larry Gardner, a property owner from St. George, 
UT; Mr. Edward D. Smith, a property owner from Centerville, UT; 
Mr. Ken Ashby, president of the Utah Farm Bureau; Mr. Ronald W. 
Thompson, district manager of the Washington County Water 
Conservancy District; and Prof. Richard G. Wilkins of Brigham 
Young University Law School. The third hearing was held on 
October 18, 1995, in Washington, DC. The Committee heard 
testimony from Senator John H. Chafee of Rhode Island; Senator 
Patrick J. Leahy of Vermont; Senator Richard C. Shelby of 
Alabama; Mr. Keith Eckel, president of the Pennsylvania Farm 
Bureau; Ms. Merrily Pierce, second vice president of the 
Fairfax County Federation of Citizens Association; Mr. Joseph 
L. Sax, counselor to the Secretary of the Interior; Mr. 
Jonathan H. Adler, director of Environmental Studies for the 
Competitive Enterprise Institute; and Prof. Richard G. Wilkins 
of Brigham Young University Law School.
    On December 21, 1995, a motion to favorably report S. 605 
was approved 10-7 by the Judiciary Committee.

                        II. The Need for S. 605

     The Founding Fathers considered an individual's right to 
private property of such significance that they enshrined it in 
the Bill of Rights. In its final clause, the fifth amendment 
declares, ``[N]or shall private property be taken for public 
use, without just compensation.'' 1 Private property is 
considered to be one of the fundamental building blocks of 
democracy and capitalism, and political philosophers have 
deemed its protection to be one of the primary aims of civil 
society. As John Locke wrote, ``The great and chief end 
therefore, [of people] uniting into Commonwealths, and putting 
themselves under Government, is the preservation of their 
property.'' 2 The Framers of the Constitution accepted 
this truth. As James Madison, the father of the Constitution 
and the author of the Takings Clause, wrote in The Federalist 
No. 54, ``[Government] is instituted no less for protection of 
the property, than of the persons of individuals.'' 3
    \1\  U.S. Constitutional amendment V.
     2  John Locke, Second Treatise of Government Sec. 124 
(Richard H. Cox, ed., Harlan Davidson 1982)(1698).
     3  The Federalist No. 54, at 402 (James Madison)(The Franklin 
Library, ed., 1984).
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     But the rise of the bureaucratic administrative state has 
led to the deterioration of the Constitution's protection of 
private property. The 20th Century has witnessed an explosion 
of Federal regulation of society that has imposed restrictions 
on property ownership and, consequently, has curtailed 
individual liberty. Recent estimates place the cost of Federal 
regulation at approximately $600 billion a year. 4 These 
costs have come at the expense of the owners of private 
property, many of whom are individuals of modest means.
     4  See Thomas D. Hopkins, Costs of Regulation: Filling the 
Gaps (August 1992)(report prepared for Reg. Info. Service Center).
---------------------------------------------------------------------------
     For instance, under the authority of statutes such as the 
Endangered Species Act and the Clean Water Act, Federal 
agencies have placed numerous restrictions on the ability of 
private property owners to use their land. For example, Mrs. 
Nellie Edwards was the owner of 36 acres of prime land that was 
seized by the city of Provo, UT, last year for an airport 
expansion project. Mrs. Edwards received only $21,500 for her 
land, which was well below the expected market value of the 
land because, unbeknownst to her, the Army Corps of Engineers 
had arbitrarily classified part of her land as a wetland--even 
though an investigator saw absolutely no water or wildlife. 
Numerous similar stories abound. In several cases, Federal 
agencies have forbidden property owners from putting their land 
to any economically beneficial use at all. In many of these 
cases, the injured property owners never received compensation, 
but instead had to suffer their losses for the benefit of 
society. As Justice Holmes put it, the public and the courts 
were ``in danger of forgetting that a strong public desire to 
improve the public condition is not enough to warrant achieving 
the desire by a shorter cut than the constitutional way of 
paying for the change.'' 5
     5  Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922).
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     Mr. Larry Gardner of St. George, UT, testified before the 
Committee concerning his uncompensated taking. He owns land 
that was declared a critical habitat of the endangered desert 
tortoise, in spite of the fact that during a walk-through of 
the land only a very few signs of tortoises could be found. The 
result of this declaration has been a precipitous drop in the 
market value of the property. Mr. Gardner has no objection to 
protecting endangered species, he merely wishes to arrange a 
deal acceptable to all. In that spirit, he proposed to the 
Bureau of Land Management that he would exchange his land for 
other land that was not critical habitat. However, the BLM only 
would give him land which was equal in value to his land after 
the designation. In short, the bureaucrats were unwilling to 
make a deal that did not deprive Mr. Smith of the large 
majority of the value of his land.
     Mr. Ed Smith of Centerville, UT, also testified before the 
Committee about a taking. He purchased a plot of land pursuant 
to a planned development in the 1970's. He was concerned about 
regulations, but was assured several times that the land he 
bought was not subject to land-use regulations. Indeed, he was 
even advised by the Army Corps of Engineers that his land was 
not a wetland, based on a 1982 report. However, in 1993 he was 
cited for filling a wetland. As his neighbors developed their 
land, his land took runoff water in the spring. The result is 
that Mr. Smith is being prohibited from using his property 
because it has puddles in the springtime.
    Springfield City, UT, developed an industrial park with 
financial aid from the Federal Economic Development 
Administration. During this development it was necessary to 
relocate a stream. The Corps of Engineers has declared that the 
old stream bed is a protected wetland and has refused to 
consider the new stream a replacement for the old stream. Thus, 
Springfield City is caught between one Federal agency 
prohibiting development and another helping to pay for it.
     The Heritage Arts Foundation, a nonprofit organization, 
tried to build the Tuacahn School and Performing Arts Center 
near the City of Ivins, UT. After more than 1 year, two 
endangered desert tortoises were found on the access road to 
the construction site. The access road was not owned by the 
Foundation. The Fish and Wildlife Service temporarily shut down 
the construction, a very costly delay, and the Foundation was 
fined $20,000. In addition, the Foundation is required to 
distribute flyers about the tortoises to all users of the road, 
install a special fence along the road, and hire people to do 
nothing but walk up and down the road looking for tortoises. If 
any tortoise is found, the Foundation will have to shut down 
again and contact the Fish and Wildlife Service.
     Mr. Harry Bowles bought land in a Texas subdivision. The 
only possible use for the land was residential, like the many 
lots around it, and indeed Mr. Bowles bought it to build his 
retirement home. The legal restrictions of the subdivision 
required him to fill the land to prevent health hazards. 
However, the land was declared a wetland and he was prohibited 
from filling it, and thus from building on it. Fourteen years 
after he bought the land, Mr. Bowles finally received a 
judgement from the U.S. Court of Federal Claims for the taking 
of his land.
     Bob and Mary McMackin of Pennsylvania obtained all the 
necessary permits to go ahead and build a house on their 
property. They did just that and lived in that house for 4 
years. Then, they were informed that their seemingly dry land 
had been designated a wetland and that they faced criminal 
sanctions and staggering fines.
     While the protection of wetlands, endangered species, and 
many other public concerns is important, the Committee believes 
that these concerns must be fairly balanced with the rights of 
the individuals who are forced to bear the cost of these 
regulations. The right of compensation guaranteed by the fifth 
amendment and enforced by S. 605 establishes just such a fair 
balance.

                a. current takings clause jurisprudence

     Due to, until recently, a confusing Supreme Court 
jurisprudence, property owners have been frustrated in their 
attempts to receive just compensation for regulatory actions 
that effected a taking of their property. In part, this stemmed 
from the jurisprudential challenge of defining what constitutes 
a regulatory taking. Courts have found it relatively easy to 
find takings in physical invasion or physical seizure cases. 
6 But courts have more difficulty in determining when a 
government regulation so circumscribes the exercise of property 
rights that the government essentially effects a taking. 
Justice Holmes provided little help aside from describing the 
difficulty of the question in the 1922 case of Pennsylvania 
Coal Company v. Mahon. 7 As Justice Holmes recognized, 
``[G]overnment could hardly go on if to some extent values 
incident to property could not be diminished without paying for 
every such change in the general law.'' 8 At the same 
time, however, Justice Holmes also declared that a substantial 
dimunition in value caused by government regulation could 
amount to a taking. As he put it, ``if regulation goes too far 
it will be recognized as a taking.'' 9
     6  See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 
U.S. 419 (1982).
     7  260 U.S. 393 (1922).
     8  Id. at 413.
     9  Id. at 415.
---------------------------------------------------------------------------
    In the 74 years since Justice Holmes' comment, the Supreme 
Court has not provided firm guidance on what constitutes a 
regulatory taking. In general, the Court has adopted an ad hoc 
balancing approach, exemplified by Penn Central Transportation 
Co. v. New York City,10 which balances the economic impact 
of the regulation against the character of the regulation and 
its restrictions on the property owner's investment-backed 
expectations. Not only were these factors so abstract as to be 
easily manipulable, they were so ambiguous that they failed to 
provide either government or property owners with any certainty 
concerning whether certain action would amount to a taking. As 
a result, every takings case deterioriates into a fact-specific 
inquiry that produces incoherent and inconsistent applications 
of law with little future significance.
    \10\ 438 U.S. 104 (1978).
---------------------------------------------------------------------------
    This confusion has been further compounded by the unclear 
division of jurisdiction over different types of takings 
claims. Under the Tucker Act,11 a plaintiff seeking 
monetary damages for an alleged taking must file in the U.S. 
Court of Federal Claims. However, the Tucker Act does not 
provide for injunctive relief. A person seeking injunctive 
relief must file in the proper U.S. District Court. A problem 
occurs when people seek both injunctive and monetary remedies. 
Whichever court they appear in first, the government argues 
that the venue is improper, and the property owners are 
shuffled back and forth from one court to the other. This 
conundrum has come to be known as the ``Tucker Act Shuffle'' 
and it wastes time and money.
    \11\ 28 U.S.C. 1491.
---------------------------------------------------------------------------
    S. 605 resolves the ``Tucker Act Shuffle'' by amending the 
Tucker Act to provide concurrent jurisdiction for monetary and 
injunctive claims in both the claims court and the district 
courts. Thus, the property owner can choose the most convenient 
forum and still be assured that technical legal maneuvering 
over the court's jurisdiction will not stand in the way of 
justice. Further, the bill provides for all appeals of trial 
court decisions to go to the U.S. Court of Appeals for the 
Federal Circuit. That will ensure consistency in the law and 
discourage forum shopping. Since the Federal Circuit already 
hears all appeals of monetary takings claims, that court has 
the necessary expertise to handle these cases.
    In the last decade there have been improvements in takings 
jurisprudence. The Supreme Court has, in part gradually 
replaced the ambiguous balancing test of Penn Central with the 
bright lines of Nollan v. California Coastal Commission,12 
Lucas v. South Carolina Coastal Council,13 and Dolan v. 
City of Tigard.14 In Nollan, State law required property 
owners who wanted to replace a small bungalow on their 
beachfront lot to receive a permit from the State. As a 
condition for granting the permit, the State sought to force 
the owners to provide a public easement for beachgoers to pass 
across their beach, which was located between two public 
beaches. The State asserted that the easement was needed 
because the Nollans' house would block access to the beach, 
would interfere with the public's ``visual access'' to the 
beach, and would create a ``psychological barrier'' to members 
of the public who might want access to the beach.
    \12\ 483 U.S. 825 (1987).
    \13\ 505 U.S. 1003 (1992).
    \14\ 512 U.S. ------, 114 S. Ct. 2309 (1994).
---------------------------------------------------------------------------
    The Supreme Court found that this requirement constituted a 
taking of property for which the State owed compensation. The 
Court held that the State's asserted interests did not justify 
the condition, because the condition did not serve the public 
purposes related to the permit requirement. In other words, 
there was no reasonable relation or ``essential nexus'' between 
seeking an easement and the public purpose in granting a 
building permit. The Court noted that seizing a public-access 
easement normally would constitute a taking under the fifth 
amendment. The Court reasoned, however, that the government has 
the power to forbid particular land uses in order to advance 
some legitimate purpose under the State's police power. This 
power, therefore, includes the power to condition land use upon 
some concession of the owner, so long as the condition furthers 
the same governmental purpose advanced as justification for 
prohibiting the use.
    In Lucas, the Court continued its movement toward a 
property rights regime protected by bright-line legal rules. A 
property owner, David Lucas, had bought two residential lots on 
a barrier island for the purpose of building single-family 
homes. Two years after he bought the property, the State passed 
a beachfront management act which prohibited the construction 
of any permanent homes on the land. The State argued that the 
bar on homebuilding was legally justified because it was 
prohibiting a ``harmful or noxious use''--which in this case 
was building a house in an area susceptible to erosion and 
wildlife habitat degradation.
    In a 6-3 decision, the Court rejected the State's argument 
that its regulation did not work a taking. The Court stated 
that any government regulation that denies all economically 
beneficial or productive use of land is a categorical taking 
for which just compensation is owed. The Court dismissed the 
State's claim that the ban on construction was necessary to 
prevent a harmful or noxious use of the land. Significantly, 
the Court recognized that the government could not ban all 
economic use of a property unless the activity banned was 
understood to be a public nuisance (such as pollution by a 
factory in a residential zone) and would have been found to be 
so by the State courts. As the Court stated, ``Any limitation 
[on the use of property] so severe cannot be newly legislated 
or decreed (without compensation), but must inhere in the title 
itself, in the restrictions that background principles of the 
State's law of property and nuisance already place upon land 
ownership.'' 15 Because using one's land to build a 
residential home has never been considered a public nuisance, 
the Court reversed the South Carolina Supreme Court and 
remanded for reconsideration.
    \15\ Lucas, 505 U.S. at 1029.
---------------------------------------------------------------------------
    In Dolan, the Court continued to elaborate upon the 
necessary link between the imposition of a condition and the 
government interest behind the land use regulation. Florence 
Dolan owned a plumbing and electric supply store in the central 
business district of the city of Tigard, OR. Dolan sought a 
permit from the city to expand her business by doubling the 
size of her store and creating a paved parking lot. The city 
approved the permit, subject to conditions: (i) that Dolan 
dedicate a portion of her property on a floodplain for 
improvement of a storm drainage system; and (ii) that Dolan 
dedicate a 15-foot strip of land adjacent to the floodplain as 
a pedestrian/bicycle path. The overall amount of land the city 
sought amounted to about 10 percent of the property.
    The Court held that the conditions placed on the permit 
amounted to a taking for which just compensation was owed. 
Under the test enunciated in Nollan, the Court examined whether 
an ``essential nexus'' existed between a legitimate state 
interest and the permit condition exacted by the city. Finding 
that such a nexus was present, the Court then asked whether a 
``rough proportionality'' existed between the exaction (the 
dedication of the path and floodplain) and the use to which the 
property was being put (the expansion of Dolan's store). As the 
Court put it, ``No precise mathematical calculation is 
required, but the city must make some sort of individualized 
determination that the required dedication is related both in 
nature and extent to the impact of the proposed development.'' 
16 The Court found that there was absent the required 
proportionality between the easement/dedication and the 
proposed new building--thus, the Court concluded that a taking 
had occurred.
    \16\ Dolan, 512 U.S. at ------, 114 S.Ct. at 2319-20.
---------------------------------------------------------------------------
    These three cases have begun to restore the bright-line 
protection for property rights intended by the Framers. Under 
Penn Central's ambiguous balancing test, takings law provided 
little protection for individual property owners. Neither 
property owners nor government agencies could determine in 
advance whether a certain action would amount to a taking, 
because neither party could predict what result the Court would 
reach until it actually completed its balancing analysis. 
Without certainty and predictability, property owners cannot 
make reasonable economic assumptions based on the value of 
their land, and government actors cannot tailor their future 
actions to the requirements of the law. Instead, both owners 
and the government must engage in protracted, expensive 
litigation to determine the exact boundaries of the Takings 
Clause in each specific case. By replacing Penn Central's 
balancing scheme with bright-line rules, the Court has taken an 
important step in restoring the Constitution's guarantee of 
true protection for property rights. Only when governed by a 
regime of clear rules can property owners safely enjoy the 
value of their property and Government agencies conduct their 
actions consistently with the law.
    Lucas also addressed one of the most difficult problems in 
takings jurisprudence: whether governmental police power and 
common law nuisance are separate exceptions to the fifth 
amendment's compensation requirement. In summary, the Lucas 
decision reaffirmed the original understanding of the fifth 
amendment that the common law of nuisance both ``defines the 
limits of individual property rights and the general scope of 
police power.'' 17
    \17\ Douglas W. Kmiec, At Last, the Supreme Court Solves the 
Takings Puzzle, 19 Harv. J.L. & Pub. Pol'y, 147, 148 (1995).
---------------------------------------------------------------------------
    In the 1887 case of Mugler v. Kansas, the Court held that 
the Government did not violate the Takings Clause when it 
prohibited the use of a property as a public nuisance.18 
In that case, Kansas prohibited the production or sale of 
alcohol within the State. The Court rejected the challenge to 
the statute by a brewery owner because use of the property 
constituted a public nuisance. This rationale, if fully 
expanded, however, threatened to give government a blank check 
on the property rights of landowners--government always could 
merely claim to justify a taking on the ground that it was 
acting to protect public health and safety,19 without 
limit on what it defined as the public's health and safety 
interests. Lucas addressed this issue by returning the public 
nuisance doctrine to its roots. A government cannot defend a 
taking by reflexively ascribing all of its rationales as based 
on the ground of public health and safety. Instead, it must 
show that the activity is barred by ``background principles of 
the State's law of property and nuisance'' that already inhered 
in the title of the property when the owner acquired it.20 
Therefore, to the extent government prohibits the use of 
property on demonstrable public health and safety grounds, its 
action will fall well within the State common law public 
nuisance exception recognized by Lucas.
    \18\ 123 U.S. 623 (1887).
    \19\ The traditional police power exception is derived from the 
maxim sic utere tuo ut alienum non laedas or ``use your own property in 
such a manner as not to injure another.'' Keystone Bituminous Coal 
Ass'n v. DeBenedictis, 480 U.S. 470, 492 (1987). This narrow police 
power exception was equated by the Lucas Court to common-law nuisance 
limitations on property use.
    \20\ Lucas, 505 U.S. at 1029.
---------------------------------------------------------------------------
    To be sure, there are several areas of takings law that the 
Court has yet to resolve in a satisfactory manner. Perhaps the 
most significant problem is in the area of partial takings. 
Some may mistake the Court's ``deprivation of all economically 
beneficial use'' language in cases such as Agins v. Tiburon 
21 to mean that no compensation is owed for less than full 
takings of property. Such a conclusion is clearly erroneous. If 
there were any doubts about the requirement of just 
compensation for partial takings, Lucas has laid the issue to 
rest. 22 Indeed, since Lucas several lower courts have 
analyzed partial takings claims utilizing balancing tests, not 
requiring a total deprivation to find a taking. 23 The 
Court, however, has yet to identify at what point a dimunition 
in value--resulting from government action--amounts to a 
compensable taking. This is understandably a difficult line for 
the court to draw and different opinions on this issue have not 
provided clear guidance for either property owners or for 
government agencies.
    \21\ 447 U.S. 255 (1980).
    \22\ Responding to the dissent's argument that a landowner whose 
property lost 95 percent of its value would receive no compensation 
under the Court's rule, the Court stated that ``[t]his analysis errs in 
its assumption that the landowner whose deprivation is one step short 
of complete is not entitled to compensation.'' Lucas, 505 U.S. at 1019 
n.8.
    \23\ Florida Rock Industries v. United States, 18 F.3d 1560 (Fed. 
Cir. 1994); Bauer v. Waste Management of Connecticut, Inc., 662 A.2d 
1179 (Conn. 1995). These courts apply an ad hoc balancing test to 
determine whether the interference with property amounts to a partial 
taking.
---------------------------------------------------------------------------
    Another problem upon which some ambiguity exists involves 
what portion of the property is to be used to calculate whether 
a taking has occurred. This is known as the ``denominator 
problem.'' 24 For example, in cases where the government 
allows only a certain portion of land to be developed, the 
question arises whether those portions upon which development 
is prohibited are to be considered taken by the government. 
Alternatively, courts could consider that these ``affected 
portions'' are part of the larger property, one with a 
substantial residuary value overall, in regard to which a 
partial taking or no taking at all may have occurred. Under the 
first approach, the denominator for purposes of calculating a 
taking is only that portion of the land that can no longer be 
used due to government regulation. Under the second approach, 
the entire parcel of land, including the portion that may be 
developed, becomes the denominator. Although lower courts have 
held that the portions of the property to be considered are 
only those for which certain uses have been denied, 25 the 
Supreme Court has not reached this question.
    \24\ See Keystone Bituminous Coal Association v. DeBenedictis, 480 
U.S. 470, 497 (1987); Frank I. Michelman, Property, Utility, and 
Fairness: Comments on the Ethical Foundations of ``Just Compensation'' 
Law, 80 Harv. L. Rev. 1165, 1192 (1967).
    \25\ Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. 
Cir. 1994).
---------------------------------------------------------------------------

                       B. Explanation of the Bill

    The Omnibus Property Rights Bill effectuates the 
Constitution's guarantee of a right to just compensation when 
the government takes private property for public use. It begins 
by requiring Federal agencies to take the costs of taking 
property into account when formulating policy, and it provides 
for a speedy administrative remedy for property owners who seek 
compensation. The bill also allows for alternative dispute 
resolution mechanisms to encourage quick settlement of takings 
claims. For cases that go to Federal court, the bill codifies 
recent Supreme Court decisions and clarifies the law in 
regulatory takings cases. The declaration of clear, bright-line 
rules of liability will lead to lower costs overall, as both 
agencies and property owners become fully aware of the limits 
of the government's power to take property. The Committee 
expects that the codification of these bright-line rules will 
ameliorate the ad hoc and arbitrary nature of takings 
jurisprudence, as Chairman Hatch stated when he introduced the 
bill.

1. Placing incentives on agencies to reduce takings

    Under current law, agencies have no incentive to take into 
account the costs that their actions impose on private property 
owners. This leads to irresponsible and inefficient rules, 
particularly when the costs of taking property are counted. 
Unfortunately, agencies do not internalize these costs. Title 
IV of the bill forces agencies to consider the impact of 
takings in their policymaking and to evaluate their policies 
with these costs in mind. This section of the bill codifies 
Executive Order 12,630, 26 which requires Federal agencies 
to conduct a ``private property taking impact analysis'' before 
issuing or promulgating any rule, regulation, or other agency 
action. The analysis requires agencies to estimate publicly 
whether contemplated policies will result in takings, how much 
compensation will be owed, and whether alternative means exist 
that will produce lower takings costs. The Committee expects 
that when agencies are forced to consider the impact of their 
actions, they will choose less costly policies that incur lower 
takings costs but that still achieve their stated goals of 
environmental, health, and safety protection.
    \26\ Exec. Order No. 12,630, 3 C.F.R. 554 (1987-88), reprinted in 5 
U.S.C. 601 (1994).
---------------------------------------------------------------------------
    Title IV also addresses rules and regulations that either 
were promulgated before codification of the Executive order or 
still result in takings even after undergoing an impact 
analysis. First, the bill prohibits the promulgation of a final 
rule if it will result in an uncompensated taking. Second, the 
bill requires agencies to review regulations that result in 
takings of private property. Where appropriate, agencies must 
re-promulgate regulations to reduce such takings to the maximum 
extent possible. This section will force agencies to review 
existing rules to ensure that they undergo a taking analysis.
    Other provisions in the bill operate to place additional 
incentives upon agencies to internalize the cost of takings 
resulting from their actions. Section 508(d) and Section 
204(f), located in titles V and II, require that any 
compensation for a taking come out of an agency's budget. This 
will force agencies to internalize the costs of takings so that 
they may more accurately weigh the costs and benefits of their 
actions.

2. Providing for swift resolution of takings claims

    Under current law, property owners must seek compensation 
for a taking in Federal court. The high costs and long delays 
of litigation in Federal court pose barriers to all but the 
most wealthy property owners. Litigation costs also add to the 
price both of vindicating property rights and of undertaking 
agency action. Title V of the Omnibus Property Rights Bill 
seeks to provide a swifter remedy for property owners and 
quicker resolution of challenges to agency decisions by 
creating an administrative appeals process. Because most 
takings occur under the Endangered Species Act of 1983 27 
and section 404 of the Federal Water Pollution Control Act, 
28 (under which the wetlands regulations have been 
promulgated), the bill requires the creation of appeals 
procedures to review agency decisions under these two acts. The 
bill also creates an informal compensation mechanism that 
allows property owners to seek relief either directly from the 
agency or through arbitration. Additionally, payments will be 
made from an agency's appropriated budgets.
    \27\ 16 U.S.C. 1531-1544 (1994).
    \28\ 33 U.S.C. 1344 (1994).
---------------------------------------------------------------------------
    Title V amends the Federal Water Pollution Control Act to 
create an administrative appeals mechanism. It allows property 
owners to challenge the denial of a permit to develop their 
land under the wetlands regulations before a neutral agency 
official. A similar provision amends the Endangered Species Act 
to create an administrative appeals process. It is expected 
that these appeals procedures will give private property owners 
the ability to require agencies to reconsider the wisdom of a 
decision to take private property. It is also expected that 
these procedures will require agencies to examine their actions 
in a timely manner to determine if they are consistent with the 
substantive standards of this bill. With the availability of an 
effective administrative appeals system, agencies and property 
owners may avoid the heavy costs and delays of Federal court 
litigation. However, the creation of the administrative appeals 
process should in no way be construed to impose an exhaustion 
requirement upon property owners, who always have the option at 
any time of seeking relief in Federal court under the bill or 
directly under the Constitution. The Committee also notes that 
nothing in these procedural amendments alters the substantive 
requirements of the Clean Water Act or the Endangered Species 
Act.
     Even if, after an administrative appeal, the agency 
chooses to go forward with a taking decision, the Committee 
expects that the agency will engage in good-faith negotiations 
with the property owner to settle the case. To this effect, the 
bill also creates a right on the part of property owners to 
negotiate for compensation for any taking that occurs as a 
consequence of agency action, and it requires agency heads to 
respond to offers to settle.
     Should the parties fail to reach an agreement, the owner 
may seek arbitration. Much of the problem in the current legal 
regime governing takings law is the expense in suing to receive 
meaningful relief. The bill provides for the use of alternative 
dispute resolution mechanisms, which are now commonly used to 
resolve numerous commercial and family disputes. Use of these 
alternative dispute resolution measures should provide for the 
quick and efficient resolution of takings disputes without 
resort to time-consuming and expensive litigation. This will 
accrue to the benefit of both property owners and agencies, 
which both have an interest in quickly resolving property 
rights disputes and in reducing litigation costs.
     But, ultimately, the only way to force agencies to 
internalize the costs of their actions is to force them to 
realize the financial burdens caused by their decisions. Under 
current law, if an agency takes property and loses in court, 
the compensation comes from the Federal Government's Judgment 
Fund. Since costs to the Judgment Fund are not borne directly 
by the taking agency, the agency has no incentive to reduce its 
taking activities. The Omnibus Property Rights Act changes this 
unacceptable incentive structure by requiring agencies to pay 
all takings judgments and awards out of its own budget. If an 
agency takes property in violation of the Constitution, then it 
will realize the costs of those actions. The Committee hopes 
that this arrangement will encourage agencies to refrain from 
taking private property except when the public good truly 
requires it.
     With these mechanisms in place, the Committee expects 
agencies to self-police their actions in order to decrease the 
taking of private property unnecessarily. The bill requires 
agencies to develop rules and regulations that will protect the 
constitutional and legal rights of property owners when the 
agency makes final decisions restricting the use of property. 
The Committee expects that agency heads will establish internal 
agency mechanisms to protect property rights. 29 It is 
hoped that these rules and regulations will encourage agencies 
to avoid unnecessary takings in the first place, and thereby 
reduce overall litigation costs and the delay to agency actions 
produced by litigation.
    \29\ Agency officials are prohibited from entering privately owned 
property to collect information about the property without the 
permission of the owner. This will prevent overzealous Federal 
officials from entering private land for the purpose of deciding it is 
covered by the Endangered Species Act or the Clean Water Act without 
the owner's permission.
---------------------------------------------------------------------------

3. Codification of existing standards

     Should these institutional incentives and new dispute 
resolution mechanisms fail to succeed, property owners have the 
final option of seeking redress in Federal court. The Omnibus 
Property Rights Act seeks to codify and clarify the legal 
protections for property owners by establishing clear, bright-
line rules concerning the substantive law to be applied by the 
Federal courts and agencies in takings cases. For the most 
part, these rules are merely restatements of existing law, both 
on takings, the definition of property, and the amount of 
compensation. In the area of regulatory takings, the bill sets 
out a standard that clears up confusion in the courts 
concerning when a diminution in value amounts to a taking. The 
bill also sets out the procedures to be followed in takings 
cases and implements technical jurisdictional modifications 
that allow property owners to bring such cases in any federal 
court. The clear declaration of these bright-line rules will 
produce reduced numbers of takings and compensation payouts (as 
well as litigation costs), because both agencies and property 
owners will be fully aware of standards governing their 
conduct.
     The Committee adopted definitions that provide full, fair, 
and adequate protection for the owner's economic investment in 
his or her property. The Committee intends that the definition 
of property includes most forms of real property, water and 
land rights, and contracts with the Federal Government. 30 
The Committee also intends to adopt the definition of property 
that exists in the law of the States, including future legal 
developments in the State law of property. Just compensation is 
defined as compensation equal to the full extent of a property 
owner's loss, including the fair market value of the property 
plus interest.
     30  Nixon v. United States, 978 F.2d 1269 (D.C. Cir 1992).
---------------------------------------------------------------------------
     In terms of the timing of a taking, a taking is considered 
to occur when a State has passed a law, or a regulation is 
promulgated, that takes property, or when a necessary permit or 
license is denied. For example, in the context of wetlands 
regulations, a taking has not occurred when the Clean Water Act 
was passed or even when the wetlands regulations were 
promulgated. In neither case does the owner yet know that his 
property is covered by those Federal laws. A taking is deemed 
to have occurred when the owner is denied a permit to develop 
his land because it has been classified as a wetland. It is 
only at that point--in the permitting process--that the owner 
learns that his property is subject to the restrictions of the 
wetlands regulations. To deem the time of taking to be the date 
of passage of the Clean Water Act or of the regulations 
promulgated pursuant to it would be unfair and unjust and would 
require owners to challenge laws that may not yet even apply to 
them.
     Title II's most important function is to codify the 
substantive standards that apply to takings. The Committee 
intends that these standards apply not just to cases brought in 
Federal court, but also to agency decisionmaking and appeals 
processes. These standards generally prohibit the government 
from imposing exactions upon property owners in exchange for 
development permits or licenses unless there is an actual, 
rational relationship between the two. They require 
compensation whenever property owners are denied all use of the 
land, or whenever the State has imposed a significant reduction 
in value of the property. As under current case law, the 
government shall bear the burden of proof for showing a nexus 
or proportionality between the purpose of a government exaction 
and the use of the property.
     A comparison of the statutory language with the holdings 
of Nollan, Lucas, and Dolan demonstrates that the Committee 
intends to codify existing taking law. Several portions of the 
bill directly incorporate the substantive standards enunciated 
in these cases. In this manner, Congress can fulfill its duty 
to enforce the Constitution and to defend individual rights. It 
should be emphasized, however, that the Committee does not 
intend to set in stone federal protections for property rights. 
Thus, the bill also contains a general clause incorporating any 
future expansions of private property rights under the fifth 
amendment.
     In the area of partial takings, the Committee has included 
a bright-line standard in an effort to clarify this difficult 
area of the law. Under the bill, if a property owner suffers a 
33-percent dimunition in the value of his or her property 
because the government has taken a property right, the owner 
may seek just compensation. This provision is not designed to 
provide compensation for mere dimunitions in value that result 
incidentally from Federal action, such when businesses near a 
military base suffer business and property losses when the base 
closes. Instead, the section is designed to address situations 
in which the Federal Government prohibits the exercise of a 
property right--such as when the Army Corps of Engineers 
forbids an owner from developing his or her land because they 
have designated the property a wetland--that produces a 
corresponding decline of 33 percent or more in the property's 
value.
    As noted before, the courts have recognized that claims for 
a partial taking may be brought under the fifth amendment, but 
they have failed to articulate a clear standard on how much of 
a dimunition in value is required. The Committee believes that 
it is Congress' role to step in and clear up ambiguous areas of 
law, such as this, which may lead to protracted litigation and 
the frustration of individual rights. For this purpose, the 
Committee also has codified the ``affected portion'' doctrine 
as articulated by the U.S. Court of Appeals for the Federal 
Circuit in the Loveladies Harbor, Inc. v. United States. 
31 When the government completely takes a portion of the 
property but permits the use of another portion, the taken 
portion is to be used as the ``denominator'' when the court 
calculates whether a taking has occurred and what just 
compensation is owed.
    \31\ 28 F.3d 1171 (Fed. Cir. 1994).
---------------------------------------------------------------------------
    A significant area of uncertainty in takings law has been 
the extent of the government's interest in protecting public 
health and safety when taking property. To clarify this area of 
the law, title II of the bill codifies the nuisance exception 
as described in Lucas. According to the Court, government 
action will not amount to a taking if the use of the land 
prohibited constitutes a nuisance. Courts are to refer to the 
nuisance law of the State within which the property is located. 
Nuisance law is generally the same throughout the 50 
States.32
    \32\ Restatement (Second) of Torts.
---------------------------------------------------------------------------
    A few examples will illustrate the public nuisance 
exception. If a property owner wishes to use his or her 
property in a manner that would constitute a public nuisance, 
such as by running a smelting plant in the middle of a 
residential neighborhood, the owner will not suffer a taking 
when the government prohibits operation of the plant. 
Similarly, if the property by its very nature constitutes a 
public nuisance, such as rotten food or infected trees, its 
destruction by the government will not constitute a taking. But 
use of property for commonly accepted purposes, such as for 
building a house in a residential area, has never been 
considered a public nuisance. The Committee believes that the 
public nuisance exception strikes the proper balance between 
protecting property rights and permitting legitimate exercises 
of government power to take private property in the public 
interest.

4. The cost of S. 605

    In this time of budgetary constraint, the Committee is very 
concerned about maintaining fiscal responsibility. S. 605 will 
not inhibit the Congress in its effort to balance the budget.
    While it is certainly true that the bill will require 
compensation, the Committee is confident that the incentive 
structure built into the bill will keep costs at a minimum. As 
agencies review the potential costs of their actions they will 
be able to predict the resulting takings liability much more 
accurately thanks to the legal clarifications in the bill. 
Further, these costs will be taken into serious consideration, 
as the agency which is responsible for the taking will be the 
same one that pays the compensation. Thus, the Committee 
expects that agencies will change their behavior so as to 
accomplish their important statutory goals with a minimum of 
infringement on private property rights.
    The Committee further notes that this analysis is supported 
in full by the cost estimate provided by the Congressional 
Budget Office.33 In that letter, CBO agrees with the 
Committee that the built-in incentives will encourage agencies 
to act more responsibly. Thus, the administrative cost of the 
bill will be a relatively small sum, and compensation costs 
even smaller still. The CBO also notes that since all 
compensation will be paid out of appropriated agency funds, 
pay-as-you-go procedures would not apply. The Committee agrees 
with this conclusion.
    \33\ See part V, infra.
---------------------------------------------------------------------------
    Opponents of S. 605 have made the claim that it will cost 
the Federal Government a large amount of money. To support 
their claim, they cite the estimate put forth by the Office of 
Management and Budget in a June 7, 1995, letter from OMB 
Director Rivlin to Judiciary Chairman Hatch. The Committee 
notes that this letter is not, in fact, an estimate of the 
potential costs of S. 605. As the letter itself states, ``OMB 
has not completed the complex task of estimating the 
Government-wide cost of S. 605 * * *.'' This lack of analysis 
is also made clear by the absence of any discussion to support 
the estimate in the letter. Even the estimate itself is 
unclear. Director Rivlin asserts that S. 605 will cost 
``several times the $28 billion cost of the House-passed 
legislation.'' The OMB letter does not even provide an actual 
estimate. The Committee does not find the OMB ``estimate'' 
credible.
    The Committee chooses to rely upon the well-researched and 
well-supported estimate from the neutral Congressional Budget 
Office. That estimate was presented in an October 17, 1995, 
letter from CBO Director O'Neill to Chairman Hatch. Based on 
extensive research and supported by several pages of analysis, 
CBO concluded that the cost of compensation to the Federal 
Government under S. 605 would be no more than $30 to $40 
million a year, a tiny fraction of the OMB figure.

                  c. answers to criticism of the bill

    Critics argue that S. 605 represents a significant 
departure from existing takings jurisprudence. This claim is 
predicated on several contentions: (1) the bill requires 
compensation for all and any diminution of property value 
caused by Federal actions; (2) the ``bright line'' takings 
standards established by the bill contravene the ``ad hoc'' 
approach to takings established by the Supreme Court; (3) the 
bill ``federalizes'' and expands the definition of property 
interests beyond the state law definitions of property; and (4) 
the bill's nuisance exception is unworkable. These contentions 
are erroneous, and are answered in turn.

1. Diminution in value

    S. 605 does not require compensation for absolutely any 
diminution of the value of property caused by Federal 
regulation above the bill's 33-percent threshold requirement. 
This bill incorporates case law construing both what defines a 
property interest and what constitutes a ``taking'' requiring 
just compensation.
    Since the 19th century, courts have recognized that to 
constitute a regulatory taking, the object of the regulation 
must be the property itself.34 In other words, indirect 
results of Federal action--consequential damages--are not 
compensable under a takings claim. Thus, as alluded to above, 
the market-based diminution of value of a home caused by the 
closing of a nearby military base by presidential order is not 
compensable under this bill.35
    \34\ See Gibson v. United States, 166 U.S. 269 (1897)(holding 
consequential damages to river landing due to construction of dike not 
compensable under fifth amendment); Transportation Co. v. Chicago, 99 
U.S. 635 (1878)(building of tunnel under Chicago River that interfered 
with business did not amount to a taking since the object of action was 
not business). This is also true in State law cases. See, e.g., Murphy 
v. Detroit, 506 N.W.2d 5 (Mich. Ct. App. 1993) (holding reduction in 
value of 75 percent of supermarket and medical facility caused by 
city's acquisition of adjacent residential property as part of urban 
renewal project not a compensable taking because merely a consequential 
affect of city action).
    \35\ This is expressly made clear by a change made by the 
``Chairman's mark'' to S. 605, which now defines a ``taking of private 
property'' to mean ``any action whereby private property is the object 
of that action and is taken so as to require compensation under the 
fifth amendment * * * or under this Act * * *.'' Section 203(7)(A) 
(emphasis added).
---------------------------------------------------------------------------
    Moreover, the Supreme Court has held that preexisting 
governmental restrictions on the use of private property are 
not ``takings'' vis-a-vis the new property owner.36 The 
permissible scope of property rights, consequently, is defined 
by the constitutionally allowable legal constraints that exist 
at the time of acquisition or possession of the property, even 
if the regulatory policy reduces the property values of a 
general class of property holders.37 The Court has gone so 
far as to hold that where property is subject to a preexisting 
regulatory scheme, there is no need for compensation for loss 
of value for that property because the regulated entity has 
little or no ``reasonable expectation'' for unrestrained use of 
the property.38
    \36\ Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2900 
(1992)(Such preexisting limitations on property use ``inhere in the 
title itself.''); see Whitney Benefits, Inc. v. United States, 18 Cl. 
Ct. 394 (1990).
    \37\ See Mitchell Arms, Inc. v. United States, 7 F.3d 212 (Fed. 
Cir. 1993)(holding revocation of firearm import permits by BATF not a 
taking because expectation of selling semiautomatic rifles was not 
inherent in ownership of rifles, but subject to federal regulatory 
power).
    \38\ E.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-1008 
(1984)(noting key factor in determining whether regulation requiring 
disclosure of trade secret amounts to taking is whether regulation 
interferes with reasonable investment backed expectations). It should 
be noted that at common law certain businesses and occupations, such as 
common carriers and inns, were subject to heavy regulation and strict 
liability for certain torts. Traditionally, and consistent with the 
more modern judicial ``reasonable expectation'' approach to the use of 
property interests in takings cases, courts have given great latitude 
to governmental regulation of businesses and occupations ``clothed with 
the public interest.''See generally Christopher G. Tiedeman, A Treatise 
on the Limitations of Police Power in the United States (1886), ch. IX, 
and cases cited therein.
---------------------------------------------------------------------------
    Thus, the examples critics have raised--a reduction in 
property value as a result of a decision by the FAA to ground 
an airplane for safety reasons, or the FDA forbidding the 
introduction of a drug into the stream of commerce for the 
protection of public health--are not compensable takings 
because those industries are subject to existing heavy 
regulation. Of course, the actual result depends in great 
degree on the specific facts of those cases. Compensation in 
these situations, as explained below, may be denied as well on 
a public nuisance theory. Wetlands and endangered species land 
use limitations in most cases do not fall in the preexisting 
law category since takings arise in these circumstances from 
denial of a permit after the property was purchased.39
    \39\ Courts have held that takings occur when the applicable 
Federal action directly affects the use of private property. Usually, 
this means that takings occur at the time of the regulation's 
promulgation. See Williamson County Regional Planning Commission v. 
Hamilton Bank of Johnson City, 473 U.S. 172, 186-87 (1985); Agins v. 
Tiburon, 447 U.S. 255, 260 (1980). Because determination of whether 
property is a wetlands is a question of fact-finding, courts have found 
that a taking in a wetlands context occurs at the time a use permit was 
denied. See Bowles v. United States, 31 Fed. Cl. 37 (Ct. Fed. Cl. 
1994).
---------------------------------------------------------------------------

2. Bright-line standards

    Critics of the bill complain that the essentially ad hoc 
approach used by courts to determine whether a regulatory 
taking occurs is contravened by the bright line standards of 
what constitutes a taking and the definition of property 
established by the bill. This is simply not the case.
    The essentially ad hoc approach established by the Supreme 
Court in Penn Central Transportation Co. v. New York 40 to 
determine a taking has been superseded by more recent Supreme 
Court decisions. For instance, the Court in Nollan v. 
California Coastal Commission,41 established that there 
must be a substantial nexus between a governmental exaction and 
a particular problem the regulation was designed to redress. 
Similarly, Dolan v. City of Tigard,42 established a 
bright-line test that there must be a demonstration of a 
``rough proportionality'' between the ``amount'' or ``degree'' 
of the exaction and the extent of the restriction on property 
use needed to alleviate or prevent harm. The bill does nothing 
more than codify these recent types of cases that establish 
bright-line standards.
    \40\ 438 U.S. 104 (1978). Penn Central looked to a number of 
factors to be balanced to determine the existence of a taking, 
including the character of the government action, the economic impact 
of the regulation, and whether reasonable investment-backed 
expectations were interfered with.
    \41\ 483 U.S. 825 (1987).
     42  512 U.S. ------, 114 S. Ct. 2309 (1994).
---------------------------------------------------------------------------

3. Definition of property

    As to the definition of property rights contained in the 
bill, the actual definitions were taken directly out of the 
case law establishing the particular property interest 
involved. For instance, the bill codifies contract rights as a 
property interest. This is predicated upon the Supreme Court 
case of Lynch v. United States,43 which definitively 
established in 1934 that contract rights are property interests 
protected by the 5th and 14th Amendments.44
    \43\ 292 U.S. 571 (1934).
    \44\ This answers the criticism that codification of contract 
rights as a protected property interest is a novel departure from 
existing law. This argument maintains that such codification would 
force the Federal Government to pay compensation when, for instance: 
(1) an agency cannot fulfill the terms of a contract to supply water 
because of a drought, or (2) in a situation where Congress terminated a 
subsidy program to supply water at less than the market price. In the 
first situation, there is simply no contract to enforce under the 
common law ``Act of God'' or force majeur doctrine, whereby the 
contract is vitiated because of a failure of consideration, in this 
case a drought preventing the delivery of water. See Arthur C. Corbin, 
Corbin on Contracts, Sec. 1324 (1953). The second situation falls under 
the so-called sovereign acts doctrine, whereby the United States need 
not pay compensation when it acts to restrict contract rights and the 
use of property in its sovereign capacity, unless the general and 
public act or legislation restricting the contract and use of property 
is specifically directed to a single class of property holders. See, 
e.g., Horowitz v. United States, 267 U.S. 458 (1925) (holding United 
States not liable for obstruction of particular contract resulting from 
general and public acts as a sovereign, nor for losses resulting from 
embargo placed on freight shipment of silk); Winstar Corporation v. 
United States, 64 F.3d 1531, 1548 (Fed. Cir. 1995) (holding United 
States may not ipso facto abrogate contracts under the sovereign acts 
doctrine; it may do so only pursuant to general and public acts when 
acting in a sovereign capacity and not in a role the equivalent to a 
private contractor). Furthermore, the Supreme Court has held that there 
exists no constitutional right to a particular subsidy. See Lynch v. 
United States, 292 U.S. 571, 577 (1933) (noting that pensions, grants, 
and such are gratuities that may be eliminated by Congress at any time 
and are not vested rights). U.S. Railroad Retirement Board v. Fritz, 
449 U.S. 166, 174 (1980) (noting railroad benefits may be altered or 
eliminated ``at any time''); Fleming v. Nestor, 363 U.S. 603 (1960) 
(holding social security program benefits may be terminated without 
paying compensation).
---------------------------------------------------------------------------

4. The nuisance exception

    Critics make three primary arguments against the nuisance 
exception in the bill. They claim that: (1) the nuisance 
exception is too amorphous or broad to be workable; (2) the 
nuisance exception is too narrow or restrictive to allow 
enforcement of Federal health, safety, and environmental 
statutes and regulations without the government having to pay 
compensation; and (3) because the bill's nuisance exception 
looks to State law for definition, the bill would establish 50 
different nuisance exception standards hindering uniformity, 
the necessary predicate for Federal legislation. These 
criticisms are misplaced. Section 204(d)(1) of S. 605 
incorporates the common law nuisance exception to the payment 
of just compensation under the fifth amendment. Actually, the 
nuisance exception is not an exception at all. At common law, 
property consists of a bundle of rights encompassing the 
possession, use (or ``enjoyment''), and disposition of one's 
acquisitions; any limitation on those rights was considered an 
unjustified interference with property.45 It was 
universally understood that this definition of property did not 
encompass uses that deprive or disturb another in the enjoyment 
of his property, nor did it include the right to use property 
in a way that damages the property rights of a third party. 
Thus, property may not be used in a manner that constitutes a 
nuisance.46
    \45\ See 3 William Blackstone, Commentaries *216-222.
    \46\ Id. at 113. See also G. Jacob, New Law Dictionary (9th ed. 
1772).
---------------------------------------------------------------------------
    At common law there are two types of nuisances, public and 
private. Private nuisance has been defined as an unwarranted 
interference with the use and enjoyment of property, 
particularly land.47 Public nuisance, on the other hand, 
is an unreasonable interference with the rights and welfare of 
a community.48 This type of nuisance is usually addressed 
by an action seeking injunctive relief and monetary 
compensation, brought by the state to protect public health and 
safety. Both types of nuisance actions require a demonstration 
of the existence of harm or an unreasonable risk of harm.
    \47\ See generally W. Page Keeton, Prosser and Keeton on the Law of 
Torts 619 (5th ed. 1984). See generally Richard Epstein, Takings: 
Private Property and the Power of Eminent Domain (1985). Professor 
Epstein concludes that the gravaman of private nuisance is the 
``physical invasion'' of another's property by the tortfeasor. Such 
physical invasion could be by trespass, pollutants, or noise or other 
waves or particulates.
    \48\ Prosser and Keaton, at 643.
---------------------------------------------------------------------------
    Although the Federal Government does not constitutionally 
possess a common-law police power,49 the Supreme Court 
historically has held that the Federal Government has inherent 
authority to prevent ``noxious'' uses of property and need not 
compensate for restrictions on property use that amount to 
common-law nuisances.50 The recent Lucas decision requires 
that a regulation must abate nuisances as defined by the State 
in which the property is located in order to escape the just 
compensation requirement of the Takings Clause. Following 
Lucas, a number of subsequent court cases have rejected police 
power, general welfare, or purely environmental values, such as 
protection of open spaces, aesthetic views, wildlife habitats, 
or wetlands as sufficient bases to justify resorting to the 
nuisance exception.51 Courts now require that harm to 
health, safety, and the environment be factually demonstrated 
to justify a regulation being classified under the nuisance 
exception.52
    \49\ Congress may legislate only pursuant to those specific and 
implied powers delegated to it by Article I of the Constitution. See, 
e.g., United States v. Lopez, 115 S. Ct. 1624 (1995).
    \50\ E.g., Miller v. Shoene, 276 U.S. 272 (1928) (destroying of red 
cedar trees to prevent spread of cedar rust disease to preserve apple 
crop not a compensable taking); Mugler v. Kansas, 123 U.S. 623 (1887) 
(shutting down of brewery pursuant to statute held not a taking because 
operating the brewery was tantamount to a ``noxious'' public nuisance).
    \51\ See, e.g., Lucas v. South Carolina Costal Council, 424 S.E.2d 
484, 486 (S.C. 1992) (building house on barrier island); Bowles v. 
United States, 31 Fed.Cl. 37, 51 (1994) (house on wetlands lot).
    \52\ See, e.g., M & J Coal Co. v. United States, 47 F.3d 1148 (Fed. 
Cir. 1995) (applying Lucas and rejecting taking claim because 
prohibition on surface subsidence mining prevented imminent danger to 
public health and safety); State v. The Mill, 887 P.2d 993 (Colo. 1994) 
(radioactive uranium mill tailings).
---------------------------------------------------------------------------
    Consequently, the critics' argument that S. 605's nuisance 
exception is not broad enough to cover some environmental 
statutes, is in a way beside the point. Plainly put, their 
argument is with the Supreme Court's Lucas decision and not the 
bill, which merely codifies the Lucas nuisance exception.
    It has been claimed that the nuisance exception is too 
broad and amorphous. Critics of the bill point to various State 
nuisance cases to support this claim.53 Upon closer 
review, however, the Committee found that the cited cases did 
not support the argument against nuisance law. In many of these 
cases the court found insufficient evidence of harm or risk to 
justify relief under a nuisance cause of action. Some cases 
were not applicable to the provisions of S. 605. In other 
cases, while courts did reach different conclusions based on 
similar pleadings, what is important is that the courts 
employed virtually the same nuisance standards. The Committee 
is satisfied that State nuisance law is both consistent enough 
and strong enough to provide a reasonable balance between 
compensable and noncompensable takings.
    \53\ See S. 605: The Omnibus Property Rights Act of 1995, hearings 
before the Senate Committee on the Judiciary, 104th Cong., 1st sess., 
56-60 (1995).
---------------------------------------------------------------------------
    Courts in these cases applied the same nuisance standards 
because nuisance law is substantially the same throughout the 
50 states.54 In other words, State courts use the same 
nuisance standards. The result is a certain uniformity in the 
law. The fact that those differing conclusions are reached by 
different State courts is no different from situations where 
Federal district and appellate courts apply the same law and 
reach different results. Any ``imprecision'' flowing from the 
application of the nuisance standard is the result of the 
changing State definition of property.55
    \54\ See note 31, infra.
    \55\ Kmiec, supra note 17, at 154.
---------------------------------------------------------------------------
    Yet, it is not unusual for Federal statutes to look to 
State law for substantive standards. This is true for diversity 
cases under the Erie doctrine,56 the Federal Tort Claims 
Act (where the Act looks to the negligence standard of the 
State where the tort is committed),57 and the Tucker Act 
58 (where the interpretation of Federal contracts is based 
on the law of the State where the contract is effectuated). 
Indeed, it could be argued that when Congress incorporates 
State law standards into a Federal law, it is demonstrating 
more sensitivity to principles of federalism and comity between 
the Federal and State governments.59
    \56\ See Tompkins v. Erie R.R. Co., 305 U.S. 673 (1938).
    \57\ 28 U.S.C. 2674 (1994).
    \58\ 28 U.S.C. 1491 (1994).
    \59\ Kmiec, supra note 17, at 153.
---------------------------------------------------------------------------

                       III. Vote of the Committee

    Pursuant to paragraph 7 of rule XXVI of the Standing Rules 
of the Senate, each Committee is to announce the results of 
rollcall votes taken in any meeting of the Committee on any 
measure or amendment. The Senate Judiciary Committee, with a 
quorum present, met on Thursday, December 21, 1995, at 10:15 
a.m., to mark up S. 605. The following rollcall vote occurred 
on S. 605:
    Motion to favorably report S. 605. The motion was adopted 
10 yeas to 7 nays.
        YEAS                          NAYS
Thurmond                            Biden
Simpson                             Kennedy
Grassley                            Leahy
Brown (proxy)                       Simon
Thompson                            Kohl (proxy)
Kyl                                 Feinstein (proxy)
DeWine                              Feingold
Abraham
Heflin
Hatch

                    IV. Section-by-Section Analysis

                               SECTION 1

    Section 1 sets out the short title of this bill, the 
``Omnibus Property Rights Act of 1995.''

                                Title I

                              SECTION 101

    Section 101 states the findings upon which this legislation 
is based. Specifically, the findings are that the protection of 
private property is a cornerstone of liberty as codified in the 
fifth amendment of the U.S. Constitution, that Federal 
regulation has encroached on those rights, and that there is a 
need for Congress to clarify the law with which property owners 
may vindicate their rights.

                              SECTION 102

    Section 102 states the purposes of this legislation, which 
are, generally stated, to codify and clarify existing Supreme 
Court precedent to facilitate the fair resolution of takings 
claims and to create procedural requirements which hold Federal 
agencies accountable for their actions with regard to takings.

                                Title II

                              SECTION 201

    This section states the findings underlying this title.

                              SECTION 202

    This section states the purposes of this title.

                              SECTION 203

    This section defines terms used in this title. Since there 
has been some discussion on the definition of ``property,'' the 
Committee wishes to clarify several points. First, all of the 
interests which make up the definition of property are well-
established and accepted property interests that are accepted 
as property under current law. This definition, therefore, does 
not expand the concept of private property in any way. Second, 
the enumerated interests are not meant as an exhaustive list. 
Indeed, the bill explicitly states that the definition 
``includes,'' but in no way suggests that it is limited to, the 
enumerated interests. The definition is intended as a ``floor'' 
of core property rights for which protection is guaranteed, but 
permits Federal, State, and local governments to add to the 
list as they see fit.

                              SECTION 204

    This is the operative section of title II, setting forth 
all substantive criteria with regard to takings litigation.

Subsection 204(a)

    This subsection lists the legal standards that courts are 
to use in evaluating takings claims. It creates a two-prong 
test which claimants must satisfy in order to prevail. The 
first prong is stated in paragraph 1 and requires that the 
claimant be the owner of a recognized property interest which 
is the object of agency action. The Committee expects that this 
is the stage of the inquiry where investment-backed 
expectations will be considered.60 As in the past, where 
the existence of a property right is unclear, the courts have 
looked to the reasonable expectations of the owner at the time 
of purchase. There is nothing in this bill which would alter 
that analysis. Claimants who cannot satisfy this test are 
ineligible for compensation under this bill. Even if this test 
is met, the claimant must meet the second prong. The second 
prong is stated in paragraph 2 and consists of several 
standards, any one of which must be met in order to satisfy 
that prong.
    \60\ The extent to which a property owner reasonably expected, at 
the time the property is acquired, to be able to use his property is, 
the Committee notes, an important factor to the courts in determining 
the existence of a property right. See Penn Central Transp. Co. v. New 
York City, 438 U.S. 104, 124-25 (1978); Lucas v. South Carolina Coastal 
Commission, 505 U.S. 1003, 1030 (1992); M & J Coal Co. v. United 
States, 47 F.3d 1148, 1153 (Fed. Cir. 1995). Thus, in evaluating a 
claim brought under this Act, the reasonable, investment-backed 
expectations of the property owner will be a factor in determining 
whether the agency action at issue infringed upon a property right held 
by the claimant.
---------------------------------------------------------------------------
    There are five possible ways to meet the requirements of 
the second prong. Subparagraph (A) is met if the claimant shows 
that the agency action does not substantially advance the 
stated government interest. This language is taken from the 
Supreme Court's holding in Nollan v. California Coastal 
Commission,61 and the Committee intends to adopt the same 
meaning.62
    \61\ 483. U.S. 825 (1987).
    \62\ The Committee understands the requirement to consist of two 
distinct inquiries. First, whether the government interest is a 
legitimate interest. Second, whether there is a reasonable nexus 
between that interest and the government action purporting to advance 
the interest. Id. The inclusion of the word ``stated'' is merely a 
recognition of the fact that in defending its action, the agency must 
state an interest and adds no new requirements or standards.
---------------------------------------------------------------------------
    Subparagraph (B) is met if the claimant shows that the 
agency action conditions the use of his property on a 
limitation of his property rights where no rough 
proportionality exists between the required limitation and the 
impact of the proposed use. This language is taken from the 
Supreme Court's ruling in Dolan v. City of Tigard,63 and 
the Committee intends to adopt the same meaning.
    \63\ 512 U.S. ------, 114 S. Ct. 2309 (1994).
---------------------------------------------------------------------------
    It should be noted that the Court's analysis in Dolan 
cannot be limited to land-use restrictions and conditions. 
Throughout the opinion, the Court took pains to apply its 
analysis to the broader ``property rights'' and not to just 
real property. Moreover, subsequent Court decisions have 
applied the ``essential nexus'' test of Nollan and the ``rough 
proportionality'' test of Dolan to permit denials,64 
waiver requirements,65 impact fees,66 as well as 
land-use conditions and restrictions.67
    \64\ See, e.g., Bowles v. United States, 31 Fed. Cl. 37 (1994); 
Whitehead Oil Co. v. Lincoln, 515 N.W.2d 401 (Neb. 1994).
    \65\ State v. Heckman, 644 So. 2d 527 (Fla. Dist. Ct. App. 1994) 
(waiver of platting requirement in return for conveyance of right-of-
way).
    \66\ See, e.g., Northern Illinois Home Builders Ass'n v. County of 
Du Page, 649 N.E.2d 384 (Ill. 1995).
    \67\ Outdoor Systems, Inc. v. City of Mesa, 997 F.2d 604 (9th Cir. 
1993); Manocherian v. Lenox Hill Hospital, 643 N.E.2d 479 (N.Y. 1994).
---------------------------------------------------------------------------
    Subparagraph (C) is met if the claimant shows that the 
agency action results in a deprivation of substantially all 
economically beneficial use of the property. This language is 
taken from the Court's decision in Lucas. 68 The Committee 
intends to adopt the same meaning.
    \68\ 505 U.S. 1003 (1992).
---------------------------------------------------------------------------
    Subparagraph (D) is met if the claimant shows that the 
agency action diminishes the value of the affected portion of 
the property by at least 33 percent. The Committee believes 
that it is essential to clarify the law on this point. 
Currently, a property owner cannot be reasonably certain of 
what standard a trial court will apply. While recent cases have 
gone far in clarifying takings law, they are still not as clear 
as the Committee believes the law should be. Additionally, some 
courts still return unpredictably to older precedents which 
have not been explicitly overruled.
    This unjustifiable uncertainty makes it impossible for a 
claimant to evaluate the strength of a claim. The Federal 
agencies which must defend against these claims are also 
hampered by this uncertainty for they cannot know how to 
structure their land-use regulations in a way to avoid takings 
problems. A bright-line test will solve both dilemmas, giving 
the property owner a reasonable ability to gauge the strength 
of his claim and the agencies the ability to regulate carefully 
and thus reduce the amount of takings they commit. Thus, the 
Committee believes that this clarification of the law aids both 
sides of a potential takings dispute.
    It should be noted the Lucas Court rejected the notion that 
only all destruction of the value of property could constitute 
a taking. 69 Subsequent to Lucas, a number of courts have 
held that a partial regulatory loss short of denial of all 
economically viable use might constitute a compensable taking. 
70 These courts generally apply an ad hoc analysis of 
factors such as fairness and regulatory burdens, an approach 
similar to the procedure used by Justice Holmes in Pennsylvania 
Coal Co. v. Mahon 71 to determine if the regulation ``went 
too far'' in diminishing the value of the property.
    \69\ 505 U.S. at 1019 n.8 (1992).
     70 E.g., Florida Rock Industries v. United States, 18 F.3d 
1560 (Fed. Cir. 1994), cert. den., 115 S. Ct. 898 (1995); Creppel v. 
United States, 41 F.3d 627 (Fed. Cir. 1994); Bauer v. Waste Management 
of Conn., 662 A.2d 1179 (Conn. 1995); Cannone v. Noey, 867 P.2d 797 
(Alaska 1994).
    \71\ 260 U.S. 393 (1922).
---------------------------------------------------------------------------
    Consequently, the Committee believes that such an ad hoc 
approach should be jettisoned for a more coherent bright-line 
33-percent ``partial takings'' standard. Thus, in a situation 
where there is a taking of property and the value of that 
property was diminished by 33 percent or more, the agency ought 
to compensate the property owner since the reduction of value 
is not a ``mere diminution,'' but a partial taking.
    In addition, the ``affected portion'' language in this 
subparagraph is an important clarification of the law. Under 
current law, it is unpredictable whether the court will look to 
the affected portion of the property or the property as a 
whole. While some courts post-Lucas continue to apply ``whole 
parcel'' analysis in the context of determining whether 
developmental restrictions affect a total taking, 72 the 
trend is to reject this approach in order to protect reasonable 
investment-backed expectations by awarding compensation for the 
affected portion of property. 73 As with the partial 
takings uncertainty, the confusion over the parcel problem 
makes litigation more expensive and uncertain. By specifying a 
standard, the Committee believes that the law will be made 
clearer and thus more efficient for all involved.
    \72\ See, e.g., Rivervale Realty Co., v. Orangetown, 816 F. Supp 
937 (S.D.N.Y. 1993); Hensler v. City of Glendale, 876 P.2d 1043 (Cal. 
1994).
    \73\ See, e.g., Loveladies Harbor, Inc. v. United States, 28 F.3d 
1171 (Fed. Cir. 1994); Boise Cascade Corp. v. Board of Forestry, 886 P. 
2d 1033 (Or. App. 1994). A number of pre-Lucas decisions have refused 
to apply whole parcel analysis, e.g., Corrigan v. City of Scottsdale, 
720 P.2d 528 (Ariz. Ct. App. 1985).
---------------------------------------------------------------------------
    Subparagraph (E) provides that new standards articulated in 
further takings rulings are automatically incorporated into 
this bill.

Subsection 204(b)

    This provision guarantees that State and local governments 
cannot be sued under this title. Even where the State agency 
action qualifies for coverage under the bill pursuant to the 
definition of State agency in section 203, any takings claims 
arising from such action must be brought against the Federal 
agency which administers the relevant program. The Committee 
believes that this provision leaves no doubt that only Federal 
agencies have to litigate and pay compensation awards under 
this title.

Subsection 204(c)

    This section places the burden of proof on the government 
with regard to subparagraphs 204(a)(2)(A), (B), and (C), while 
placing the burden of proof on the property owner for 
204(a)(2)(D).

Subsection 204(d)

    Paragraph (1) of this subsection is the nuisance exception 
to compensation. This provision states that under no 
circumstances shall compensation be required under this Act if 
the owner's use or proposed use of the property amounts to a 
nuisance, as understood by background principles of nuisance 
and property law in that State. Both the doctrines of public 
and private nuisance are encompassed within this provision. The 
Committee believes that under this exception regulations that 
help reduce or eliminate threats to public health and safety 
would not require compensation.
    Paragraph (2) of this subsection defines the level of 
compensation owed to a successful claimant as the difference 
between the fair market value before and after the property 
became the subject of the agency action.74 This provision 
also provides that, where it is appropriate, compensation shall 
include business losses.
    \74\ The Committee is aware that it is possible for agency action 
to confer a specific benefit to a property owner, as well as a 
financial harm. Where this benefit is unique to the property owner and 
not merely the same benefit which the action conveys to the general 
public, the Committee believes it would be proper for the courts to 
consider the specific benefit as well as the harm for the purpose of 
calculating damages. See Dolan 114 S. Ct. 2039 (1994) (the Court 
considered, but rejected as nonexistent, various possible benefits to 
the property owner); See also Armstrong v. United States, 364 U.S. 40, 
49 (1960) (the Takings Clause is ``to bar Government from forcing some 
people alone to bear public burdens which, in all fairness should be 
borne by the public as a whole.'').
---------------------------------------------------------------------------

Subsection 204(e)

    The subsection states that when compensation is paid for 
the taking of a property interest, the United States takes 
title of that interest. This prevents the possible problem of 
subsequent compensation for the taking of the same property 
right.

Subsection 204(f)

    All awards for compensation are to be paid out of the 
budget supporting the agency action responsible for the taking. 
The Committee believes that requiring the agencies to pay for 
their own transgressions against the rights of property owners 
will make the agencies more likely to comply with the 
provisions of the Act. In short, it will hold them accountable.
    This provision also stipulates that when there is cross-
jurisdictional responsibility for the taking, the various 
agencies may seek appropriate reimbursement among each other. 
This guarantees that the proper agency will be held 
responsible.
    Additionally, this subsection instructs that if there are 
insufficient funds to pay an award in the fiscal year the award 
becomes final, the agency must seek additional appropriations 
or pay the award from the next year's appropriation. Thus, 
compensation awards can only be paid from the responsible 
agency's appropriated budget. The Committee is certain that 
this provision forecloses any possibility that compensation 
awards would ever be paid from the Judgment Fund.

                              section 205

Subsection 205(a)

    This subsection clears the jurisdictional roadblock to a 
judgement in takings cases commonly known as the ``Tucker Act 
Shuffle.'' The problem is eliminated by giving both the U.S. 
Court of Federal Claims and the United States District Courts 
concurrent jurisdiction to hear both claims for monetary and 
injunctive relief under this Act. Which court will hear the 
case is up to the plaintiff.

Subsection 205(b)

    The Federal Circuit is granted exclusive jurisdiction to 
hear appeals of the cases described in 205(a). The Committee 
believes that this will provide uniformity of law and prevent 
forum shopping.

Subsection 205(c)

    This subsection grants standing to any person adversely 
affected by an agency action as defined by this act.

Subsection 205(d)

    This subsection amends the Tucker Act's grant of 
jurisdiction to the U.S. Court of Federal Claims so that it is 
in harmony with 205(a). It also repeals unnecessary provisions 
of 28 U.S.C. 1500.

                              section 206

    The statute of limitations for claims under this title is 6 
years from the date of the taking.

                              section 207

    In any case brought under this title, the court shall award 
attorneys' fees and costs to any prevailing plaintiff.

                              section 208

    This section reiterates that any State may add to the 
definition of property contained in this title.

                              section 209

    This title shall take effect on the date of enactment and 
shall apply to any agency action which occurs after that date.

                               Title III

                              section 301

    This section provides the opportunity for parties to 
resolve takings claims without resorting to litigation. It 
establishes a formal arbitration procedure, subject to the 
consent of both parties. The source of compensation and 
judicial review of the arbitration is identical to title II. 
The claimant has an election of remedies and is not required to 
pursue arbitration prior to other action.

                                Title IV

                              section 401

    This section sets forth the purposes of this title.

                              section 402

    This section defines several terms for the purposes of this 
title only.

                              section 403

Subsection 403(a)

    This subsection requires all agencies to complete a taking 
impact analysis before engaging in any agency action which is 
likely to result in the taking of private property. The issues 
that must be addressed by the statement are enumerated in this 
subsection. A number of exceptions to this requirement are also 
set forth. They include military or foreign affairs functions 
(not including the Army Corps of Engineers), immediate threats 
to health or safety, law enforcement, and other similar 
actions.

Subsection 403(b)

    This subsection requires the Attorney General to assist 
agencies in complying with this section and to submit annual 
reports to the Office of Management and Budget listing each 
agency action for which a taking assessment was prepared, a 
takings claim filed, or compensation awarded.

Subsection 403(c)

    This provision requires the agencies to make their taking 
assessments available to the public and to transmit copies of 
the analysis to the owners of the affected property.

Subsection 403(d)

    For the purposes of judicial proceedings, this provision 
establishes a rebuttable presumption that a takings assessment 
is inaccurate if it has been unmodified for 5 or more years at 
the time of the proceeding. Thus, unless the presumption was 
rebutted, the takings assessment would not be reliable evidence 
for use in takings litigation.

                              section 404

    This section prohibits agencies from issuing new rules that 
reasonably could be construed to require uncompensated takings. 
Also, agencies are to review and, where appropriate, re-
promulgate regulations that result in takings, submit budget 
requests that account for the payment of takings claims, and 
submit to Congress a list of statutory changes that the agency 
believes will help minimize takings.

                              section 405

    This section states that nothing in this title shall be 
construed to require exhaustion of remedies or to interfere 
with the property owner's right to a complete election of 
remedies. Nor is anything in this title to constitute a 
conclusive determination of the value of any property or any 
other material issue.

                              section 406

    The statute of limitations for the enforcement of the 
provisions of this title is 6 years after the date of the 
submission of the taking impact analysis.

                                Title V

                              section 501

    This section states the findings and purposes for this 
title.

                              section 502

    This section defines several terms for the purposes of this 
title.

                              section 503

    This section requires agencies to conduct the 
implementation and enforcement of their statutory missions 
without violating local law. Agencies are to minimize any 
disturbances of private property rights. The agencies are 
instructed to develop rules to ensure that these requirements 
are properly implemented.

                              section 504

    This section forbids agencies from trespassing on private 
property to collect information. If the property owner consents 
to the agency's presence and is supplied with the data 
collected, the agency may enter the property.

                              section 505

    This section forbids the use of information gathered as a 
result of entrance onto private property unless the property 
owner is supplied with the information, a description of how it 
was collected, and an opportunity to dispute the accuracy of 
that information. If such a challenge is raised, the agency may 
not base agency action on that information unless the agency 
determines the information to be accurate.

                              section 506

    This section amends 33 U.S.C. 1344 (section 404 of the 
Clean Water Act). The amendment provides a right to an 
administrative appeal of certain agency actions regarding the 
delineation of a parcel of land as a protected wetland, 
permits, and penalties. The agency is required to adopt 
procedures to hear such appeals. Certain requirements 
concerning the location and procedures of the hearing are also 
specified. Property owners who proceed under this provision are 
still entitled to pursue a takings claim in Federal court.

                              section 507

    This section amends 16 U.S.C. 1540 (section 11 of the 
Endangered Species Act) to provide for an administrative appeal 
of agency action regarding the determination of a parcel of 
land as a critical habitat of a listed species, permits, 
incidental ``take'' statements, and penalties. The agency is 
required to adopt procedures to hear such appeals. Certain 
requirements concerning the location and procedures of the 
hearing are also specified. Property owners who proceed under 
this provision are still entitled to pursue a takings claim in 
Federal court.

                              section 508

    This section provides for compensation for the taking of 
private property. The claimant retains the election of remedies 
and may pursue a claim under section 204 of this Act. This 
section further provides for a formal compensation negotiation 
between the property owner and the agency. If no agreement can 
be reached, the property owner may submit the matter for 
binding arbitration. The agency selects the arbitrator from a 
list obtained from the American Arbitration Association. In any 
case where compensation is made, payment shall be supplied by 
the funds supporting the agency action that gave rise to the 
claim.

                              section 509

    This section amends 16 U.S.C. 1535 (section 6 of the 
Endangered Species Act) to require the agency to provide 
notification of and an opportunity for participation in 
management agreements for all property owners whose property is 
the subject of that agreement.

                              section 510

    This section explicitly states that a claimant need not 
exhaust administrative remedies to proceed under this Act nor 
are any other titles conditions precedent to proceeding under 
this title. Further, nothing in this title bars a claim under 
28 U.S.C. 1346 or 1402 or chapter 91. Finally, nothing in this 
title shall constitute a conclusive determination of the value 
of property or any other material issue.

                                Title VI

                              section 601

    This section states that if any portion of this Act is held 
to be unconstitutional, the remainder of this Act shall not be 
affected.

                              section 602

    This section states that, except as provided in this Act, 
the provisions of this Act shall take effect on the date of 
enactment and shall apply to any agency action after such date.

                            V. Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, March 8, 1996.  
Hon. Orrin G. Hatch,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 605, the Omnibus 
Property Rights Act of 1995.
    Enacting S. 605 would not affect direct spending or 
receipts. Therefore, pay-as-you-go procedures would not apply 
to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

    1. Bill number: S. 605.
    2. Bill title: Omnibus Property Rights Act of 1995.
    3. Bill status: As ordered reported by the Senate Committee 
on the Judiciary on December 19, 1995.
    4. Bill purpose: S. 605 would prohibit federal agencies (or 
state agencies, if carrying out a federal program) from taking 
private property without paying just compensation to the owner. 
The bill would establish specific conditions, definitions, and 
standards to be used in determining when an agency action has 
caused a taking of private property and what compensation is 
due to the owner.
    Two titles of this legislation would make it easier and 
less expensive to pursue claims for compensation against the 
United States. First, Title II would establish a statutory 
right to judicial redress that may be used by owners to sue the 
government when property rights have been taken by the 
activities of a federal (or authorized state) agency.
    Second, Title V would establish special rules for resolving 
property rights disputes that involve federal programs carried 
out under the Endangered Species Act (ESA) and section 404 of 
the Federal Water Pollution Control Act (FWPCA). This title 
would amend the two statutes to provide landowners with a right 
to appeal and/or seek compensation for agency actions through a 
new administrative process.
    Other provisions of the bill would attempt to reduce the 
number of takings caused by federal regulatory actions. Such 
provisions would require agencies to consider and minimize the 
effects of their actions on private property rights. For 
example, Title IV would require agencies to conduct impact 
analyses before taking actions that are likely to affect 
private property. Agencies could not promulgate final rules 
that would result in uncompensated takings. Where existing 
regulations are found to be in conflict with the new law, 
agencies would have to issue new regulations. Similarly, Title 
V would require agencies to administer programs carried out 
under the ESA and FWPCA in a manner that has the least impact 
on the rights of property owners.
    Finally, the bill would require that all compensation 
payments to property owners be paid from funds appropriated to 
the agency that caused the taking. This would be true for all 
payments (including any awarded interest and cost 
reimbursements), whether determined by court judgment, 
settlement, arbitration, or administrative decision.
    5. Estimated cost to the Federal Government: Implementing 
S. 605 would involve two types of federal expenditures: (1) 
payments of compensation to property owners, and (2) operating 
and administrative expenses incurred by federal agencies.
    Payments of Compensation. CBO expects that additional 
compensation costs over the next few years would probably be 
less than the additional administrative costs (discussed below) 
because most of the cases that would be resolved during this 
period would be small administrative claims involving minor 
dollar amounts. CBO has no basis for estimating the additional 
amounts of compensation that the government might have to pay 
for cases where property owners choose to pursue larger claims 
in court.
    Administrative Costs. Assuming appropriation of the 
necessary amounts, CBO estimates that federal agencies would 
spend an additional $30 million to $40 million a year over the 
next five years to implement and operate the administrative 
appeals and claims procedures prescribed by Title V. After this 
period, ongoing administrative expenses would probably fall 
considerably, although they would remain above the current 
annual costs of $110 million to $125 million to carry out the 
affected regulatory programs.
    Other administrative costs to comply with Title IV, which 
requires federal agencies to review existing regulatory actions 
and analyze proposed ones for their impacts on property rights, 
depend greatly on how agencies interpret their responsibilities 
under the bill. However, for most agencies, we expect that such 
costs would not add significantly to the cost of conducting 
similar assessments under current law or administrative 
policies.
    6. Basis of estimate: Payments of Compensation. In the 
first few years following enactment of S. 605, additional 
compensation costs resulting from the legislation would 
probably account for a relatively small portion of each 
affected agency's operating budget because few claims would be 
paid over this period and those that would be paid would 
typically involve small awards. The cost of compensating 
property owners in the longer run is very uncertain and would 
depend on a number of unknown factors, including how property 
owners and federal agencies would react to the legislation and 
how the legislation would be interpreted by the Administration 
and the courts.
    CBO expects that enacting the bill would cause federal 
agencies to attempt to avoid paying compensation by modifying 
their decisions, processing permits more quickly, or otherwise 
changing their behavior. Although the number of small claims 
brought against the United States could increase dramatically--
especially since so few are made under existing law--those that 
are paid would involve small awards. We expect the increase in 
the number of large claims to be much less significant, because 
most such claims would probably have been brought anyway and 
would still require litigation, but the bill could increase the 
chances of success for those who choose to litigate.
    Compensation under Current Law. Under existing law, persons 
who wish to seek compensation for property that they believe 
has been taken by a government action usually must do so 
through litigation--generally in United States Court of Claims. 
The process is time-consuming and expensive. Property owners 
who bring suit in the Claims Court typically wait at least two 
years before their cases are heard. Decisions unfavorable to 
the government have been rare in the past because of the high 
loss thresholds required by precedent before the courts will 
award compensation. Property owners who pursue their cause can 
expect the government to appeal unfavorable decisions, which 
often adds years to the process. Because the legal and other 
costs of waging a protracted court battle are greater than most 
property owners can afford, relatively few compensation claims 
are brought against the United States (although there has been 
a steady increase in the last decade). Those cases that are 
brought typically involve relatively large claims (more than 
$100,000, to more than $100 million) brought by corporations or 
other large property owners. Such claims can require more than 
a decade to resolve. As a result, the few awards that are paid 
often include more for interest and reimbursements of 
litigation costs than for compensation.
    Compensation Under S. 605. CBO expects that the vast 
majority of new compensation claims resulting from this bill 
would be brought under the administrative process prescribed by 
Title V. Although the number of such claims could be quite 
large at first, we expect that relatively few would result in 
payment because:
          the bill's effective dates, definitions, and 
        other provisions would probably allow agencies to 
        reject a large portion of early claims (such as those 
        involving pending or pre-enactment agency decisions) by 
        deeming them to be outside the scope of the bill;
          the requirements that compensation payments 
        be made from agency appropriations would cause the 
        agencies to try to resolve as many claims as possible 
        without having to pay any compensation--for example, by 
        reversing or modifying permit decisions or enforcement 
        actions, by processing permit applications more 
        quickly, and by working more closely with landowners to 
        negotiate permit conditions; and
          the 33 percent threshold established by the 
        bill for determining whether a taking has occurred 
        would probably be too high to allow property owners 
        affected by many agency actions to recover. Especially 
        for agency actions that apply to an area generally 
        (such as those taken under the ESA), the overall 
        percentage of value lost on an affected property 
        typically would be small.\1\
    \1\ For example, an individual species listing and/or habitat 
determination under the ESA can affect thousands of properties ranging 
in size from single residential lots to major timber holdings, most of 
which are likely to experience some overall reduction in market value 
across the property as a whole. In most cases, however, the average 
diminution in property value (or business loss, in terms of new 
compliance costs) would be well below the 33 percent threshold.
---------------------------------------------------------------------------
    Further, we estimate that any compensation payments 
eventually made through the administrative process would 
involve relatively small amounts (often as little as a few 
thousand dollars), largely because small claims would account 
for the vast majority of claims likely to be made under this 
title. Most of the actions that would lead to successful claims 
under this title (such as decisions on permit applications) 
involve either very small land parcels or some minor fraction 
(``affected portion'') of larger tracts.\2\ Moreover, we 
believe that property owners with large claims would be very 
unlikely to seek compensation under Title V. Because disputes 
involving large claims almost always involve complicated 
technical and valuation issues, they would be much more 
difficult to resolve under the simple administrative procedures 
established by Title V. Also, the administrative and binding 
arbitration processes prescribed by this title do not 
specifically allow claimants to receive interest on their 
awards or be reimbursed for legal and other costs. 
Consequently, it would be very risky for owners with large 
claims to proceed under Title V. Such claims (which are often 
brought by corporations and others who have sufficient 
resources to sue the federal government) would probably 
continue to be resolved through litigation.
    \2\ For example, of the types of section 404 permit decisions that 
are likely to result in compensation claims, about one-half involve 
fill sites of less than one acre, and as many as 75 percent involve 
less than five acres. Even if the Corps had to treat each such denial 
as a 100 percent loss of value for the entire fill acreage, most 
payments would be minimal. Moreover, a significant number of section 
404 permit decisions cover fill sites that could be too small either to 
reduce the owner's total holding by 33 percent or to have any market 
value independent of the property as a whole.
---------------------------------------------------------------------------
    CBO expects that new claims for compensation also would be 
brought under the right to judicial relief established by Title 
II of the bill, although we expect that any budgetary impact 
resulting from new litigation would take several years to be 
felt. Title II specifies the events and conditions that 
constitute a compensable taking of private property, and the 
standards to be used in calculating just compensation. 
Compensation awarded under this title would include compound 
interest calculated from the date of the taking until payment 
and reimbursement for litigation costs, including legal 
expenses and expert witness fees.
    Enactment of Title II probably would increase the number of 
lawsuits brought against the United States, at least in the 
short run. CBO expects that the majority of the new suits would 
involve relatively large claims against agencies that regulate 
the use of land or water, particularly the U.S. Army Corps of 
Engineers and the Department of the Interior (DOI). The impetus 
for most of these claims would be the new statutory conditions 
for identifying a compensable loss.
    Even if the government would ultimately lose more lawsuits 
as a result of the legislation, additional compensation costs 
would probably be minimal in the 1996-2000 period because 
claims would take several years to resolve. Large claims 
brought under Title II would still involve many of the same 
factors that prolong litigation under existing law, including a 
lengthy discovery period, court delays, and valuation disputes. 
Moreover, in the early years many new claims would likely 
involve conflicting interpretations of the statute that could 
take a number of years to resolve through the judicial process.
    The effect of Title II on federal compensation costs in 
later years would depend on the outcome of this process and is 
very difficult to predict. On the one hand, it is likely that 
the legislation's 33 percent loss threshold and related 
provisions would cause property owners to bring--and possibly 
win--more suits than in the past. On the other hand, the 
requirement that agencies pay all compensation awards, 
including compound interest and reimbursements of costs, from 
their operating budgets could have the effect of limiting 
potential costs under this title. We expect that this 
requirement would encourage most agencies to avoid actions that 
would cause property owners to sue, to the greatest extent 
allowed by applicable law.

Administrative costs

    Over the first few years following enactment, the major 
impact of S. 605 would be on federal administrative costs 
incurred to implement and carry out Title V. This title would 
direct the Corps of Engineers, the Environmental Protection 
Agency (EPA), and the U.S. Fish and Wildlife Service (USFWS) to 
institute administrative appeals procedures to allow property 
owners to request a review of agency decisions on wetlands and 
endangered species matters.\3\ Property owners could also seek 
compensation administratively, if a final agency action 
deprives them of 33 percent or more of their property's value 
or economic use.\4\ Under current law, property owners must 
pursue both types of requests through litigation.
    \3\ The appeal and compensation provisions of this title would 
apply to a broad range of regulatory, enforcement, and conservation 
activities carried out under the two acts, including: (1) actions that 
apply to individuals or groups of property owners, such as permits to 
fill wetlands under section 404 or incidental take permits issued under 
the ESA, and (2) general, area-wide actions that affect more than one 
property owner, such as listings of endangered or threatened species 
and designations of their critical habitat under the ESA.
    \4\ As defined by Title V, ``property'' includes water rights, 
land, and related interests.
---------------------------------------------------------------------------
    CBO estimates that federal costs to administer the two 
affected statutes as amended by Title V would be significantly 
greater than under current law, at least in the first few years 
following enactment of the legislation. During this initial 
period, addressing previous harms to property owners would 
account for the lion's share of new expenses. In order to take 
advantage of the administrative appeal and compensation 
provisions of S. 605 (which would apply only to agency actions 
that take place after enactment), persons affected by past 
government actions would have to apply or reapply for permits 
to obtain a new agency decision. As a result, the affected 
agencies would probably experience a one-time flood of such 
requests beginning soon after enactment. Processing 
applications and reapplications would require the agencies to 
revisit hundreds of old decisions made over the years since the 
two statutes were enacted. Moreover, once the resubmitted 
permits have been processed, each unfavorable decision could 
form the basis of an appeal and/or compensation claim that also 
would have to be resolved.
    The Corps of Engineers would probably incur most of the 
additional workload because it processed the vast majority of 
individual permits that would likely be resubmitted as a result 
of this bill. Moreover, we would expect relatively few 
landowners affected by previous ESA determinations to take 
advantage of the appeals and claims provisions of Title V 
because in order to do so they would probably have to apply for 
an incidental take permit and obtain an unfavorable decision 
from the FWS. Incidental take permits, which must be obtained 
in order to develop land subjects to ESA regulations, are very 
expensive and time-consuming for the average small landowner to 
pursue.
    Depending on how quickly the reapplications arrive and what 
priority the agencies give them, processing permits and other 
requests related to these previous actions would add $15 
million to $20 million annually to the cost of wetlands and 
endangered species programs in the short run.
    In addition to these amounts, federal agencies also would 
incur new annual expenses to process administrative appeals of 
decisions made after enactment of the bill. Most of the 
additional costs of processing appeals would be incurred by the 
Corps under the section 404 wetlands program because it makes 
the greatest number of decisions that are likely to result in 
such requests in any given year. CBO estimates that the agency 
would spend about $12 million annually to process appeals under 
Title V, or about twice as much as the $6 million requested for 
a similar (but more limited) administrative relief system 
proposed by the President in the fiscal year 1996 budget 
submission. The cost of the ESA appeal process would probably 
be much less--about $3 million annually--because the USFWS 
issues far fewer decisions each year and would be able to 
consolidate individual appeal of many of its decisions.
    Also, beginning in 1997, both agencies would incur new 
costs to process compensation requests. CBO believes that the 
majority of such claims would stem from the creation of an 
administrative forum, which would provide most property owners 
with a cost-effective way to seek compensation. Typically, 
persons affected by wetlands and endangered species regulations 
are small landowners who often cannot afford to sue the federal 
government or who would not expect to receive enough 
compensation to justify the substantial expense of attorneys 
and experts. Thus, without the administrative claims process 
prescribed by Title V, most of these people would not be able 
to take advantage of the 33 percent loss threshold or other 
standards established by the bill that might increase a 
landowner's chance of prevailing against the government.
    We estimate that annual costs to process compensation 
claims would be about $1 million or $2 million for the first 
few years after enactment,rising to about $5 million by about 
2000. About half of these amounts would be spent by each of the 
two agencies.
    In addition to these costs, some federal agencies may incur 
increased administrative expenses to carry out Title IV of the 
bill. Title IV would require all agencies to conduct takings 
impact analysis (TIAs) on proposed policies, regulations and 
legislation. Agencies would submit each TIA to the Office of 
Management and Budget as a part of any required regulatory 
impact analysis. Agencies would also have to review existing 
regulations and, for those found to result in the taking of 
private property, revise them in a manner that reduces such 
takings to the maximum extent possible.
    Under Executive Order 12630, dated March 15, 1988, all 
federal agencies are already required to evaluate the potential 
effects of their regulatory actions on private property rights. 
The information required by that order is very similar to that 
which agencies would have to submit under Title IV, including 
estimates of potential federal liability. Based on information 
obtained from several regulatory agencies, CBO expects that the 
TIAs conducted under Title IV would be very similar to those 
done under existing policy in both content and the level of 
effort required. As under current policy, most agencies would 
conduct these analyses for actions that directly affect private 
property (for example, permit denials), with relatively few 
performed for broader actions (such as proposed legislation or 
regulations that affect the nation as a whole). Depending on 
whether agencies interpret Title IV as being more stringent 
than current law, the bill's specific loss threshold and 
definition of private property may induce some to conduct TIAs 
for more actions than they do currently. Because the level of 
effort for such analyses would continue to be minimal for most 
types of actions, however, we estimate that the additional 
costs involved would be minor.
    Similarly, we expect that the requirement that agencies 
review existing regulations would probably be interpreted by 
most regulators to involve very few past agency decisions that 
directly affect the right to use property (for example, 
prohibitions on mining or other commercial activities in 
certain areas). As a result, the effort required of most 
agencies to carry out this exercise would be minimal--
particularly compared to that needed for more general, 
comprehensive reviews such as those conducted under the 
Administration's regulatory reform initiative in 1995.
    7. Pay-as-you-go considerations: None.
    8. Estimated impact on State, local, and tribal 
governments: S. 605 contains no intergovernmental mandates, as 
defined in Public Law 104-4, that would impose any direct costs 
on state, local, or tribal governments.
    9. Estimated impact on the private sector: S. 605 contains 
no private sector mandates as defined in Public Law 104-4.
    10. Estimate comparison: None.
    11. Previous CBO estimate: On October 17, 1995, the 
Congressional Budget Office prepared a cost estimate for S. 
605, as introduced on March 23, 1995. This estimate provides 
more information about anticipated administrative costs than 
the earlier one, but the two versions of the bill are very 
similar and the estimated costs have not changed.
    12. Estimate prepared by: Deborah Reis.
    13. Estimate approved by: Robert A. Sunshine (for Paul N. 
Van de Water, Assistant Director for Budget Analysis).

                    VI. Regulatory Impact Statement

    Pursuant to paragraph 11(b), rule XXVI of the Standing 
Rules of the Senate, the Committee, after due consideration, 
concludes that S. 605 will have significant regulatory impact.
              VII. SUPPLEMENTAL VIEWS OF SENATOR GRASSLEY

                  omnibus property rights act--s. 605

     The Omnibus Property Rights Act is extremely important to 
the people of my state. In Iowa, over 98 percent of the land is 
privately owned. Only three other States have a higher 
percentage of privately held land. So virtually every 
government regulation in some way affects the ability of Iowa 
landowners to use their property.
     The people have grown tired of the increasing regulatory 
encroachment on their everyday lives and on their property 
rights. The plea I hear most often when I return to Iowa is 
``Get the government off our back.'' I hear this from ordinary 
citizens--the small family farmers and the small business 
owners. This bill is vital for these people--it is not merely a 
way to relieve the regulatory burden on big business as the 
opponents of this bill would have you believe.
    It is also not a bill that will roll back environmental 
laws or pay industries to keep them from polluting. It 
addresses real problems, faced by real people.
     In my State, one of the most common encroachments on an 
individual's property rights occurs due to the Federal wetlands 
regulations. My office is currently involved in several cases 
where small, family farmers are being deprived of the right to 
farm their land because of the presence of a wetland.
    In most instances, the land has been farmed by the same 
family for many generations. And in some instances, it is very 
questionable whether a wetland exists on the land at all.
    These cases illustrate that we have a bureaucracy 
characterized by overlapping jurisdiction, where one official 
can authorize an action that another will condemn you for 
later. This is a complete lack of common sense in 
administrating the law.
     Second, the cases show that Federal regulations affecting 
private property in most instances impact average Americans. It 
is not the large manufacturers and agribusinesses that need the 
protection from government overreaching. They have the 
resources, in terms of money, time and legal advice to go to 
court and defend a governmental action. The average citizen 
does not.
     This bill helps address many of these concerns in the 
following ways. It generally codifies the existing judicial 
standards for proving a takings case. In addition, the bill 
provides relief to landowners whose property value is 
diminished by at least 33 percent. This bright-line standard 
will benefit the small landowner by bringing some clarity to 
the case law. This gives guidance to aggrieved landowners as to 
the likelihood of their case succeeding, thereby preventing 
frivolous lawsuits.
     The bill provides for compensation to landowners whose 
property is taken or devalued by 33 percent. It also forces 
agencies to analyze proposed regulations as to the likelihood 
that the regulation will result in a taking. And finally, the 
bill makes it easier for aggrieved landowners to seek remedy 
from the government in Federal court.
     Simply stated, the legislation strikes a balance between 
the public good and the desire to protect private property 
rights. Currently, the deck is stacked in favor of the 
government and against property owners.
     Opponents of the bill argue that the Constitution already 
protects the rights of private property owners in the 5th and 
14th amendments. However, for the reasons pointed out in the 
hearing testimony of Chief Judge Smith, a petitioner seeking to 
invoke these constitutional protections faces both 
jurisdictional and procedural hurdles that are not easily 
overcome. In fact, the Congressional Research Service reports 
that of 31 Federal court decisions on the takings issue in 
1993, only 2 were decided in favor of the property owner.
    Moreover, litigation under the Takings Clause is generally 
more expensive and time-consuming than other types of 
litigation because of its fact-intensive nature and lack of 
clear judicial standards. Thus, many aggrieved landowners are 
effectively barred from a judicial remedy due to the cost and 
time involved in trying their case. This proposed legislation 
sets a clear standard, eliminates jurisdictional hurdles and 
expedites the process in favor of the landowner who has 
suffered a taking.
    The bill also will force agencies to consider whether their 
actions affect the use of private property. This requirement 
will result in more innovative regulations that both promote 
the public good and limit the infringement of the government on 
property rights.
    This bill does not turn back the clock on the gains we have 
made in the last two decades in improving the environment. 
Critics of this legislation argue that the government will be 
forced to pay polluters to comply with environmental law, thus 
rewarding so-called ``bad actors.'' This is simply not the 
case. No compensation will be paid for activity that 
constitutes a common-law nuisance.
    In closing, this bill is sorely needed to bring back some 
common sense to the way agencies promulgate and enforce 
regulations. It is also needed to give the aggrieved landowner 
a fighting chance against a government that has failed to 
uphold the sanctity of private property rights.
                                                    Chuck Grassley.
                VIII. ADDITIONAL VIEWS OF SENATOR HEFLIN

              court of federal claims provisions of s. 605

     The Court of Federal Claims (the ``Court'') is the 
American citizen's primary judicial forum for resolving general 
disputes with the Federal Government over money and property 
including disputes involving certain tax cases (28 U.S.C. 1507-
1509), contracting (28 U.S.C. 1491), regulation of property (28 
U.S.C. 1491), patent use (28 U.S.C. 1498), military personnel 
(28 U.S.C. 1491), cases under the Contract Work Hours and 
Safety Standards Act (28 U.S.C. 1499), Indian tribes (28 U.S.C. 
1505), and others relating to agricultural matters, 
transportation services, and childhood vaccination programs.
     One of the provisions relating to the Court of Federal 
Claims addresses a problem relating to a split in jurisdiction 
between the Court (which can provide a monetary remedy under 
the Tucker Act of 1887) and the article III U.S. district 
courts (which can provide equitable or injunctive relief under 
the Administrative Procedure Act of 1946).
    The split between equitable and monetary remedies requires 
a citizen to sue the Federal Government in two separate courts 
to obtain full relief in what is in reality one case or cause 
of action.
    Current law requires a citizen to consecutively bring a 
suit against the Federal Government in district court to 
challenge the propriety of an administrative decision or 
regulation relating to a takings case. After all appeals have 
been exhausted, the citizen must then file a suit in the Court 
of Federal Claims seeking monetary relief.
    Section 205(a) confers concurrent jurisdiction upon the 
Court and the district courts to resolve cases arising under 
the Property Rights Act. This provision would make complete 
relief against the Federal Government available in one forum. 
It would make it easier and quicker to resolve taking cases and 
cut litigation costs on behalf of the taxpayer and the Federal 
Government.
    Section 205(b) provides that any appeals arising from 
either the Court or the district courts will be decided 
exclusively by the Court of Appeals for the Federal Circuit in 
order to provide consistency and uniformity on questions of 
law.
    Section 205(c) provides that persons adversely affected by 
an agency action under this act shall have standing to 
challenge such agency action.
    Section 205(d) amends 28 U.S.C. 1491 to clarify the grant 
of concurrent jurisdiction provided in section 205(a). Section 
205(d) also authorizes the Court to grant injunctive and 
declaratory relief where appropriate in cases within its 
jurisdiction, to grant ancillary tort jurisdiction in cases 
within its jurisdiction, and repeals 28 U.S.C. 1500, which 
prohibits the Court from hearing any claim which a plaintiff 
has pending in another court.
     John Schmidt, Associate Attorney General, U.S. Department 
of Justice, testified before the Committee on these provisions 
and stated that they would ``expand'' the jurisdiction of the 
Court by giving it the authority (1) to invalidate acts of 
Congress that adversely affect property rights; (2) to decide 
all claims against the Federal Government for monetary relief, 
including those concerning the proper interpretation of 
statutes and regulations that are currently determined by 
district courts; (3) to grant injunctive and declaratory relief 
when appropriate in any case within its jurisdiction; and (4) 
to consider related claims brought under the Federal Torts 
Claim Act. (Written statement of Associate Attorney General 
John Schmidt, April 6, 1995, at pages 24-25.)
    The term ``property rights'' in the provisions of section 
205 limits the Court's jurisdiction to addressing violations of 
those specific rights and provides the Court with the remedial 
tools to give complete relief in all cases that are within the 
Court's jurisdiction. These provisions eliminate remedial 
barrier that currently may cause a citizen and the Federal 
Government to litigate the same or related claim in two courts.
     Associate Attorney General Schmidt's testimony before the 
Committee raises concerns about ``blurring'' the distinctions 
between article I courts (such as the Court of Federal Claims) 
and article III district courts stating ``we do know that these 
changes will give an Article I court the power for the first 
time to invalidate an act of Congress.'' (Schmidt, written 
statement at page 25.)
    The distinction between article I courts and article III 
courts is, however, quite clear. Article III courts are 
established to adjudicate private right suits where one private 
party sues another private party, or where the government sues 
a private party. However, in contrast, article I court 
jurisdiction may be exercised over the whole area of public 
rights which are suits brought by a private citizen against the 
Federal Government. These suits have been called suits about 
public rights because there was no right at common law to sue 
the government (or sovereign). Thus, when the Federal 
Government waives its sovereign immunity to allow such a suit, 
the government can set the conditions under which the suit can 
be brought. For example, the Federal Government can require 
that a suit be brought in an article I court or it can require 
that the suit be tried without a jury.
    With respect to the issue of whether an article I court has 
the power to declare an act of Congress or regulation 
unconstitutional, the answer is clearly in the affirmative. 
Each Federal judge has the inherent authority and duty to 
disregard unconstitutional statues and regulations. This 
principle was first enunciated in Marbury v. Madison, 5 U.S. (1 
Cranch) 137 (1803). Article I judges are appointed by the 
President, confirmed by the Senate for a 15-year term, and take 
the same oath of office as article III judges. They have the 
same duties as article III judges in cases within their 
jurisdiction.
    For example, suppose a statute or regulation stated that 
members of a particular religion or ethnic background could not 
bring a takings case and, further, suppose that the Federal 
Government raised as an affirmative defense that particular 
statute or regulation. Surely, there could be no question that 
a judge on the Court of Federal Claims had the inherent 
authority to address the constitutionality of such a statute or 
regulation.
    Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 
(1991) is the Supreme Court's most recent pronouncement on the 
nature of article I court jurisdiction. Freytag was a case 
dealing with the special trial judges of the article I tax 
court, which is similar in structure and function to the Court 
of Federal Claims. The Freytag case holds that article I courts 
exercise the judicial power of the United States. The Supreme 
Court stated:

          Our cases involving non-Article III tribunals have 
        held that these courts exercise the judicial power of 
        the United States. In both Canter and Williams, this 
        Court rejected arguments similar to the literalistic 
        one now advanced by petitioner, that only Article III 
        courts could exercise judicial power because the term 
        ``judicial power'' appears only in Article III of the 
        Constitution. In Williams, this Court explained that 
        the power exercised by some non-Article III tribunals 
        is judicial power. [Freytag at p. 898.]

The Supreme Court further quotes from Williams v. U. S., 289 
U.S. 553, at 565-567 (1933), which found the Court of Federal 
Claims to be an article I court which exercised judicial power.
    In the recent case of I.B.M. Corporation v. U.S., 59 F.3d 
1234, cert. granted (8 Dec. 95) (No. 95-591), the Court of 
Appeals for the Federal Circuit affirmed a ruling by the Court 
of Federal Claims which had declared a Federal tax statute (28 
U.S.C. 4371) unconstitutional. Neither before the Court of 
Appeals for the Federal Circuit nor in its petition for a writ 
of certiorari before the Supreme Court did the Federal 
Government contest the jurisdiction of the Court of Federal 
Claims to adjudicate the constitutionality of the tax statute 
at issue. Thus it appears abundantly clear that article I 
courts exercise judicial power and have the power to declare 
acts of Congress and regulations unconstitutional in those 
cases within the courts' jurisdiction.
    As noted previously, in section 205(d)(1)(B), in cases 
within its jurisdiction, the Court of Federal Claims shall have 
the power to grant injunctive and declaratory relief when 
appropriate. The Court currently has such powers in 40 percent 
of its cases. These include contract, tax, military and bid 
protest cases. Article I courts (territorial courts, District 
of Columbia Superior Court, and the Courts of Appeals for the 
Armed Forces) have long exercised such powers in cases which 
can result in imprisonment or in the death penalty. It does not 
appear that remedial power of the Courts with respect to these 
cases has created any constitutional problems, nor should they 
with respect to the Court of Federal Claims in takings cases.
    Section 205(d)(1)(C) provides that, in cases otherwise 
within its jurisdiction, the Court of Federal Claims shall also 
have supplemental jurisdiction to render judgment upon any 
related tort claim authorized under the Federal Torts Claim 
Act, 28 U.S.C. 2674.
    This provision does not provide general Torts Claim Act 
jurisdiction which is exercised by the district courts. It 
provides ancillary jurisdiction when a related tort claim may 
be deemed to have arisen from the same operative facts as the 
primary claim within the court's jurisdiction. This provision 
will most frequently find application on contract or takings 
claims when the factual context gives rise to ancillary tort 
claims. For example: where a plaintiff sues the Federal 
Government for breach of contract and the facts show that the 
government may have negligently (or willfully) destroyed a 
plaintiff's equipment used to work on a project. For example: 
where a plaintiff sues the Federal Government in a takings case 
alleging hazardous wastes poisoned the ground water and the 
ancillary tort of trespass is also alleged.
    In each of these instances, this new provision would give 
the Court of Federal Claims jurisdiction to decide an ancillary 
tort claim and dispose of the case in one forum, thereby 
avoiding wasteful and duplicative litigation.
    Section 205(d)(1)(C) also provides that, in proceedings 
within the jurisdiction of Court of Federal Claims which 
constitute judicial review of agency action, the provisions of 
section 706 of title 5 shall apply. This provision makes clear 
that in cases which constitute judicial review of 
administrative agency action, the Administrative Procedure Act 
standards set forth in 5 U.S.C. 706 shall apply.
    Despite a long history of applying the judicial review 
provisions the Administrative Procedure Act, two recent 
decisions of the Court of Appeals for the Federal Circuit have 
confused matters. Mitchell v. U.S., 1 F.3d 1252 (Fed. Cir. 
1993) [military pay case; review of decision of Board for 
Correction of Military Records]. Also, Murphy v. U.S., 993 F. 
2d 871 (Fed. Cir. 1993) [military pay case; review of decision 
of Board for Correction of Military Records]. The inclusion of 
this provision will end any doubt and confusion regarding the 
Court's authority to apply the judicial review provisions of 
the Administrative Procedure Act.
    Finally, section 205(d)(2)(A) repeals 28 U.S.C. 1500 which 
bans the Court of Claims from hearing any claim which a 
plaintiff has pending in another court. This is known as the 
Tucker Act ``shuffle.''
    The split between legal and equitable remedies requires a 
plaintiff to sue in two separate courts in order to obtain full 
relief in what is really one case. Section 1500 bans a 
plaintiff from seeking a monetary remedy while a suit is 
pending in another court seeking an equitable remedy.
    Thus, if a plaintiff files suit in one court, by the time 
appeals have been exhausted, the statute of limitations may 
have run on the remaining portion of his claim subject being 
adjudicated in the other court. The current statutory regimen 
of requiring a citizen to file a suit for equitable relief in 
the district courts and for monetary relief in the Court of 
Federal Claims is expensive, time-consuming, and of no benefit 
to anyone but the government. The repeal of section 1500, in 
conformity with section 205(a), would make complete relief 
against the Federal Government available in one forum.

                                                     Howell Heflin.
  IX. MINORITY VIEWS OF SENATORS BIDEN, KENNEDY, LEAHY, SIMON, KOHL, 
                        FEINSTEIN, AND FEINGOLD

          ``* * * nor shall private property be taken for 
        public use, without just compensation.''

    With these few words, our Constitution enshrines the right 
to own property as fundamental, an American birthright and 
privilege. To own, enjoy and develop private property is a 
right central to our Nation's economic vitality, and central, 
even, to our national identity.
    And so it is that the fifth amendment promises that if the 
government takes your property, it must pay you. And it must 
pay you fairly.
    On these principles we can all agree. In fact, it is on 
these very principles that we base our opposition to S. 605--
for we believe that the bill creates sweeping new entitlements 
for a few property owners, at the expense of the vast majority 
of Americans who rely on our nation's environmental, health, 
safety, fiscal and civil rights laws to protect their property 
interests and their quality of life.
    Most Americans live downstream, downwind, or down the road 
from other property owners. We all count on each other to be 
good neighbors--for it is clean water, fresh air, and safe land 
management that makes our property valuable and secure.
    S. 605, we believe, will allow some property owners to be 
bad neighbors. And it will face our Nation with two equally 
untenable options. Either we will have to cut back on the 
environmental, health, safety and civil rights protections that 
add value to our property and lives--or we will have to pay our 
neighbors to do the right thing: we will have to pay employers 
not to discriminate, pay companies to ensure worker safety, and 
pay manufacturers not to dump their waste into our rivers and 
streams. Either way, the vast majority of Americans will lose.
    We do not quarrel with the emotions that drive this bill. 
All Americans should be free from unreasonable, irrational and 
nonsensical regulatory restrictions on their property. And we 
do not dispute that such regulations are sometimes promulgated, 
and that real people suffer real economic harm as a 
consequence.
    We should right such wrongs. Where a Federal program treats 
property owners unfairly, we should fix it--either as it is 
being implemented in specific cases, or, if necessary, more 
generally. Indeed, the Clinton administration has gone to great 
lengths to lift a number of regulatory burdens on private 
property, especially as to smaller property owners. Regarding 
the Endangered Species Act, for example, the administration has 
issued a new policy which presumptively exempts from the Act 
single family homeowners with five or fewer acres of land. 
Similarly, for wetlands programs, the Army Corps of Engineers 
has provided new exemptions for owners of smaller parcels 
containing wetlands, and allowed for greater flexibility even 
for large wetland areas.
    We must be ever vigilant against regulatory abuses, and we 
must forge ahead with needed reforms. But we should not, as 
Justice Blackmun once said, ``launch a missile to kill a 
mouse.'' 1 We believe that S. 605 would do just that--for 
it quite radically departs from over a century of 
constitutional thinking in this area, and poses a direct threat 
to the property, health and safety interests of most 
Americans.2
    \1\ Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1036 
(1992) (Blackmun, J., dissenting).
    \2\ In explaining the need for this legislation, the majority tells 
a series of stories of regulatory insensitivity or wrongheadedness. 
Although we have not investigated each case, and although we, again, do 
not mean to dismiss any hardship suffered, we simply note that there 
are often two sides to every story. For example, the majority tells of 
the McMackins of Pennsylvania and their wetlands dispute with the Army 
Corps of Engineers. We understand, however, that the McMackins filled 
in their wetland--which provided important flood control and wildlife 
habitat--without applying for the requisite authorization. When the 
Corps learned of the McMackins' actions some 4 years later, it did not 
(contrary to the majority's suggestion) seek any monetary or criminal 
penalties. Instead, the Corps allowed the McMackins to file for the 
necessary permits after the fact, agreed to waive important legal 
requirements, and worked closely with them to mitigate the 
environmental damage caused by their actions. Moreover, as mentioned 
above, the Corps has recently issued a new nationwide wetlands permit, 
under which landowners like the McMackins may now fill up to half an 
acre of wetlands without need for an individual permit.
    The anecdote, we also suggest, is a genie with two masters. The 
Committee heard testimony from John Chaconas of Louisiana, who moved 
into his home after the previous owner had illegally filled in about 
eight acres of surrounding wetland. As a result, the Chaconases not 
infrequently find themselves ankle deep in water and mud 10 feet from 
their front door; one of their neighbors cannot access his property 
whenever it rains, and another's pecan trees have been inundated with 
water. To the Chaconases, it is not too much--but too little--wetlands 
enforcement that has devalued their property. ``What is wrong here is 
not wetland policy gone awry,'' Mr. Chaconas testified, ``but the 
arrogant belief that some can do whatever they want with their property 
and all others be damned.'' (Written statement of John and Cynthia 
Chaconas, Apr. 6, 1995, at 3.)
---------------------------------------------------------------------------
    Our objections to S. 605 are many. We here briefly 
summarize:
           Contrary to longstanding Supreme Court 
        precedent--which aims to strike a fair balance between 
        the interests of property owners, their neighbors and 
        the community at large--S. 605 provides a mechanical, 
        ``one size fits all'' rule of compensation. A property 
        owner would be entitled to payment where a government 
        action devalued any portion of his property by 33 
        percent--without a fair regard for the interests of 
        others, and without regard for his legitimate 
        expectations.
           S. 605 would be prohibitively expensive--
        costing the taxpayers in excess of $28 billion over the 
        next 7 years. It would also generate a mountain of 
        costly and time-consuming litigation, diverting scarce 
        judicial resources from many other meritorious claims.
           S. 605 would require an elaborate takings 
        impact analysis before the government takes even the 
        most minor of regulatory actions. Although we agree 
        that agencies should certainly take into account the 
        impact of their regulations, we believe this provision 
        would bring necessary protections for the public to a 
        standstill, and channel scarce resources into 
        bureaucratic paperwork.
           S. 605 prohibits Federal agencies charged 
        with protecting wetlands and endangered species from 
        entering a property owner's land to collect 
        environmental data without consent--even in the case of 
        an emergency or when criminal activity is suspected.
    As we explain below, S. 605 would do far more harm than 
good to the property rights, and quality of life, of the great 
majority of Americans. In the words of President Clinton, who 
has promised to veto S. 605 or similar compensation entitlement 
legislation:

        Though styled as an effort to protect private property, 
        a goal which I strongly support, S. 605 does not 
        protect legitimate private property rights. The bill 
        instead creates a system of rewards for the least 
        responsible and potentially most dangerous uses of 
        property. It would effectively block implementation and 
        enforcement of existing laws protecting public health, 
        safety, and the environment. (Letter from President 
        Clinton to Chairman Hatch, December 13, 1995.)

     I. The Compensation Provisions: Paying People to Obey the Law

  a. s. 605 stands our nation's property rights tradition on its head

    The fifth amendment says that the government cannot 
``take'' our property for public purposes without paying 
compensation. It does not say, however, that the government is 
powerless to regulate property for the community good--or that 
any time it does so, taxpayers must compensate the affected 
property owner.
    To the contrary: it has long been considered one of 
government's chief responsibilities to regulate property use 
for the public good. As Justice Holmes once said:

        Government hardly could go on if, to some extent, 
        values incident to property could not be diminished 
        without paying for every such change in the general 
        law. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 
        (1922).

    Why does the government regulate property? Not, as some 
would have us believe, to keep property owners from making a 
fair profit or to otherwise keep the engines of capitalism in 
low gear. Rather, we impose limits on certain property uses in 
order to make communities secure, stable, prosperous and 
attractive--and thus to protect and enhance property values for 
everyone.
    Although it is nowhere written, it is our belief that we 
Americans have a compact with our government and with each 
other. In any number of ways, the government helps to make our 
property valuable and productive: it builds roads, parks and 
museums; it makes sure our water is pure and our skies are 
clean; it helps see to it that our workplaces are safe; and it 
regulates the stock and bond markets to help keep them stable.
    Do we ask that the beneficiaries of a neighborhood park or 
an agriculture subsidy write a check to the Treasury for the 
added value to their property? Of course not. Instead, what we 
ask is that property owners keep up their end of the compact--
which is to use property in ways that do not hurt their 
neighbors or the community at large.
    The right to property has always carried with it the 
corollary responsibility not to use property in a way that 
harms someone else, or the public generally. Again, as the 
Supreme Court said long ago:

        We think it a settled principle, growing out of the 
        nature of well ordered civil society, that every holder 
        of property, however absolute and unqualified may be 
        his title, holds it under the implied liability that 
        its use may be so regulated, that it shall not be 
        injurious * * * to the rights of the community. Holden 
        v. Hardy, 169 U.S. 366, 392 (1898).

    S. 605 is based on an opposite premise, entitling property 
owners to compensation without a fair regard for the 
consequences to others or to the public generally. The bill, in 
our view, would dramatically tip the scales of fairness--and 
place the thumb of the law on the side of a few property owners 
at the expense of the many, and at the expense, too, of the 
greater American community.

        b. s. 605 is an extreme departure from the constitution

    The majority argues that S. 605 does little more than 
codify longstanding fifth amendment jurisprudence. In fact, the 
bill marks a sharp break from our constitutional tradition on a 
number of fronts.
    Under the Constitution as currently interpreted, the courts 
decide whether a taking has occurred by balancing the interests 
of the property owner against the legitimate interests of the 
neighbors and the community. The Supreme Court has recognized 
that no mechanical bright line rule can strike a fair balance 
between and among property owners and the public, and has thus 
insisted on a careful, fact-specific inquiry into all the 
relevant information at hand. See Connolly v. Pension Benefit 
Guar. Corp., 475 U.S. 211, 224 (1986) (takings analysis 
``eschewe[s] the development of any set formula and * * * 
relie[s] instead on ad hoc, factual inquiry into the 
circumstances of each particular case''); Concrete Pipe & 
Prods. v. Construction Laborers Pension Trust, 113 S.Ct. 2264, 
2290 (1993)(same).
    Formulas, calculators and financial appraisals cannot alone 
measure fairness, the Court has recognized. Required, as well, 
is a look at all the relevant factors--such as the owner's 
reasonable expectations in the property, the economic impact of 
the government action on the property, and the importance of 
the public interest being protected. See Penn Central Trans. v. 
New York, 438 U.S. 104, 124-25 (1978). This kind of flexible 
balancing (known as the ``Penn Central'' test) recognizes both 
that we should be able to put our property to profitable use, 
and that we have a corresponding responsibility not to use our 
property in ways that hurt others.
    The majority argues that the high court has replaced the 
Penn Central balancing approach with a new set of ``bright 
line'' rules. On the contrary, the Court has carved out limited 
exceptions only in certain narrow and extraordinary contexts: 
where the government compels a permanent physical occupation of 
property, Loretta v. Teleprompter CATV Corp., 458 U.S. 419 
(1982); where it completely deprives an owner of the 
economically beneficial or productive use of land, Lucas v. 
South Carolina Coastal Council, 505 U.S. 1003 (1992); or where 
it exacts a dedication that denies the owner the right to 
exclude others, Nollan v. California Coastal Comm., 483 U.S. 
825 (1987); Dolan v. City of Tigard, 114 S.Ct. 2309 (1994).
    Each of these cases presents a rare--or as the Lucas Court 
put it, ``extraordinary''--circumstance where Penn Central 
balancing need not be performed. 505 U.S. at 1015. Broader 
``bright line'' rules simply cannot be found in--or be fairly 
read into--these cases. Indeed, Nollan and Dolan themselves 
repeatedly cite Penn Central with approval, 483 U.S. at 834, 
835, 836 & n.4; 114 S.Ct. at 2316 nn. 5-6, 2318. And in the 
1992 Lucas case, the Court expressly retained the Penn Central 
balancing test for all but the most discrete and narrow of 
aforementioned cases, 505 U.S. at 1015. The Supreme Court, 
plainly, continues to require the balancing approach in the 
overwhelming majority of takings disputes. See also Concrete 
Pipe, 113 S.Ct. at 2291.
    S. 605 would change all that. It does away with the careful 
balancing of interests, and replaces it instead with a 
mechanical, ``one size fits all'' rule of compensation for all 
cases--thus substituting a formula for fairness, and allowing 
one person's desired property use to trump everyone else's 
property rights and welfare.
    Among other provisions, section 204(a)(2)(D) entitles a 
property owner to compensation if a regulation results in a 33-
percent loss-in-value to any portion of property--regardless of 
the property owner's legitimate expectations; regardless of the 
profitable use of the property as a whole; and regardless, 
even, of the potential harm that a proposed property use might 
cause others.
    This is an extreme idea. First, it says what the Supreme 
Court has never said: that a loss of property value, standing 
alone without regard to other factors, is enough to trigger 
compensation. As recently as 1993, a unanimous Supreme Court 
said it clearly:

          [O]ur cases have long established that mere 
        diminution in the value of property, however serious, 
        is insufficient to demonstrate a taking. Concrete Pipe, 
        113 S.Ct. at 1291. 3
    \3\ See also Bowen v. Gilliard, 483 U.S. 587, 606-07 (1987) 
(Constitution does not compel compensation based on loss in value 
standing alone); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 
U.S. 470, 493-502 (1987) (same); Penn Central, 438 U.S. at 131 (cases 
under just compensation clause ``uniformly reject the proposition that 
diminution in property value, standing alone, can establish a 
taking''); Agins v. City of Tiburon, 447 U.S. 255, 261-63 (1980) 
(same); Goldblatt v. Hempstead, 369 U.S. 590, 593-94 (1962) (same).

    This bedrock constitutional principle has weathered the 
test of time, not because the Founders and a procession of 
Justices have been universally insensitive to property rights, 
but because a look at other factors--like the property owner's 
legitimate expectations and the ramifications of the proposed 
property use on neighbors or the public at large--is necessary 
to decide whether compensation would be fair and just.4
    \4\ Quoting only part of a now famous Lucas footnote, 505 U.S. at 
1019 n.8, the majority argues that ``any doubts about the requirement 
of just compensation for partial takings'' have been laid to rest. 
Report at p. 19. The unquoted portion of that footnote, however, tells 
more than the other half of the story. For there, the Court makes clear 
that in the vast majority of cases where a loss in value is less than 
complete, the Penn Central balancing test governs. Under that approach, 
as we have seen, compensation for a diminution in value, though severe, 
is not automatic and certainly not ``required''--as it would be under 
S. 605.
---------------------------------------------------------------------------
    In another sharp about-face from constitutional precedent, 
S. 605 would give a property owner a right to compensation when 
a regulation impacts only a portion of the property. Sections 
204(a)(2) (B), (C), (D). In defense of this proposition, the 
majority cites a lone Federal circuit case, and asserts that 
the Supreme Court has not reached the question. Report at p. 
19.
    We respectfully commend to them the unanimous 1993 opinion 
in Concrete Pipe.5 There, the Court ruled that, in 
assessing regulatory burdens on property, we should look to the 
property as a whole, rather than segmenting it into smaller 
parts:
    \5\ 113 S.Ct. 2264.

          A claimant's parcel of property [can] not first be 
        divided into what [is] taken and what [is] left for the 
        purpose of demonstrating the taking of the former to be 
        complete and hence compensable. * * * [T]he relevant 
        question is whether the property taken is all, or only 
        a portion of the parcel in question. Concrete Pipe, 113 
        S.Ct. at 2290.6
    \6\ Nowhere does the majority in its 74 footnotes mention Concrete 
Pipe. So we also recommend: Penn Central, 438 U.S. at 130-31 (``Takings 
jurisprudence does not divide a single parcel into discrete segments * 
* * In deciding whether a particular governmental action has effected a 
taking, this Court focuses * * * on the * * * interference with the 
rights in the parcel as a whole'') (unanimous); Keystone Bituminous 
Coal, 480 U.S. at 498 (rejecting claim that Court should only look at 
coal that state law required to be left to prevent subsidence); Andrus 
v. Allard, 444 U.S. 51, 65-66 (1979) (unanimous); Clajon Production 
Corp. v. Petera, 70 F.3d 1566, 1577 (10th Cir. 1995)(unanimous) (case 
must be viewed in light of defendant's entire property; takings 
analysis must focus on ``entire bundle of rights associated with a 
parcel of land''); Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 802 
(Fed. Cir. 1993)(``[c]learly, the quantum of land to be considered is 
not each individual lot containing wetlands or even the combined area 
of wetlands''); Mountain States Legal Foundation v. Hodel, 799 F.2d 
1423, 1430-31 (10th Cir. 1986)(en banc), cert. denied, 480 U.S. 951 
(1987); MacLeod v. Santa Clara, 749 F.2d 541, 546-47 (9th Cir. 
1984)(unanimous), cert. denied, 472 U.S. 1009 (1985).

    S. 605, on the other hand, would give a property owner a 
right to compensation when even the smallest portion of his 
property is affected. So if a developer is allowed to develop 
99 acres of a 100-acre parcel, but prevented from filling in a 
wetland on the one acre, S. 605 could entitle him to 
compensation for that acre--even if the rest of his property is 
exceedingly profitable, and even though preserving the acre of 
wetlands would help prevent flooding of his neighbor's land.
    It also seems to us that the 33-percent compensation 
threshold, at bottom, is illusory--analytically and 
practically. As Professor Carol Rose of Yale Law School 
testified:

          Once land can be apportioned into ``relevant'' 
        portions, any diminution can be manipulated to become a 
        100% diminution. This effectively means that virtually 
        any regulation with any adverse impact on an owner's 
        parcel could become an occasion for compensation, 
        without regard to the owner's expectations and whether 
        they were reasonable. (Written statement of Prof. Carol 
        M. Rose, Apr. 6, 1995, at 12-13.) 7
    \7\ The Federal Circuit has also concluded that under an ``affected 
portion'' standard, ``protection of wetlands via a permit system would, 
ipso facto, constitute a taking in every case where [the Army Corps of 
Engineers] exercises its statutory authority.'' Tabb Lakes, Ltd. v. 
United States, 10 F.3d 796, 802 (Fed. Cir. 1993).

    The majority attempts to address some of our concerns by 
arguing that current case law can simply be read into the bill. 
Where property is subject to a ``preexisting regulatory 
scheme,'' they note, courts have not found a taking vis-a-vis 
the new property owner--and, in such a situation, compensation 
is unwarranted because the regulated entity has little or no 
``reasonable expectation'' for unrestrained use of the 
property. Report at pp. 26-27.
    This we find a non-sequitur. Obviously, S. 605 would not 
require compensation to a new property owner for certain 
preexisting restrictions. But it simply does not follow that 
new regulations in a heavily regulated industry would be non-
compensable under the bill.
    But more to the point, we believe that the majority is 
simply wrong in assuming that case law would somehow supersede 
or mitigate the effects of S. 605. Statutes are written to 
change the law, and S. 605 is no exception. Nowhere in the bill 
is there language providing a defense of ``reasonable 
expectations,'' or exempting from its scope industries subject 
to ``preexisting governmental restrictions.'' To the contrary: 
with its so-called ``bright line'' standards, the bill reads 
out the constitutional safeguards against unreasonable 
compensation awards. 8
    \8\ ``Of course,'' the majority states, ``the actual result [in 
takings cases involving regulated entities] depends in great degree on 
the specific facts of those cases.'' Report at p. 27. This statement 
raises another point. As elsewhere in the Report, the majority here 
seems to be acknowledging that its ``bright line'' rules are a little 
less than bright--and that, even under S. 605, takings claims would 
raise complex and fact-specific questions. (Or, as the majority puts it 
in criticizing the Penn Central balancing approach, where ``every 
takings case deteriorates into a fact-specific inquiry * * *'' Id. at 
p. 16.) What ``reasonable expectations'' does a regulated entity have? 
Does a firearms dealer reasonably expect that he can sell semiautomatic 
rifles, or not? And what does it mean to say that an industry is 
``subject to existing heavy regulation''? The bill thus seems caught on 
the horns of a dilemma. On one hand, if it does not allow consideration 
of these sorts of questions, there will be no way to eliminate 
undeserving claims. On the other hand, allowing consideration of such 
questions, whether in court or an administrative proceeding, will dash 
any hopes for a clear, simple and inexpensive claims process.
---------------------------------------------------------------------------
    The majority elsewhere advances its codification-of-the-
Constitution argument by pointing to statutory language drawn 
from various Supreme Court cases. Context, however, is all--and 
words pulled out of context can take on a meaning quite 
different than that originally intended or articulated. Such is 
the case with various provisions in S. 605.
    For instance, section 204(a)(2)(B) would require 
compensation where a condition for a permit, license or any 
other agency action lacks a ``rough proportionality between the 
stated need for the required dedication and the impact of the 
proposed use of the property.'' Section 204 (a)(2)(B). This 
language takes its cue from Dolan v. City of Tigard, 114 S. Ct. 
2309, 2318-22 (1994) which ruled that, where the government 
requires a permit applicant to dedicate property in a way which 
eviscerates his right to exclude others, the government must 
meet a higher ``rough proportionality'' standard. The Dolan 
Court went out of its way, however, to distinguish such 
dedication requirements--which take away an ``essential 
attribute'' of property ownership (there, the right to exclude 
others)--from regulations which merely restrict the ability to 
use property in a particular way. Id. at 2316-17. S. 605 
extends the Dolan principle far beyond public dedications of 
real property--and applies it across the board to any type of 
condition on agency action that ``exacts or affects'' any type 
of property interest. Section 204(a)(2)(B).
    S. 605, there's no disputing, does much. But codify the 
Constitution it does not. As Joseph Sax, a constitutional 
expert in this field now serving as Counselor to the Secretary 
of the Interior testified:

        S. 605 embodies an explicit departure from the 
        constitutional standard adopted by the Supreme Court, 
        and incorporates a standard that has been repeatedly 
        rejected by the Court as inappropriate. * * * The 
        consistent judgment of the Supreme Court spanning 
        nearly the whole of the nation's history should sound a 
        warning note against efforts to legislate a one-
        dimensional, one-size-fits-all, purported bright-line 
        standard. (Written statement of Joseph Sax, Oct. 18, 
        1995, at 2, 8.) 9
    \9\ Lest our legal analysis be deemed partisan, we note that among 
those who agree that S. 605 departs markedly from the Constitution are 
the non-partisan Congressional Research Service, see Memorandum from 
CRS, American Law Division, to Senate Committee on the Judiciary, 
``Comparison of the Compensation Threshold in S. 605 (Title II) with 
that in the Takings Clause of the Fifth Amendment'' (Feb. 1, 1996); a 
bipartisan group of 33 State attorneys general (takings bills ``purport 
to implement constitutional property rights protections, but in fact 
they promote a radical new takings theory that would severely constrain 
the government's ability to protect the environment and public health 
and safety'') (Letter to Members of Congress, Sept. 26, 1994); and 126 
professors of constitutional, property and environmental law from 
around the country (``we view such legislation as flawed caricatures of 
constitutional rules that would impose wholly new and burdensome 
requirements on Congress and the federal agencies when they seek to 
protect private property and public health and safety'') (Letter to 
Members of Congress, June 29, 1994).

     C. S. 605 Will Undermine Important Protections for the Public

    The debate over S. 605, involving an often arcane 
constitutional jurisprudence, can sometimes sound rather 
academic. But we believe that the every-day harm--to real 
people in the real world--that S. 605 could work is anything 
but academic.
    The scope of the bill is itself breath-taking, as it goes 
beyond mere land-use restrictions and covers environmental, 
public health, financial, safety and civil rights regulations. 
And it is not limited to real property, but ``inchoate 
interests'' in real property, section 203(5)(A)(ii); the right 
to use or receive water, section 203(5)(B); rents, issues and 
profits of land, section 203(5)(C); property rights provided by 
contract, section 203(5)(D); ``any interest defined as property 
under state law,'' (which sweeps in the gamut of personal 
property and intangible property, like patents and licenses), 
section 203 (5)(E); and any other interest ``understood to be 
property,'' section 203(5)(F).
    Consider the potential implications:
    Suppose the Food and Drug Administration, prompted by new 
research, determines that a drug on the market poses a serious 
health risk. When the FDA bans the dangerous drug, its 
manufacturer will have shelves of useless inventory and 
production equipment that will be greatly devalued--clearly 
``property'' within the meaning of the bill. See sections 
203(5)(A)(iii), (E). Should we have to compensate the 
manufacturer for its losses? Should we have to pay him to keep 
his dangerous drug off the market? Under this bill, we might.
    We do not, of course, believe that the authors or 
supporters of S. 605 intend such a result. We are simply 
reading the plain language of the bill--which we believe would 
authorize, however unintentionally, a host of undeserving 
claims.10 And although some may accuse us of crying wolf, 
we suggest that they take a look at a few of the takings cases 
actually brought and litigated in recent years.
    \10\ We are mindful of the ``venerable principle'' announced by 
Justice Scalia ``that if the language of a statute is clear, that 
language must be given effect--at least in the absence of a patent 
absurdity.'' INS v. Cardoza-Fonseca, 480 U.S. 421, 452 (1986) (Scalia, 
J., concurring).
---------------------------------------------------------------------------
    A few years ago, a California restaurant owner argued that 
he should be compensated by the government because, under the 
Americans With Disabilities Act, he was required to make his 
restrooms wheelchair accessible. Pinnock v. International House 
of Pancakes, 844 F.Supp. 574, 586-87 (S.D. Cal. 1993), cert. 
denied before judgment, 114 S.Ct. 2726 (1994). Under current 
law, the court rejected the claim. Id. at 587-89. Under this 
bill, if the restauranteur could show, say, that he had to 
build a ramp to a bathroom, thereby reducing table space, and 
resulting in a 33-percent drop in profits attributable to that 
portion of his property, he could be entitled to compensation. 
He could have to be paid to make his restaurant accessible to 
the disabled.
    Also several years ago, the Federal Communications 
Commission promulgated ``dial-a-porn'' regulations designed to 
prevent children from having easy access to pornography over 
the telephone. One of the dial-a-porn providers sued, and 
argued that the regulations amounted to a taking of his 
property. Carlin Communications, Inc. v. FCC, 837 F.2d 546 (2d 
Cir. 1988), cert. denied, 488 U.S. 924 (1988). (Unfortunately, 
it is profitable to peddle pornography to children--and the 
regulations, which made it harder for children to access the 
material, were apparently cutting into the provider's profits.) 
Should we have to pay that person? The court, under current 
takings law, rejected the claim out of hand. Id. at 557 n.5. 
Had S. 605 been on the books, however, things might have been 
quite different.
    In West Virginia, a coal company removed so much coal from 
an underground mine that huge cracks opened on the surface of 
the land, rupturing gas lines, collapsing a stretch of highway, 
and destroying homes. After the State refused to take action, 
the Interior Department stepped in and directed the company to 
reduce the amount of coal it was mining. The company sued, 
claiming that Interior's action constituted a compensable 
taking. The court under our current law once again rejected the 
claim. M & J Coal Co. v. United States, 30 Fed. Cl. 360, 368 
(1994), affirmed, 47 F.3d 1148 (Fed. Cir. 1995), cert. denied, 
116 S.Ct. 53 (1995). Yet under this bill, the coal company 
might very well have been entitled to compensation for its 
business losses. See section 204(d)(2)(B) (providing for 
compensation of business losses).
    And what about pollution? When the government sets air or 
water quality standards that require new technologies for 
industrial sites, compliance can be expensive, and can lower an 
enterprise's value. If the government is unable to prove that 
emissions fall within the bill's narrow nuisance exception 
(discussed below), S. 605 could require the taxpayers to pay 
compensation--or pay the company, as it would turn out, not to 
pollute.

 D. The Bill's ``Nuisance Exception'' is Wholly Inadequate to Protect 
                Vital Interests, Both Public and Private

    In response to these criticisms, the majority points to the 
bill's so-called ``nuisance exception.'' Section 204(d)(1). We 
won't have to pay polluters not to pollute, we won't have to 
pay pharmaceutical companies to take their dangerous drugs off 
the shelves, we won't have to pay restaurants not to 
discriminate, they say, because these actions constitute a 
``nuisance.'' Nuisance, in their view, seems to mean something 
like: ``things that are bad'' or ``actions which cause harm.''
    But that is neither what the bill says nor what it would 
do. To quote the relevant provision: compensation would not be 
required if a property use--

        is a nuisance as commonly understood and defined by 
        background principles of nuisance and property law, as 
        understood within the state in which the property is 
        situated. Section 204(d)(1).11
    \11\ The bill further makes it explicit that, to bar a damage 
award, the government must bear the burden of proving that a proposed 
use would constitute a nuisance. Id.

    Due to the many limitations, complexities, and 
peculiarities of State nuisance law, this provision would not 
bar undeserving claims--and the bill would still require us to 
pay people not to put their property to harmful or socially 
unacceptable uses. Here's why:
           Nuisance law in most States covers only 
        immediate, demonstrable harm; it simply does not 
        address actions whose health and safety risks are long-
        term. So it might very well not be a nuisance to dump 
        toxins into the water or out into the air--because they 
        do not cause identifiable harm today or even tomorrow. 
        The fact that the damage will occur a few years from 
        now does not generally figure into ``nuisance'' law, as 
        it does with our Federal environmental laws.
           Similarly, nuisance law does not address the 
        problem of cumulative harms--where, say, many low-level 
        polluters create a harm that none alone would cause.
           Also, a nuisance generally must be 
        substantial and continuing--so nuisance law often does 
        not apply to the one-time or intermittent polluter.
           Some State nuisance laws contain strict 
        scienter requirements that can be satisfied in only the 
        most egregious cases.
           And finally, though the principles of 
        nuisance law are stated rather uniformly among the 
        States, interpretation and application vary quite 
        markedly from State to State. In practice, the nuisance 
        exemption would mean that we would have different 
        compensation schemes--not to mention different 
        environmental protections--from one State to another.
    Consider some real world examples of how nuisance law has 
proven inadequate to prevent environmental harm, protect 
neighboring property values, or safeguard public health and 
safety:
           In Massachusetts, contamination of one's own 
        property is not a nuisance--even if spilled chemicals 
        enter the groundwater and migrate to a neighboring 
        property. American Glue & Resin, Inc. v. Air Products & 
        Chemicals, Inc., 835 F. Supp. 36 (D. Mass. 1993).
           In Maine, filling a portion of property and 
        creating a barrier to water drainage is not a 
        nuisance--even though it interferes with the drainage 
        on the adjoining property. Johnson v. Whitten, 384 A.2d 
        698 (Me. 1978).
           In New York, a cement plant which created 
        offensive noise, white powder, and pollution by 
        unlawfully discharging waste into a bay adjoining a 
        residential neighborhood did not run afoul of the 
        State's nuisance law--because the plant's actions did 
        not rise to the high legal standard for nuisance, which 
        requires that the activity be intentional and 
        unreasonable, negligent or reckless, or abnormally 
        dangerous. Benjamin v. Nelstad Materials Corp., 625 
        N.Y.S.2d 281 (N.Y. App. Div. 1995).
           In Maryland, a current tenant does not have 
        a cause of action in nuisance against a former tenant 
        for contaminating the property prior to the current 
        tenant taking possession. Rosenblatt v. Exxon Co., 642 
        A.2d 180 (Md. 1994).
    These examples make it clear: State nuisance law will not 
protect us from ``things that are bad'' or ``actions that cause 
harm.'' Nuisance law was simply never meant to stretch so far, 
but arose, instead, as a common-law effort to arbitrate the 
one-on-one property disputes between neighbors. It is plainly 
ill-suited to address the more complicated, large-scale 
environmental, health and safety problems of our day.
    Indeed, when the Congress passed our landmark environmental 
laws, it was with the full realization that State nuisance law 
could not adequately or uniformly protect nearby landowners or 
the community at large. For example, when Congress was 
considering the Clean Air Act in 1970, it heard about a 
rendering plant in Bishop, Maryland, whose emissions were doing 
damage to the health and welfare of people nearby. Some of the 
problems that the plant's neighbors were having included 
nausea, vomiting, labored breathing and respiratory problems. 
Not surprisingly, property values in the area were depressed, 
and businesses stayed away. The report's conclusion:

          Bishop Processing Company's dry rendering plant has 
        had problems with malodors since it became operational 
        in 1955. Officials from Delaware and Maryland 
        recommended corrections but all efforts to obtain 
        abatement by local and state officials through public 
        nuisance laws have been fruitless. (S. Doc. No. 63, 
        91st Cong., 2d sess. 1679 (1970)) (emphasis added).

    Similarly, in 1979, when the Senate was developing Federal 
hazardous waste legislation, it heard testimony about 17 
industries that were polluting the Warrior River in Alabama, 
and damaging neighboring riparian owners. The person 
representing the owners testified that:

        [t]here was every sort of polluter involved in that 
        case, just about. They continued to pollute. Why? 
        Because we could not find a successful vehicle under 
        the common law, under nuisance law, that would 
        adequately protect these individuals. (Hazardous and 
        Toxic Waste Disposal: Hearings before the Subcommittees 
        on Environmental Pollution and Resource Protection of 
        the Senate Committee on Environment and Public Works, 
        96th Cong., 1st sess., Sept. 7, 1979, at 693) (emphasis 
        added).

    It is as true today as it was yesterday: State nuisance law 
cannot adequately safeguard our environment, and it cannot see 
to it that the health, safety and property values of 
neighboring landowners are protected. Furthermore, nuisance law 
does not even address other vitally important public 
interests--like civil rights protections, worker safety rules, 
and product safety guidelines. Discrimination may be shameful--
but it is not a ``nuisance.''
    The majority argues that our complaint is not with S. 605, 
but with the Supreme Court's Lucas decision--which (according 
to the majority) established the nuisance exception codified in 
S. 605. Report at 29. We dispute this contention by agreeing 
with another: ``[t]he nuisance exception,'' the majority writes 
elsewhere in its Report, ``is not an exception at all.'' Id. at 
28. Indeed, it has been historically and universally understood 
that the ``bundle of rights'' that comes with property 
ownership has never included the right to commit a nuisance.
    That a property owner does not have the right to make a 
nuisance of his property is not a revolutionary idea. What is 
revolutionary is S. 605's application of the idea--for it makes 
the ``nuisance exception'' the only limitation on a broad new 
set of compensation entitlements, including the sweeping 33-
percent diminution-in-value trigger. This is a dramatic about-
face from current practice. Lucas is clearly and expressly 
limited to the rare ``total loss'' category of takings cases. 
For the vast majority of cases, the question of whether a 
restricted use constitutes a nuisance is never dispositive.
    Indeed, in a case cited by the majority, Miller v. Schoene, 
276 U.S. 272 (1928), the Supreme Court made it perfectly clear 
that compensation does not turn on whether the restricted land 
use constitutes a nuisance. There, the Court held that 
government destruction of cedar trees to prevent the spread of 
disease to nearby apple orchards was not a compensable taking. 
Id. at 279. The Court did not, however, base its judgment on a 
finding that the cedars constituted a nuisance. To the 
contrary: the Court found it unnecessary to ``weigh with nicety 
the question whether the infected cedars constitute a nuisance 
according to the common law; or whether they may be so declared 
by statute.'' Id. at 280.
    Indeed, Lucas itself makes the point that cases like Miller

          are better understood as resting not on any supposed 
        ``noxious'' quality of the prohibited uses but rather 
        on the ground that the restrictions were reasonably 
        related to the implementation of a policy--not unlike 
        historic preservation--expected to produce a widespread 
        public benefit and applicable to all similarly situated 
        property. Lucas, 505 U.S. at 1023 (quoting Penn 
        Central, 438 U.S. at 133-34 n. 30).

    Again, there is nothing remarkable about this proposition. 
For it has long been understood that the government can, and 
should, regulate activities which do not constitute a 
nuisance--without having to pay compensation to an affected 
property owner.\12\ Zoning, of course, stands as a key example. 
No one would argue that building a house right up against the 
sidewalk constitutes a nuisance. But nor would anyone argue, we 
assume, that we should have to compensate people to abide by 
setback rules. But because S. 605, with its sweeping new 
``takings'' standards, makes ``nuisance'' the only backstop 
against compensation, that is precisely the situation that we 
could find ourselves in.
    \12\ See, e.g., Village of Euclid v. Ambler Realty Co., 272 U.S. 
365 (1926) (zoning); Heart of Atlanta Motel v. United States, 379 U.S. 
241 (1964) (civil rights); Penn Central, 438 U.S. 104 (1978) (historic 
preservation); Goldblatt v. Hempstead, 369 U.S. 590, 593 (1962) (sand 
and gravel mining); see also Lucas, 505 U.S. at 1023 (rejecting 
suggestion that such cases are ``premised on, and thus limited by, some 
objective conception of `noxiousness' '').
---------------------------------------------------------------------------

                     e. the bill is a budget buster

    S. 605, as we have discussed, would require the public to 
pay compensation in many circumstances not now required under 
the Constitution. We believe the new compensation entitlements 
are unwise, unjust and extreme. But they are also prohibitively 
expensive. As one of our former colleagues, Senator Paul 
Tsongas, has said of the bill:

        From the standpoint of a citizen dedicated to improving 
        our nation's fiscal discipline, takings legislation is 
        a prescription for disaster. Takings bills are budget 
        busters. * * * They would require unjust compensation 
        at taxpayer expense. (Written statement of Paul E. 
        Tsongas before the Senate Committee on Environment and 
        Public Works, July 12, 1995, at 2, 3.) \13\
    \13\ Responding to the fiscal concerns voiced by former Senator 
Tsongas, Senator Robert Dole last spring was quoted as saying, ``I 
think he has raised some legitimate questions. Maybe there is another 
way to do it. We are not trying to run up the tab. We know one thing we 
can't do is spend a lot of money.'' Boston Globe, Apr. 29, 1995, at 13.

    The Office of Management and Budget has estimated that the 
narrower takings bill passed by the House of Representatives, 
H.R. 9--which applies only to real property and covers only six 
environmental statutes--would cost the taxpayers $28 billion 
over the next 7 years. OMB says that this bill, which is much 
broader, would be several-fold more expensive. (Letter from OMB 
Director Alice Rivlin to Chairman Hatch, June 7, 1995.)
    When the Congressional Budget Office was asked to estimate 
the costs of S. 605, it responded with more questions than 
answers. While CBO calculated that it would cost $30 to $40 
million dollars to simply administer the bill over the next 5 
years, the office reported that it could not estimate the long-
term costs of compensating property owners under the bill. 
(Letter from CBO Director June O'Neill to Chairman Hatch, Oct. 
17, 1995, at 2.) \14\
    \14\ To quote the letter precisely: ``CBO has no basis for 
estimating the additional amounts of compensation that the government 
might have to pay for cases where property owners choose to pursue 
larger claims in court,'' CBO letter, at 2; compensating property 
owners in the longer run is ``very uncertain,'' id.; costs of claims in 
later years ``is very difficult to predict,'' id. at 5. Even those 
skeptical of other multi-billion dollar estimates should, it seems to 
us, be concerned about a bill whose financial risks to the taxpayers--
even under the most optimistic of estimates--is unknowable.
---------------------------------------------------------------------------
    Of course, it is the compensation costs--the dollars it 
would take to compensate a new category of property owners--
that would work the most financial harm. And where the CBO did 
address the compensation issue, we believe it made several 
false assumptions. For example, the analysis assumes that the 
bill would ``codify the constitutional prohibition'' against 
uncompensated takings. (CBO letter, at 1.) As we have discussed 
at length, the bill creates an entitlement to compensation far 
broader and more expansive than the Constitution. The CBO also 
concludes that the 33-percent compensation threshold would 
screen out most compensation claims. Id. at 4. We believe, to 
the contrary, that the threshold would be of minimal 
significance in these cases because a litigant could readily 
show that an agency action devalued an ``affected portion'' of 
property by at least 33 percent.\15\
    \15\ One way or another, the bill seems destined to miss its mark. 
If, as the CBO contends, few regulated property owners would be able to 
prove a 33-percent reduction in the value of their property, the bill's 
many (uncompensated) constituents will be sorely disappointed. If, on 
the other hand, thousands of affected property owners can recover, 
there seems to be no stopping a billion-dollar run on the Federal 
coffers.
---------------------------------------------------------------------------
    But the most revealing thing about the CBO estimate, echoed 
throughout the majority report, is the assumption that S. 605 
will not be expensive because it will force the agencies to 
alter their regulatory course. To quote the letter:

        CBO expects that enacting the bill would cause federal 
        agencies to attempt to avoid paying compensation by 
        modifying their decisions * * * or otherwise changing 
        their behavior. (CBO letter, at 2.)

    What we hear the CBO and the majority to be saying is this: 
threatened with prohibitive compensation costs, agencies will 
simply stop regulating--which, translated, means they will stop 
protecting our environment, stop ensuring public safety, stop 
looking out for the community welfare. This, it seems to us, 
amounts to back door regulatory reform. It is not reform out in 
the sunshine, where changes to regulations can be debated on 
the merits, but an effort to curtail our environmental, health, 
and safety protections in the dark--by telling agencies that we 
will drain their budgets unless they stop regulating.
    To those who do not share our concerns--who in fact hope 
and intend that the bill will induce regulatory rollbacks--we 
sound a different note of caution. Many regulatory decisions 
are not purely discretionary, and regulators are often not free 
to decide for themselves how vigorously to implement or enforce 
regulations. Instead, the first obligation of regulators is to 
comply with the law, which in many cases constrains regulatory 
discretion with binding legal standards and other mandates. 
Thus in many situations, it would simply be unlawful for an 
agency to permit an activity, regardless of the economic impact 
of a permit denial.
    So what would an agency do? If judgments exceed available 
funds, might it not pay a fraction of each judgment? Or would 
it pay only the first few cases in line--which would likely be 
brought by the most monied of property owners and their blue 
chip lawyers.
    This is no way for the Government to do business--and no 
way, certainly, to strike a fair balance between the rights of 
individual property owners and the rights of neighbors and the 
community at large.\16\
    \16\ S. 605 also requires a Federal agency to compensate property 
owners whenever a State agency administering a Federal program takes 
action that effects a taking under the expansive definition in the 
bill. Section 204. Although the State action is the trigger, ``[c]laims 
arising from the action, inaction, or indecision of a State agency are 
properly filed against the Federal agency which administers the 
relevant Federal program.'' Section 204(b). Thus, S. 605 gives State 
agencies the extraordinary power to obligate Federal funds.
    In order to allow States greater flexibility, in recent years 
Federal lawmakers and agency heads have delegated more and more 
authority to State agencies to administer Federal programs. This is 
especially true in the area of environmental regulations where States 
are often authorized to issue regulations, review permit applications, 
perform inspections, and enforce the law. Exposing the Federal 
Government to liability for these State activities will surely be a 
disincentive for this type of cooperation. Far from encouraging State 
involvement, if S. 605 is enacted, Federal agencies will no longer be 
able to afford this cooperation, and the voice of the States in Federal 
regulatory lawmaking will be muted.
---------------------------------------------------------------------------

             F. The Bill Will Create a Litigation Explosion

    The proponents of S. 605 herald the bill as a beacon of 
clarity and certainty in an otherwise foggy area of the law. We 
believe, quite to the contrary, that S. 605 will bring to the 
law less clarity, not more, and that it will generate a 
mountain of litigation--not only because it opens the door to 
many new claims, but because the courts will need to resolve 
many novel factual and legal questions.
    The bureaucratic demands on the government alone would be 
massive. As Associate Attorney General John Schmidt testified:

        Agencies would need to hire more employees to process 
        compensation claims, more lawyers to handle claims, 
        more investigators and expert witnesses to determine 
        the validity of claims, more appraisers to assess the 
        extent to which agency action has affected property 
        value, and more arbiters to resolve claims. The sheer 
        volume of entitlement requests under these schemes 
        would be overwhelming. The result would be far more 
        government, not less. (Written statement of Associate 
        Attorney General John R. Schmidt, Apr. 6, 1995, at 14-
        15.)

    By its very terms, the bill is an inventive lawyer's dream. 
What follows is just one of its many different definitions of 
``property'':

        any interest understood to be property based on custom, 
        usage, common law, or mutually reinforcing 
        understandings sufficiently well-grounded in law to 
        back a claim of interest. Section 203(5)(F).

    What is a ``custom'' or ``usage''? When are interests 
``understood'' to be property? What about claims based on an 
activity sanctioned by custom or usage but not recognized by 
state law? What sorts of ``understandings'' are ``mutually 
reinforcing'' and ``sufficiently well-grounded in law to back a 
claim of interest''? The legal arguments, we predict, would be 
as lavish as a lawyer's ingenuity and a client's checkbook 
would allow.
    As discussed above, S. 605 provides a cause of action for 
compensation if an agency action (or inaction) reduces the fair 
market value of an affected portion of property by 33 percent. 
Section 204(a)(D). This the majority heralds as a bright line 
test. However, in even the most straightforward and 
uncomplicated of business transactions, placing a value on 
property is no simple or clear cut matter. How are we to decide 
what the affected portion of property is? How to tell whether 
it has been devalued by 33 percent? What was the fair market 
value both immediately before and immediately after the 
governmental action? Battles among lawyers, appraisers, 
accountants and expert witnesses will abound.
    Other definitions in the bill are equally vexing. As we 
have also discussed, central to the bill is its reliance on 
State nuisance law--or, more precisely, on ``nuisance as 
commonly understood and defined by background principles of 
nuisance and property law. * * *'' Section 204(d)(1). As Dean 
Prosser has written: ``there is perhaps no more impenetrable 
jungle in the entire law than * * * nuisance.'' W. Page Keeton 
et al., Prosser and Keeton on the Law of Torts, section 86 at 
616 (5th ed. 1984). This provision alone would generate 
complex, protracted and expensive proceedings.
    Such legal quagmires, furthermore, will not have to be 
waded through only once or twice--but over and over again, case 
by case, claim by claim.

                 G. Opposition to S. 605 is Widespread

    Although ours is the minority view on this Committee, we 
find ourselves in very good and far-reaching company all across 
our Nation. As we have noted already, the Clinton 
administration stands with us in solid opposition to this bill. 
So, too, State and local officials nationwide have voiced their 
unequivocal objections to takings legislation. What follows is 
a small sampling of their comments.
    From the National Conference of State Legislatures:

        [S. 605] would radically expand the [constitutional] 
        definition of a compensable government action and 
        create an expensive new entitlement program. At its 
        core, this takings legislation would severely limit the 
        government's ability to govern by forcing government to 
        pay for the right to regulate. (Letter to U.S. 
        Senators, Apr. 19, 1995.)

    From the National League of Cities:

        In order to avoid the compensation requirements 
        provided in the bill, the federal government might 
        severely curtail its efforts to achieve environmental 
        and other regulatory objectives and, instead, pressure 
        local governments to adopt regulations to undertake 
        these objectives. * * * S. 605 is not a solution to 
        municipal concerns about federal overregulation. [It] 
        is a blunt instrument that would exacerbate rather than 
        solve the major issues with federal government 
        overregulation and would be likely, in the end, to lead 
        to more mandates on local governments--thus making the 
        problem worse, not better. (Letter to U.S. Senators, 
        July 18, 1995.)

    From 33 State attorneys general in 1994:

        [Takings bills] purport to implement constitutional 
        property rights protections, but in fact they promote a 
        radical new takings theory that would severely 
        constrain the government's ability to protect the 
        environment and public health and safety. (Letter to 
        Members of Congress, Sept. 29, 1994.)

    Takings legislation is also opposed, among many, many 
others, by the National Governors Association, the Western 
State Land Commissioners Association, the United States 
Conference of Mayors, the National Institute of Municipal Law 
Officers, the League of Women Voters, the American Public 
Health Association, the United States Catholic Conference, as 
well as senior citizens groups, consumer and health 
organizations, labor groups, historic preservation groups, 
hunting and fishing organizations, local planning groups and 
civil associations, civil rights groups, and environmental 
organizations.
    The voices from our Nation's editorial boards are also 
roundly, and strongly, critical of takings legislation. Again, 
a sampling:

                          Polluter's Loophole

          A better title for this measure would be ``The 
        Polluters Public Compensation Act of 1995.'' It would 
        open a whole new federal entitlement category to pay 
        millions to industry, ranchers, miners, or anyone else 
        who could show that regulations cut into profits or 
        assets. * * * The inevitable result would be a gutting 
        of environmental protections, as they would become 
        prohibitively expensive to enforce.

                              Mesa [AZ] Tribune, February 27, 1995.

     Law Threatens Environment and People; Ill advised ``takings'' 
                law will take the public to the cleaners

          [T]his measure has little to do with the little guy 
        and much to do with the grazing, logging, mining, and 
        developmental interests that are backing this 
        proposal--and who will benefit most from its enactment. 
        At first glance, the idea looks reasonable, but the 
        ramifications are staggering. * * * The government 
        would have to choose between paying a would-be polluter 
        not to pollute, or not enforcing the anti-pollution 
        law. * * * Are there not less radical ways to deal with 
        certain problems posed by environmental regulations? Is 
        this how [the American people] think their hard-earned 
        tax dollars should be spent?

                   The Times Record [Brunswick, ME], March 6, 1995.

                         Tricking the Taxpayers

    So called ``takings'' legislation would force the public to pay 
                                 bribes

          Primary beneficiaries would be those who profit from 
        polluting. Primary losers would be their neighbors and 
        the American taxpayers. * * * Like a hustler who 
        threatens a frivolous lawsuit in hopes his target will 
        pay him to avoid the hassle, a property owner can 
        declare his intent to develop his land in a way that 
        would violate regulations in hopes of tricking 
        taxpayers into paying him not to. Must the public pay a 
        business to act responsibly? Must your taxes go to 
        bribe a landlord not to wreck your neighborhood? * * * 
        The right answer to the ``takings'' nonsense is no.

                         The Des Moines Register, May 15, 1995.    

              ``Takings'' Bill a Vehicle for Exploitation

          On a local level, a neighbor who pollutes a creek or 
        kills somebody's lawn with a chemical drift could 
        actually seek damages if somebody complained. It 
        amounts to blackmail. * * * On the national scale, 
        exploitation-minded corporations would profit at 
        taxpayer expense. Virtually anyone who could show that 
        regulations cut into profits or assets could file 
        claims against the government. * * * [T]he ``takings'' 
        bill isn't about private property rights; it's a 
        vehicle for greed and exploitation, and * * * 
        persisting with something so obviously flawed and 
        potentially disastrous as the ``takings'' legislation 
        isn't responsible lawmaking.

                     The Bismarck [N.D.] Tribune, May 12, 1995.    

                          Tossing Out the Baby

          [T]axpayers can expect to one day pay a price so high 
        that the sponsors of the so-called ``taking'' 
        legislation don't even know how to forecast its size. 
        The tab * * * could make the current federal deficit 
        look like pocket change * * * [L]awmakers * * * can 
        amend environmental laws, alter regulatory programs and 
        deal directly, and honestly, with property issues. And 
        they can do it without mortgaging the quality of our 
        air, water and land, and without assaulting the public 
        pocketbook.

                  The Charlotte [N.C.] Observer, March 7, 1995.    

                         Second Take on Takings

          Holding out the promise of compensation would set off 
        years of litigation, prompt speculators to buy up 
        unusable properties simply for the chance to dun the 
        government and cost the taxpayers billions in property 
        settlements, legal costs and additional regulatory red 
        tape.

                                 The Sacramento Bee, March 9, 1995.

    State governments and citizens, too, have time and again 
rejected takings legislation. Some 32 State legislatures have 
considered and declined to adopt takings bills. Just a few 
months ago, the voters in Washington State rejected a 
referendum that would have enacted far-reaching State takings 
legislation. When the citizens of Washington took a good look 
at a proposal much like S. 605, they saw who would win and who 
would lose--and they said, ``no.'' 17
    \17\  A 1995 study estimated that the potential compensation 
exposure under the Washington initiative was upwards of $11 billion. 
(Referendum 48--Economic Impact Study of the Property Rights 
Initiative, University of Washington, Institute for Public Policy 
Management, 1995.) In the two other times when citizens have been 
presented with statewide takings referenda--in Arizona in 1994 and 
Rhode Island in 1986--they voted them down.
---------------------------------------------------------------------------

                       H. There is a Better Way.

    Once again, we do not take lightly complaints about 
insensitive or excessively burdensome regulations. And we join 
our colleagues in deploring the hardship such regulations may 
cause American property owners, large and small. But we believe 
that this heavy-handed bill would do less to right such 
specific wrongs than it would to fundamentally realign the 
balance of power among property owners, at the expense of many 
a neighbor and the community at large.
    Ours, therefore, is a different call to action: instead of 
trying to rewrite the Constitution, we should craft specific 
solutions to specific problems. Where there are Federal 
programs treating property owners unfairly, we should fix them. 
And the Clinton administration, for its part, appears to be 
well on the way to doing just that, especially on behalf of 
smaller landowners.
    For example, the Army Corps of Engineers and the 
Environmental Protection Agency have issued a regulation that 
allows landowners to build single-family homes and related 
structures on nontidal wetlands without individual permits. The 
EPA and Corps have issued a proposed regulation to streamline 
the permit appeals process, to allow for faster and cheaper 
administrative appeals of wetlands permit decisions and 
wetlands jurisdictional determinations. The administration has 
also exempted some 53 million acres of farmland from wetlands 
regulations. (See addenda to written statement of Joseph Sax, 
Oct. 18, 1995.) 18
    \18\  In a related vein, the Army Corps of Engineers reports that 
it approves the vast majority of wetlands permit applications. In 1995, 
for example, approximately 62,000 people applied for permits. Of these, 
only 274 were denied--less than one-half of one percent. Moreover, 83 
percent of the applications were approved within 17 days, with an 
overall average response time of 26 days. See Memorandum from Michael 
L. Davis, U.S. Army Corps of Engineers Regulatory Branch Chief, 
Operations, Construction and Readiness Division, to District and 
Division Regulatory Chiefs, Nov. 8, 1995.
---------------------------------------------------------------------------
    Further, with regard to the Endangered Species Act, the 
Interior Department has issued a proposed rule that will 
presumptively exempt from the Act's threatened species 
requirements single family homeowners with 5 or fewer acres. 
Interior has also put into place both ``no surprises'' and safe 
harbor policies that will help protect property owners' 
expectations and create incentives for landowners to protect 
the resources on their property. Id.
    Moreover, the chairman of the Senate Environment and Public 
Works Committee, Senator Chaffee--who also strongly opposes 
this bill--testified that his Committee has held hearings on, 
and is taking a close look at a variety of statutes, including 
the Endangered Species Act, Superfund, and the wetlands 
provisions in the Clean Water Act. (Written statement of 
Senator John Chaffee, Oct. 18, 1995, at 9). 19
    \19\  We think Senator Chaffee's testimony is worth quoting 
further:

      [I]t is clear to me that enactment of S. 605, or other 
      compensation legislation, would be a mistake. The far 
      preferable way to proceed is to amend individual 
      environmental statutes--not by adding a new statutory right 
      to compensation--but by making the statutes more user-
      friendly and flexible for affected property owners. * * * 
      Our goal is to ensure that a property owner is not unfairly 
      asked to forego the fruits of his investment and labor, on 
      the one hand, and, on the other, also to ensure that the 
      government can work to protect the welfare of other 
      property owners and the environment we all share. (Senator 
      Chaffee statement, at 9-10.)
    Where reform is needed in these specific statutes, we 
should proceed apace. But we should not pass this bill, and 
create what would essentially be a two-tiered system of laws in 
this country: where we would have one set of laws that we are 
all supposed to obey, and another set of laws that some 
property owners are paid to obey.
    We recognize that there are people who disagree with our 
nation's environmental laws or with our health and safety laws. 
We call on them to make their case to the American people. It 
is the prerogative of all citizens to do what they can to 
change laws with which they disagree. But it is not their 
prerogative, in our view, to demand that they be paid to comply 
with them.
    Most Americans are willing to obey the law for free. We 
don't pay people to stop behind the school bus. And we don't 
pay people to stay off drugs. We should not pay people to abide 
by our environmental laws, our civil rights laws, and our 
health and safety laws.

   II. New Court of Claims Jurisdiction: An Unwise Expansion of Power

    S. 605 would grant the Court of Federal Claims (``CFC'') 
new and sweeping jurisdiction to invalidate any statute or 
regulation that ``adversely affects private property rights'' 
in violation of the fifth amendment to the Constitution. 
Section 205(a), (d). The provision would also give the CFC new 
powers to grant injunctive and declaratory relief, section 
205(d)(B), and to hear tort claims against the United States, 
section 205(d)(C)(4). We believe that this dramatic expansion 
of the Court's authority raises serious constitutional and 
practical concerns.
    Article III of the Constitution provides that ``[t]he 
judicial Power of the United States, shall be vested in one 
Supreme Court, and in such inferior Courts as the Congress may 
from time to time ordain and establish.'' The defining 
attributes of article III judges are life tenure and protected 
salaries, which are meant to safeguard their independence from 
the legislative branch and insulate them from political 
pressure. The Court of Federal Claims, on the other hand, is an 
administrative tribunal--or so-called ``legislative'' court--
created under article I. The judges who sit on the CFC do not 
have the tenure and salary protections of their article III 
counterparts. See 28 U.S.C. 171-72.
    It is precisely because of their independence that we 
entrust article III judges with the core judicial 
responsibility of interpreting the Constitution and 
invalidating acts of Congress and the Executive. See Marbury v. 
Madison, 5 U.S. (1 Cranch) 137, 177 (1803) (authority to 
declare act of Congress unconstitutional lies at heart of 
article III judiciary's constitutionally ordained ``province 
and duty * * * to say what the law is'').
    We believe that to give the central article III power of 
invalidation to article I judges who do not have the 
independence protections runs afoul of article III's vesting 
clause. See Commodity Futures Trading Commm'n v. Schor, 478 
U.S. 833, 847 (1986) (delegation of adjudicative functions to 
non-article III body must ``be assessed by reference to 
purposes underlying the requirements of Article III''); 
Northern Pipeline Constr. Co. v. Marathon Pipe Line, 485 U.S. 
50 (1982) (invalidating judicial review provisions of 1978 
Bankruptcy Act, which conferred article III judicial power on 
judges who lacked life tenure and salary protections). As 
Associate Attorney General Schmidt testified:

          The power of invalidation is so great and raises such 
        fundamental questions about the structure of the 
        federal government that it has been traditionally 
        reserved for Article III courts. (Schmidt statement, at 
        25.)

    We are also very concerned about the practical 
ramifications of this provision, as it would appear to 
completely foil the ``preclusive review'' provisions in many 
statutes. These are provisions which carefully specify both the 
time and place for any challenges to a statute's implementing 
regulations. 20 The idea, of course, is to get all 
interested parties together within a short period of time in 
one forum to air their grievances with a set of regulations--so 
there can be a prompt, authoritative, and final determination 
regarding the validity of the regulations by a court 
experienced in complex administrative law issues. S. 605 would 
give litigants the chance to circumvent this process 
completely--opening all federal courthouse doors to litigation 
over a regulation for years.
    \20\ See, e.g., 15 U.S.C. 2618 (exclusive jurisdiction for judicial 
review of regulations under Toxic Substances Control Act vested in U.S. 
Courts of Appeal; challenges must be filed within 60 days of 
promulgation of rule); 33 U.S.C. 1369(b) (certain regulations under 
Clean Water Act must be challenged in Courts of Appeal within 120 days 
of issuance; actions subject to review cannot be challenged in any 
civil or criminal proceeding for enforcement); 42 U.S.C. 300j-7 
(certain regulations under Safe Drinking Water Act can only be 
challenged in District of Columbia Circuit; others only in appropriate 
courts of appeal; challenges must be filed within 45 days of issuance 
of rule; actions with respect to which review could have been obtained 
shall not be subject to judicial review in any civil or criminal 
proceeding for enforcement or to enjoin enforcement); 42 U.S.C. 6976 
(challenge to any regulation under Resource Conservation and Recovery 
Act must be filed in District of Columbia Circuit within 90 days of 
issuance; action that could have been reviewed shall not be subject to 
judicial review in civil or criminal proceedings for enforcement); 42 
U.S.C. 7607(b) (Clean Air Act regulations must be challenged within 60 
days of issuance, with review of some regulations in District of 
Columbia Circuit, others in appropriate court of appeals; such 
regulations cannot be challenged in subsequent enforcement action); 42 
U.S.C. 9613(a) (regulations under Superfund must be challenged in 
District of Columbia Circuit within 90 days of issuance; cannot be 
subsequently challenged in enforcement actions).
---------------------------------------------------------------------------
    The Judicial Conference of the United States--the umbrella 
organization of our Nation's Federal judges, chaired by Chief 
Justice Rehnquist--opposes S. 605's broad expansion of 
jurisdiction for the Court of Federal Claims. The Conference is 
concerned about blurring the distinction between the CFC and 
the U.S. district courts:

          The proposed amendments are not merely minor 
        extensions of existing jurisdiction of the Court of 
        Federal Claims, but rather represent a major expansion 
        of the jurisdiction and remedial powers of the court. 
        There has been historically a sound working 
        relationship between the Court of Federal Claims and 
        the district courts that has enabled the courts to 
        accommodate their overlapping jurisdiction. (Letter 
        from L. Ralph Mecum, Secretary to the Conference, to 
        Chairman Hatch, December 7, 1995.)

We should heed the Conference's studied opinion.

          III. Taking Impact Statements: Paralysis by Analysis

    It goes without saying that government regulators should 
evaluate the potential consequences of their actions on private 
property. But S. 605's requirement for a complicated and time-
consuming takings impact analysis (``TIA'') every time an 
agency issues even the most minor of rules or policies would do 
much, much more. This provision, in our view, would halt 
necessary regulatory changes, make oversight and enforcement 
prohibitively expensive, and require that our Federal laws 
enhance the property values of a few, at the expense of the 
property, health, environmental and safety values of the vast 
majority of American citizens.

   a. takings impact analyses will bring necessary regulations to a 
                               standstill

    With limited exceptions, S. 605 requires agencies to 
perform elaborate takings impact analyses before issuing ``any 
policy, regulation, proposed legislation, or related agency 
action'' which ``is likely to result in a taking of private 
property.'' Section 403(a)(1)(B). The TIA must outline the 
purpose of the policy or regulation; assess whether a 
``taking'' will occur; evaluate the likelihood that 
compensation will be required; itemize alternatives that would 
be less likely to effect a ``taking''; and estimate potential 
liability. Section 403(a)(3). Each TIA must be submitted to OMB 
for review, section 403(a)(4), and no final rule could be 
promulgated if its enforcement ``could reasonably be construed 
to require an uncompensated taking'' of private property. 
Section 404(a).
    Needless to say, the practical--and we believe 
debilitating--impact of this provision would be staggering. We 
underscore, at the outset, that it is not a constitutional 
``taking'' that the bill directs agencies to assess, but a 
taking as newly--and very broadly--defined under S. 605. That, 
coupled with the requirement that a TIA be performed for even 
the most minor of rules or policies, will hamstring countless 
regulations necessary to protect our environment, health and 
safety. As Associate Attorney General John Schmidt testified:

        Because S. 605 establishes such a broad definition of 
        ``taking,'' * * * [the takings impact assessment 
        requirements] would impose an enormous, unnecessary, 
        and untenable paperwork burden on many aspects of 
        government operations. This inflexible and unnecessary 
        bureaucratic burden would apply to all kinds of 
        government efforts to protect public safety, human 
        health, and other aspects of the public good. The bill 
        would severely undermine these efforts by imposing an 
        incalculable paperwork burden. (Schmidt statement, at 
        27-28.)

And because the measure would invariably increase the costs of 
promulgating any and all regulations, regulatory reforms--which 
might ease certain burdens, or better adapt to changes in 
technology, business practices, or the environment--would also 
proceed at a snail's pace.
    The provision's ``decisional criteria,'' moreover, would 
prevent the final promulgation of any rule or policy which 
could ``reasonably be construed'' to effect a taking. Section 
403(a). The possibilities for abuse, we believe, abound. A 
proposed rule, subject to challenge by an even moderately 
clever lawyer, could be waylaid for years--for it is almost 
always possible to come up with a scenario where even the most 
benign regulation could diminish the value of an ``affected 
portion'' of property by 33 percent. Thus, rather than 
litigating takings claims as they actually arise, this 
provision gives lawyers the go-ahead to challenge regulations 
in a vacuum--where they could posit countless arguments as to a 
rule's legal construction, and paint any number of pictures as 
to how it could hypothetically operate.
    At bottom, we are skeptical about the very idea of 
evaluating takings in the abstract. As previously discussed, 
the question of whether the government has ``taken'' private 
property (even under this bill's new definitions) is highly 
fact-specific. To require agencies to answer the question 
before implementing a regulation or enforcing it in a real-
world situation would be highly speculative. Will a regulation 
requiring handicapped accessible bathrooms diminish the value 
of some portions of some restaurants by 33 percent? How many 
restaurants would be affected nationwide? What would the 
government's overall financial liability be? We agree with the 
majority of State attorneys general who wrote:

        [Takings Assessment] proposals would require agencies 
        to speculate about the precise amount by which the 
        value of all affected private property might be 
        diminished, then speculate about how much diminution in 
        value would be caused by various alternative courses of 
        action, and then speculate about what the courts might 
        decide in any potential lawsuit challenging the 
        regulation. Since agency attorneys already review new 
        proposals for potential takings problems * * * this new 
        paper-shuffling requirement would do nothing to reduce 
        the likelihood of unconstitutional takings. (Letter 
        from 33 Attorneys General to Members of Congress, Sept. 
        26, 1994.)

Not only is such an exercise futile, in our view, it is most 
certainly an unwise use of our scarce regulatory 
resources.21
    \21\ Indeed, both the Congressional Budget Office and the Office of 
Management and Budget have estimated the cost of this provision to be 
between $30 and $40 million over 5 years. (CBO Letter, at 2; letter 
from OMB Director Alice Rivlin to Chairman Hatch, Dec. 5, 1995.) It is 
unclear whether these estimates include the formidable costs of the 
bill's ``look back'' provision, discussed below, whereby agencies would 
be required to review all their existing regulations and reissue each 
one that could effect a taking.
---------------------------------------------------------------------------

b. the ``look back'' provision will require the government to reissue a 
    multitude of existing regulations--at the expense of important 
                              protections

    Perhaps even more troublesome, the bill requires that all 
agencies review each and every regulation on their books--no 
matter how longstanding--and reissue any that has resulted in 
even a single taking anywhere in the country. Section 
404(b)(1). In performing this task, the agencies are directed 
to ``reduce such takings of private property to the maximum 
extent possible within existing statutory requirements.'' Id. 
In other words, each such reissued regulation must have one 
single, overriding goal: to diminish the impact of the 
regulation on private property--not to protect the public 
health or safety, not to safeguard consumers, and not even to 
maximize business opportunities.
    This provision, we believe, is yet another way in which 
neighboring property values, the community welfare, and our 
Nation's environmental, health and safety protections, would be 
trumped by narrow private property interests under this bill. 
Again, Associate Attorney General Schmidt:

        By elevating property impact above all other legitimate 
        goals and objectives, section 404 would inevitably lead 
        to less effective implementation of many federal 
        protections that affect property rights. (Schmidt 
        statement, at 28.)

    We note, as well, that this ``look back'' provision will 
renew the statute of limitations on each and every regulation 
required to be reissued. Under current law, as previously 
noted, the statute of limitations for challenging a newly 
promulgated regulation is generally short--so that all 
arguments can be made and evaluated within a reasonably quick 
time, in order that a rule passing judicial muster may take 
effect without undue delay.
    But delay is precisely what is built into this provision--
for its statute of limitations is 6 years. Section 406. 
Invariably, the threat of litigation over regulations issued or 
reissued will cloud their enforcement for years. Again, the end 
result will be less protection for our environment, less 
protection for neighboring property owners, and less protection 
for the public's health, safety and general quality of life.

 IV. Property Owner Bill of Rights: The Wrong Way to Challenge the Law

    Title V of the S. 605 takes aim specifically at the 
Endangered Species Act, and the wetlands provisions of the 
Clean Water Act (``the Acts'')--and would, in our view, 
seriously undermine enforcement of these provisions. Again, we 
reiterate the point that we have made previously: if the ESA or 
wetlands provisions require changes, we should do so directly, 
not through such backdoor measures as are contained in this 
title.
    At the outset, the bill requires that any action to 
implement or enforce the Acts must comply with state and tribal 
laws. Section 503(a)(1). In other words, State and tribal laws 
would supersede Federal law--contrary to the mandate of the 
Supremacy Clause of the Constitution--even where the Acts 
themselves specifically preempt State laws. This provision 
would thus allow a local government to enact laws to 
effectively gut enforcement of endangered species and wetlands 
protections.
    Without qualification, the bill prohibits an agency from 
entering property to collect information without the written 
consent of the owner. Section 504. We find the implications of 
this provision extremely troublesome. Should a property owner 
refuse consent, the government would be barred from responding 
to an environmental emergency. And because there is no law 
enforcement exception to the proposal, a property owner in the 
midst of committing an environmental crime could legally block 
an investigation into wrongdoing.
    These provisions are made all the more indefensible, in our 
view, in light of existing privacy protections, such as state 
trespass law and the constitutional prohibition against 
unreasonable searches and seizures. Environmental agencies seek 
consent to enter land whenever feasible. But there are times--
in emergencies, or when an agency suspects criminal activity--
when gaining consent is not feasible or inadvisable. Agencies 
must not, in our view, be prevented from taking necessary 
action in such circumstances.
    The bill moreover prohibits an agency from using data it 
has collected until each and every property owner has the 
opportunity to dispute each and every sample result. Section 
505. This is the case whether or not the property owner or his 
property values are affected by the data. The ensuing disputes 
about the minutia of data collection will create a mountain of 
administrative litigation, and make the business of data 
collection extremely expensive. Finality of results will also 
surely be delayed, by months or even years.
    Sections 506 and 507 of the bill provide for a new 
administrative appeals process to challenge final agency 
actions. We do not disagree that affected property owners 
should have access to a fast and inexpensive appeals process. 
But we point out that such reform is already underway. The Army 
Corps of Engineers, for example, is currently instituting an 
administrative review process for wetlands determinations. We 
should proceed with such reforms to make the process more 
accessible and user-friendly.

                               CONCLUSION

    We end where we began. Property rights are central to 
America's political, economic, and social vitality, and they 
should--indeed, must--be protected. That is why we oppose S. 
605. For we believe that the property rights and values of 
Americans are protected by laws that make our skies clean, our 
water fresh, our workplaces safe, and our neighborhoods secure. 
We believe that S. 605 would jeopardize those rights and 
values--by giving property owners a near automatic right to 
compensation in a great many new and, in our view, often 
undeserving situations. It would, we believe, make it legally 
permissible, and perhaps even profitable, to be a bad neighbor.
    We pledge our commitment to the rights of all property 
owners. Where regulations are unfair or unreasonably 
burdensome, we will support specific and tailored reform. But 
we think it unwise to take a sledge hammer to a problem that 
calls for a scalpel. And we cannot sanction the creation of new 
injustices in an effort to eradicate old ones.
    Individual anecdotes of unfairness can make for good 
legislative drama. But they can also make for bad law. That is 
what we believe S. 605 would be--a bad law that would undermine 
the property values of the vast majority of Americans, while at 
the same time threatening the environmental, health, safety, 
welfare and civil rights protections that add value to all of 
our lives.

                                   Joe Biden.
                                   Edward M. Kennedy.
                                   Patrick J. Leahy.
                                   Paul Simon.
                                   Herb Kohl.
                                   Dianne Feinstein.
                                   Russell D. Feingold.
                  X. ADDITIONAL VIEWS OF SENATOR LEAHY

    While concurring with the opinions expressed by Senator 
Biden I wish to present my additional dissenting views. The 
consideration of this bill has provided an opportunity to 
debate fundamental issues about the relationship of citizens to 
their communities.
    John Kennedy, in the early 1960's, inspired a generation 
when he said, ``ask not what your country can do for you--ask 
what you can do for your country.''
    Later in the same decade another--and very different motto 
emerged. That motto was ``do your own thing.'' The ``do your 
own thing'' approach to life led to the drug culture. ``It's my 
brain,'' they claimed, ``I can do with it what I want.''
    These two mottoes exemplify a basic issue in our political 
lives. The balance between individual rights and community 
responsibility.
    What is the balance between our rights as individuals and 
our responsibility to our neighbors?
    Do we have a right to take any drugs we want?
     Do we have a right to use our property in a way that hurts 
our neighbors?
    There are some that today claim that anytime the community 
asks a person to limit the use of his property, it is somehow a 
``takings'' under the fifth amendment.
    I approach this issue without any sense of defensiveness. 
The Vermont State Constitution has the strongest private 
property protection provision of any State constitution.
    In 1981 Paul Laxalt and I joined to pass a regulatory 
reform bill, which passed the Senate almost unanimously.
    The 1990 Farm Bill reformed the wetlands provisions for 
farm programs so that no longer would a farmer lose all his 
benefits for good-faith mistakes. It gave farmers the 
flexibility to change farming practices.
    Unfortunately, the Bush administration chose never to tell 
farmers about the new flexibility that the law contains.
    Let us first discuss this issue in light of our Anglo- 
American political tradition.
    Then, as a citizen of one of the most rural States in the 
Nation, and the senior Democrat of the Senate Agriculture 
Committee, let me discuss whether the new extreme views on 
``property rights'' are consistent with American rural values.
    As Americans, we share certain basic community values. One 
of these is stated in the simple phrase, ``your freedom ends, 
where my nose begins.'' This common value is now being 
challenged. ``Takings'' bills assume that property owners have 
a right to use their property in a way that harms their 
neighbors.
    This is not the American tradition. A person has never had 
an unfettered right to use his property in a way that hurts his 
neighbors.
    Before the American Revolution, our community values were 
reflected in the ``common law.'' The ``common law'' was the 
body of law that developed out of common community values 
without any legislative action. Under the common law, 
``nuisance'' action was the legal expression of the maxim, 
``your freedom ends where my nose begins.''
    As one commentator says:

          The beauty of a simple nuisance case is that it 
        reduces that case to terms a lay person can understand: 
        ``You dumped it, it hurt me or my property, and you 
        should pay.''

    Indeed in the landmark Lucas case, Chief Justice Rehnquist 
noted that if the South Carolina law had its basis in historic 
nuisance law, it would not have violated the fifth amendment.
    In a sense, most modern environmental, labor and safety 
laws grow out of the same moral assumptions which underlie 
nuisance actions.
    The clean air laws say that a polluter cannot use his 
property to cause a child to get asthma.
    The occupational health statutes say that an employer does 
not have a right to use his property in a way that injures or 
kills his employees.
    The labor laws say that an employer does not have the right 
to use his property to exploit children. (Parenthetically, the 
opponents of child labor laws claimed they interfered with the 
private property of the mill owners.)
    Wetland laws say that you cannot use your land to flood my 
land or lower the water table and dry your neighbors well.
    Many of the so-called property rights bills disagree with 
this premise of our legal heritage. Their premise is that a 
citizen must be paid not to use his property in a way that 
injures his neighbor.
    That many of our statutes are built on the foundation of 
nuisance law does not mean that common law nuisance actions can 
address the challenges of balancing the rights and 
responsibilities of 240 million Americans living thousands of 
miles apart on a billion acres of land.
    I am sure that Midwest utilities would not want to resolve 
clean air issues in a nuisance action brought on behalf of a 
asthmatic child in a Caledonia County Vermont courtroom.
    And this brings me to my second point.
    Rural Americans have always understood that there must be a 
balance between individual rights and community responsibility. 
They understand that irresponsible use of private property 
hurts both our neighbors and our neighbors land values.
    On board the Mayflower, the Pilgrims' leaders were 
frightened by the boasts of a few unruly passengers. They 
established the Mayflower Compact to protect the common good 
against an unruly minority.
    Our Constitution was written to both ``promote the general 
Welfare,'' and ``secure the blessings of Liberty.''
    Even the wagon trains starting West routinely developed 
written bylaws in which, as the eminent historian Daniel 
Boorstin says, ``there was seldom any hint or a doubt that 
final control on all matters rested with the majority. * * *'' 
(The American Experience, at 67).
    Community institutions that limit private property rights, 
but promote the general good of the community are common in 
rural America. For example, in the 19th century, milk was not a 
major commercial product because it carried diseases such as 
tuberculosis. Legal safety standards were imposed which 
required farmers to spend large sums upgrading their facilities 
to ensure milk safety. Thus, farmers' compromised their 
``right'' to produce milk as they saw fit, to create a market 
that benefited most dairy farmers.
    Another example is wetlands. From prerevolutionary times, 
farmers have joined together to form drainage districts to 
carry away unwanted water. To jointly drain these lands for 
their mutual benefit, each farmer gave up some control over his 
lands. Every farmer was, and still is, required to pay an 
assessment for maintenance of the drainage system. Drainage 
districts build ditches across farmer's fields against their 
will to benefit all farmers.
    There are many other examples of how rural Americans have 
limited their individual rights to benefit their communities as 
a whole. In the West, weeds that damage grazing lands (called 
noxious weeds) can reduce the value of ranchers' lands. Noxious 
weeds cannot be successfully controlled unless they are 
controlled on all land in a region. Thus, many States have 
passed ``noxious weed'' laws. In States like Nebraska, if the 
county weed supervisor identifies a noxious weed infestation on 
a private land, the supervisor may order the landowner to treat 
the infested land. If the landowner refuses to destroy the 
weeds, the county destroys the weeds on the private property. 
Any costs incurred during the treatment are done at the expense 
of the landowner. The total payment includes an additional 10 
percent charge of the treatment costs.
    Another type of statute is found in South Carolina. Because 
abandoned fruit trees harbor pests, South Carolina law gives 
the State Crop Pest Commission power to destroy abandoned 
orchards if the trees are a menace to the fruit growing 
industry. The State then has the authority to put a lien on the 
property until the landowner pays for the action.
    Twenty-five States have similar weed or pest control 
statutes granting the government power to enter the land and 
destroy the nuisance plants at the owner's expense: Delaware, 
Colorado, Florida, Iowa, Illinois, Kansas, Kentucky, 
Massachusetts, Maryland, Michigan, Minnesota, Montana, 
Nebraska, Nevada, Ohio, Oklahoma, Oregon, Rhode Island, South 
Dakota, South Carolina, Tennessee, Utah, Washington, Wisconsin, 
Wyoming. Nine other States: Arkansas, Indiana, Georgia, 
Louisiana, Maine, New Jersey, New Mexico, Virginia, West 
Virginia, also have similar weed or pest control statutes, but 
a court order is required.
    Or to take an example from livestock, every State has a 
comprehensive statute to control animal diseases. All of these 
statutes give a government agent the power to prevent the 
movement of diseased cattle. A farmer may have to wait a month 
to make sure his cattle are brucellosis free. Cattle prices 
routinely jump up and down 20 percent or more. Should we 
compensate a farmer who loses money because his sale of 
diseased cattle is delayed?
    Of course not. We cannot protect the livestock our 
communities rely on if a few irresponsible landowners do not 
control disease in their livestock.
    All these laws restrict private property rights. Yet, the 
benefit of protecting the community from negligent landowners 
outweighs the costs incurred by the individual.
    Some now feel that the property rights of the individual 
should override the well-being of the community. This is not 
the American tradition and it is clearly not the tradition in 
rural America. If ``private property rights'' extremists 
succeed, our American values and the value of the lands on 
which pests and weeds cannot be controlled will be lost. Both 
our traditional American values and the value of rural land are 
at stake in this debate. Each landowner has rights, but also 
has responsibilities to his neighbors.

                                                     Patrick Leahy.
                XI. ADDITIONAL VIEWS OF SENATOR FEINGOLD

    At a time when we are rethinking the role of government and 
working to make it both more efficient and less costly, does it 
make sense to extend additional protections to recipients of 
federally subsidized water? As the author of legislation to 
reduce Federal spending on water subsidies, I am especially 
concerned with provision of S. 605 that could expand the rights 
of agricultural water users at considerable cost to the 
taxpayer.
    S. 605's definition of property includes ``the right to use 
or the right to receive water'' \1\ and ``property rights 
provided by or memorialized in a contract.'' \2\ The definition 
further states that property under the bill means ``all 
property protected under the Fifth Amendment. For this Act.'' 
\3\
    \1\ Section 205(5)(B).
    \2\ Section 205(5)(D).
    \3\ Section 203(5), emphasis added.
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    The supporters of this legislation argue that contractual 
rights are property rights, citing the 1934 Supreme Court 
holding in Lynch v. United States.\4\ The question, however, 
isn't whether contracts for water or other commodities 
represent real interests in property, but rather whether this 
bill adds a layer of protection for contractual rights beyond 
that which is constitutionally guaranteed.
    \4\ 292 U.S. 571 (1934).
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    As the minority views make clear, understanding the full 
implications of S. 605 requires working through a maze of 
confusing and sometimes tautological definitions. At present, 
there is no Federal right to ``receive'' water except as 
memorialized in a contract. The Bureau of Reclamation delivers 
water in 17 Western States pursuant to contracts for primarily 
agricultural purposes. Each year, it allocates water based upon 
supplies available in reservoirs and other storage facilities. 
Most contracts generally anticipate that delivered quantities 
may vary on an annual basis. For example, the contract between 
the Bureau and the Westlands Water District in California's 
Central Valley states:

        There may occur at times during any year a shortage in 
        the quantity of available for furnishing to the 
        District through and by means of the project, but in no 
        event shall any liability accrue against the United 
        States or any of its officers, agents or employees for 
        any damage, direct or indirect, arising from shortage 
        or account of errors in operation, drought, or any 
        causes * * * \5\
    \5\ Article 11 of the contract between Westlands and the Bureau of 
Reclamation.

    During the drought of 1993, the Bureau reduced the 
quantities of water to Westlands agricultural users. It 
allocated a portion of the limited water available to protect 
fish in accordance with the requirements of the Endangered 
Species Act. When agricultural users received 50 percent of 
their contract quantities, Westlands sued alleging that the 
liability limitations of the contract were invalid and they 
were guaranteed a fixed quantity of water at a fixed price.\6\ 
They contended that despite the liability limitations of the 
contract, the Bureau's water allocation decisions were still 
subject to some Agency discretion which deprived them of water 
and entitled them to compensation.
    \6\ 95 Daily Journal D.A.K. 328.
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    Last March, the Ninth Circuit Court of Appeals dismissed 
Westlands' claim, sustaining the Federal Government's contract 
defense. The failure of S. 605 to explicitly provide for a 
defense of compliance with contract casts doubt on its 
availability. Though some witnesses testified that the contract 
defense continues to be available, some supporters of this 
legislation argue that the measure is specifically needed to 
overturn decisions such as the Westlands case. In response to 
questions I submitted subsequent to the October 18, 1995, 
Judiciary Committee hearings on S. 605, Counselor to the 
Secretary of the Interior Joseph Sax wrote explicitly about the 
Administration's concerns with the bill's potential to create a 
new category of Federal water law:

        Where Congress has recently restructured federal 
        reclamation projects to direct more economically and 
        environmentally sensitive management, as it has done in 
        California's Central Valley Project, * * * [a]ny steps 
        the Department of Interior takes to implement these 
        congressionally ratified improvements would doubtless 
        result in demands for compensation by affected 
        interests if these bills became law.\7\
    \7\ Letter to Russell D. Feingold, Nov. 7, 1995. In the response 
Sax refers to a memorandum prepared by the Solicitor's Office of the 
Department of the Interior dated May 1, 1995, Effects of S. 605 and 
H.R. 925 on Western Water Development.

    In addition to expanding the rights of aggrieved 
agricultural water users to seek compensation, S. 605 also 
defines compensation in a way that could be extremely costly. 
The bill obligates the government to pay successful claimants: 
the fair market value of the water, rather than the subsidized 
price the user receives; the reduction in the market value of 
the land not irrigated by the water; the loss of profits 
attributable to the loss of water; and the fair market value of 
lost crops.\8\
    \8\ Section 204(2).
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    The difference in potential compensation awards between 
what the users pay for the water and the subsidized price is 
substantial. For example, the contract price for water in 
California's Central Valley ranges from $3.50 to $7.50 per acre 
foot, while the fair market value may range from $100 to $250 
per acre foot. This difference alone could amount to between 
$109 million and $300 million per year for each of the first 5 
years if compensation is awarded.\9\
    \9\ Office of the Solicitor, United States Department of the 
Interior, Compensation Bills and Western Water Rights: Seven 
Insuperable Shortcomings. Aug. 4, 1995, pp. 2-3.
---------------------------------------------------------------------------
    Moreover, I am concerned about the extension of water 
rights, in addition to the enhancement of contract protections. 
S. 605 also is novel in recognizing a new class of Federal 
rights not based on State law--interests ``understood to be 
property based on custom [or] usage.''\10\ In the water area, 
extending ``usage'' rights could cover individuals who are 
illegally irrigating outside their Federal contract acres, a 
practice known as water spreading, or who have never held 
contracts to access Federal projects. Under the existing law, 
individuals engaged in these activities would not be entitled 
to compensation. However, under S. 605, the Federal Government 
may be liable to deliver water now obtained by custom where 
Federal or State law recognizes no such property right.
    \10\ Section 203(5)(F).
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    I do not believe that many of the supporters of this 
``takings'' legislation fully comprehend the implications of 
this legislation as it relates to protecting rights to taxpayer 
subsidized irrigation water. As currently drafted, the water 
provisions, if enacted, could have an enormous, unintended cost 
to the taxpayers.

                                                     Russ Feingold.
                      XII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 605, as reported, are shown as follows existing law proposed 
to be omitted is enclosed in brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman):

                           UNITED STATES CODE

          * * * * * * *

               Title 28--Judiciary and Judicial Procedure

          * * * * * * *

                    PART IV. JURISDICTION AND VENUE

          * * * * * * *

                      CHAPTER 91--COURT OF CLAIMS

1491.  Claims against United States generally; actions involving 
Tennessee Valley Authority.
            * * * * * * *
    [1500.  Pendency of claims in other courts.] [1500.  
Repealed.]
          * * * * * * *

Sec. 1491  Claims against United States generally; actions involving 
                    Tennessee Valley Authority

    (a)(1) [The United States Claims Court shall have 
jurisdiction to render judgment upon any claim against the 
United States founded either upon the Constitution, or any Act 
of Congress or any regulation of an executive department, or 
upon any express or implied contract with the United States, or 
for liquidated or unliquidated damages in cases not sounding in 
tort The United States Court of Federal Claims shall have 
jurisdiction to render judgment upon any claim against the 
United States for monetary relief founded either upon the 
Constitution or any Act of Congress or any regulation of an 
executive department, or upon any express or implied contract 
with the United States, in cases not sounding in tort, or for 
invalidation of any Act of Congress or any regulation of an 
executive department that adversely affects private property 
rights in violation of the fifth amendment of the United States 
Constitution]. For the purpose of this paragraph, an express or 
implied contract with the Army and Air Force Exchange Service, 
Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, 
or Exchange Councils of the National Aeronautics and Space 
Administration shall be considered an express or implied 
contract with the United States.
    (2) In any case within its jurisdiction, the Court of 
Federal Claims shall have the power to grant injunctive and 
declaratory relief when appropriate. To provide an entire 
remedy and to complete the relief afforded by the judgment, the 
court may, as an incident of and collateral to any such 
judgment, issue orders directing restoration to office or 
position, placement in appropriate duty or retirement status, 
and correction of applicable records, and such orders may be 
issued to any appropriate official of the United States. In any 
case within its jurisdiction, the court shall have the power to 
remand appropriate matters to any administrative or executive 
body or official with such direction as it may deem proper and 
just. The Claims Court shall have jurisdiction to render 
judgment upon any claim by or against, or dispute with, a 
contractor arising under section 10(a)(1) of the Contract 
Disputes Act of 1978.
          * * * * * * *
    (4) In cases otherwise within its jurisdiction, the Court 
of Federal Claims shall also have supplemental jurisdiction, 
concurrent with the courts designated in section 1346(b) of 
this title, to render judgment upon any related tort claim 
authorized under section 2674 of this title.
    (5) In proceedings within the jurisdiction of the Court of 
Federal Claims which constitute judicial review of agency 
action (rather than de novo proceedings), the provisions of 
section 706 of title 5 shall apply.
          * * * * * * *

[Sec. 1500. Pendency of claims in other courts

    [The United States Claims Court shall not have jurisdiction 
of any claim for or in respect to which the plaintiff or his 
assignee has pending in any other court any suit or process 
against the United States or any person who, at the time when 
the cause of action alleged in such suit or process arose, was, 
in respect thereto, acting or professing to act, directly or 
indirectly under the authority of the United States.]
          * * * * * * *
                                ------                                


                  FEDERAL WATER POLLUTION CONTROL ACT

          * * * * * * *

                  Permits for Dredged or Fill Material

    Sec. 404. (a) * * *
          * * * * * * *
    (u) Administrative Appeals.--
          (1) The Secretary or Administrator shall, after 
        notice and opportunity for public comment, issue rules 
        to establish procedures to allow private property 
        owners or their authorized representatives an 
        opportunity for an administrative appeal of the 
        following actions under this section:
                  (A) A determination of regulatory 
                jurisdiction over a particular parcel of 
                property.
                  (B) The denial of a permit.
                  (C) The terms and conditions of a permit.
                  (D) The imposition of an administrative 
                penalty.
                  (E) The imposition of an order requiring the 
                private property owner to restore or otherwise 
                alter the property.
          (2) Rules issued under paragraph (1) shall provide 
        that any administrative appeal of an action described 
        in paragraph (1) shall be heard and decided by an 
        official other than the official who took the action, 
        and shall be conducted at a location which is in the 
        vicinity of the property involved in the action.
          (3) An owner of private property may receive 
        compensation, if appropriate, subject to the provisions 
        of section 508 of the Omnibus Property Rights Act of 
        1995.
          * * * * * * *
                                ------                                


                     ENDANGERED SPECIES ACT OF 1973

          * * * * * * *

                      cooperation with the states

    Sec. 6. (a) * * *
          * * * * * * *
    (j) Notwithstanding any other provision of this section, 
when the Secretary enters into a management agreement under 
subsection (b) with any non-Federal person that establishes 
restrictions on the use of property, the Secretary shall notify 
all private property owners or lessees of the property that is 
subject to the management agreement and shall provide an 
opportunity for each private property owner or lessee to 
participate in the management agreement.
          * * * * * * *

                       penalties and enforcement

    Sec. 11. (a) * * *
          * * * * * * *
    (i) Administrative Appeals.--
          (1) The Secretary shall, after notice and opportunity 
        for public comment, issue rules to establish procedures 
        to allow private property owners or their authorized 
        representatives an opportunity for an administrative 
        appeal of the following actions:
                  (A) A determination that a particular parcel 
                of property is critical habitat of a listed 
                species.
                  (B) The denial of a permit for an incidental 
                take.
                  (C) The terms and conditions of an incidental 
                take permit.
                  (D) The finding of jeopardy in any 
                consultation on an agency action affecting a 
                particular parcel of property under section 
                7(a)(2) or any reasonable and prudent 
                alternative resulting from such finding.
                  (E) Any incidental ``take'' statement, and 
                any reasonable and prudent measures included 
                therein, issued in any consultation affecting a 
                particular parcel of property under section 
                7(a)(2).
                  (F) The imposition of an administrative 
                penalty.
                  (G) The imposition of an order prohibiting or 
                substantially limiting the use of the property.
          (2) Rules issued under paragraph (1) shall provide 
        that any administrative appeal of an action described 
        in paragraph (1) shall be heard and decided by an 
        official other than the official who took the action, 
        and shall be conducted at a location which is in the 
        vicinity of the parcel of property involved in the 
        action.
          (3) An owner of private property may receive 
        compensation, if appropriate, subject to the provisions 
        of section 508 of the Omnibus Property Rights Act of 
        1995.
          * * * * * * *

                                
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