Regulatory Takings: Agency Compliance with Executive Order on	 
Government Actions Affecting Private Property Use (16-OCT-03,	 
GAO-04-120T).							 
                                                                 
Each year federal agencies issue numerous proposed or final rules
or take other regulatory actions that may potentially affect the 
use of private property. Some of these actions may result in the 
property owner being owed just compensation under the Fifth	 
Amendment. In 1988 the President issued Executive Order 12630 on 
property rights to ensure that government actions affecting the  
use of private property are undertaken on a well-reasoned basis  
with due regard for the potential financial impacts imposed on	 
the government. This testimony is based on our recent report on  
the compliance of the Department of Justice and four		 
agencies--the Department of Agriculture, the Army Corps of	 
Engineers, the Environmental Protection Agency, and the 	 
Department of the Interior--with the executive order. (Regulatory
Takings: Implementation of Executive Order on Government Actions 
Affecting Private Property Use, GAO-03-1015, Sept.19,2003).	 
Specifically, GAO examined the extent to which (1)Justice has	 
updated its guidelines for the order to reflect changes in case  
law and issued supplemental guidelines for the four agencies, (2)
the four agencies have complied with the specific provisions of  
the executive order, and (3) just compensation awards have been  
assessed against the four agencies in recent years.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-120T					        
    ACCNO:   A08722						        
  TITLE:     Regulatory Takings: Agency Compliance with Executive     
Order on Government Actions Affecting Private Property Use	 
     DATE:   10/16/2003 
  SUBJECT:   Compensation					 
	     Federal law					 
	     Federal regulations				 
	     Property rights					 

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GAO-04-120T

United States General Accounting Office

GAO Testimony

Before the Subcommittee on the Constitution, Committee on the Judiciary,
House of Representatives

For Release on Delivery

Expected at 10:00 a.m. EDT REGULATORY TAKINGS

Thursday, October 16, 2003

 Agency Compliance with Executive Order on Government Actions Affecting Private
                                  Property Use

Statement of Anu K. Mittal, Director, Natural Resources and Environment

GAO-04-120T

Highlights of GAO-04-120T, a testimony before the Subcommittee on the
Constitution, Committee on the Judiciary, House of Representatives

Each year federal agencies issue numerous proposed or final rules or take
other regulatory actions that may potentially affect the use of private
property. Some of these actions may result in the property owner being
owed just compensation under the Fifth Amendment. In 1988 the President
issued Executive Order 12630 on property rights to ensure that government
actions affecting the use of private property are undertaken on a
well-reasoned basis with due regard for the potential financial impacts
imposed on the government.

This testimony is based on our recent report on the compliance of the
Department of Justice and four agencies-the Department of Agriculture, the
Army Corps of Engineers, the Environmental Protection Agency, and the
Department of the Interior-with the executive order. (Regulatory Takings:
Implementation of Executive Order on Government Actions Affecting Private
Property Use, GAO-03-1015, Sept. 19, 2003).

Specifically, GAO examined the extent to which (1) Justice has updated its
guidelines for the order to reflect changes in case law and issued
supplemental guidelines for the four agencies, (2) the four agencies have
complied with the specific provisions of the executive order, and (3) just
compensation awards have been assessed against the four agencies in recent
years.

www.gao.gov/cgi-bin/getrpt?GAO-04-120T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Anu K. Mittal at (202)
512-3841 or [email protected].

October 16, 2003

REGULATORY TAKINGS

Agency Compliance with Executive Order on Government Actions Affecting Private
Property Use

Justice has not updated the guidelines that it issued in 1988 pursuant to
the executive order, but has issued supplemental guidelines for three of
the four agencies. The executive order provides that Justice should update
the guidelines, as necessary, to reflect fundamental changes in takings
case law resulting from Supreme Court decisions. While Justice and some
other agency officials said that the changes in the case law since 1988
have not been significant enough to warrant a revision, other agency
officials and some legal experts said that significant changes have
occurred and that it would be helpful if a case law summary in an appendix
to the guidelines was updated. Justice issued supplemental guidelines for
three agencies, but not for Agriculture because the two agencies were
unable to resolve issues such as how to assess the takings implications of
denying or limiting permits that allow ranchers to graze livestock on
federal lands managed by Agriculture.

Although the executive order's requirements have not been amended or
revoked since 1988, the four agencies' implementation of some of these
requirements has changed over time as a result of subsequent guidance
provided by the Office of Management and Budget (OMB). For example, the
agencies no longer prepare annual compilations of just compensation awards
or account for these awards in their budget documents because OMB issued
guidance in 1994 advising agencies that this information was no longer
required. According to OMB, this information is not needed because the
number and amount of these awards are small and the awards are paid from
the Department of the Treasury's Judgment Fund, rather than from the
agencies' appropriations. Regarding other requirements, agency officials
said that they fully consider the potential takings implications of their
regulatory actions, but provided us with limited documentary evidence to
support this claim. The agencies provided us with a few examples of
takings implications assessments stating that such assessments were not
always documented in writing or retained on file. In addition, our review
of the agencies' rulemakings for selected years that made reference to the
executive order revealed that relatively few specified that an assessment
was done and few anticipated significant takings implications.

According to Justice, property owners or others brought 44 regulatory
takings lawsuits against the four agencies that were concluded during
fiscal years 2000 through 2002, and of these, 14 cases resulted in just
compensation awards or settlement payments totaling about $36.5 million.
The executive order's requirement for assessing the takings implications
of planned actions applied to only three of these cases. The actions
associated with the other 11 cases either predated the order's issuance or
were otherwise excluded from the order's provisions. The relevant agency
assessed the takings potential of its action in only one of the three
cases subject to the order's requirements. According to Justice, at the
end of fiscal year 2002, 54 additional lawsuits involving the four
agencies were pending resolution.

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the measures taken by the
Department of Justice (Justice) to implement certain provisions of
Executive Order 12630 (EO) and the efforts of four agencies-the Department
of Agriculture, the U.S. Army Corps of Engineers (Corps), the
Environmental Protection Agency (EPA), and the Department of the
Interior1-to comply with the EO's requirements. Our testimony is based on
work included in a report recently released by this subcommittee. 2

Each year federal agencies issue numerous proposed or final rules or take
other regulatory actions that may potentially affect the use of private
property. Agencies take these actions to meet a variety of societal goals,
such as protecting the environment, promoting public health and safety,
conserving natural resources, and preserving historic sites. At the same
time, these actions may place restrictions on the use of private property,
such as limiting the development of land that includes critical wildlife
habitat or wetlands needed for flood control, thereby potentially
depriving the landowner of the use or economic value of the property.

Any landowner believing that a government regulatory action has resulted
in a taking of his or her private property may file a lawsuit seeking just
compensation under the Fifth Amendment to the U.S. Constitution. In
general, these suits must be brought in the United States Court of Federal
Claims; Justice is responsible for litigating these cases on behalf of the
government. Such cases, many of which may take years to resolve, may
result in a dismissal, a decision in favor of the government, a settlement
payment made to the landowner, or an award of just compensation. In
general, such awards and settlements are paid from the Department of the
Treasury's Judgment Fund.

In 1988 the President issued Executive Order 12630,3 "Governmental Actions
and Interference with Constitutionally Protected Property Rights," to
ensure that government actions are undertaken on a well reasoned basis
with due regard for the potential financial impacts imposed on the

1We refer to these agencies as the "four agencies" in subsequent
references.

2See U.S. General Accounting Office, Regulatory Takings: Implementation of
Executive Order on Government Actions Affecting Private Property Use,
GAO-03-1015 (Washington, D.C., Sept. 19, 2003).

353 Fed. Reg. 8859 (Mar. 18, 1988).

government by the Just Compensation Clause of the Fifth Amendment.
Specifically, the EO requires executive branch agencies, among other
things, to (1) prepare annual compilations of awards of just compensation
resulting from landowner lawsuits alleging takings, (2) account for
takings awards levied against them in their annual budget submissions, (3)
designate an agency official responsible for implementing the order, and
(4) consider the potential takings implications of their proposed actions
and document significant takings implications in notices of proposed
rulemaking. The EO also requires Justice, specifically the U.S. Attorney
General, to issue general guidelines to provide agencies with a uniform
framework for implementing the EO and to issue supplemental guidelines for
each agency, as appropriate, that reflect that agency's unique
responsibilities. In addition, the EO requires the Attorney General to
update the general guidelines, as necessary, to reflect fundamental
changes in takings case law resulting from U.S. Supreme Court decisions.
Furthermore, the EO requires the Office of Management and Budget (OMB) to
ensure that the policies of executive branch agencies are consistent with
the EO's requirements and that just compensation awards made against the
agencies are included in agencies' budget submissions.

Our testimony discusses the extent to which (1) Justice has updated its
guidelines to reflect changes in case law and issued supplemental
guidelines for the four agencies, (2) the four agencies have complied with
the specific provisions of the EO, and (3) awards of just compensation
have been assessed by the courts against the four agencies in recent years
and whether in these cases, the agencies had assessed the potential
takings implications of their actions before implementing them.

In summary, we found the following:

o  	Justice has not updated the general guidelines that it issued pursuant
to the EO in June 1988, but has issued supplemental guidelines for three
of the four agencies. Officials at Justice, the Corps and EPA expressed
the general view that changes in takings case law related to Supreme Court
decisions since 1988 had not been significant enough to warrant a revision
of the guidelines. Justice officials also noted that the guidelines were
intended to provide a general framework for agencies to follow in
implementing the EO, and thus did not require frequent revision. However,
Interior and Agriculture officials said that it would be helpful if
Justice updated a summary of the key aspects of relevant case law
contained in an appendix to the guidelines to reflect significant
developments over the past 15 years. Similarly, representatives of
property rights groups and law professors stated

that the guidelines should be updated, noting that the body of relevant
case law has evolved significantly over the past 15 years. Justice has
issued supplemental guidelines for all of the individual agencies except
Agriculture.

o  	The four agencies' implementation of some of the EO's key provisions
has changed over time in response to subsequent OMB guidance. The agencies
have not prepared annual compilations of just compensation awards or
accounted for these awards in their budget documents since OMB issued
guidance in 1994 advising agencies that this information is no longer
required. Regarding the EO requirement for designating an official
responsible for ensuring the agency's compliance with the EO, the four
agencies have each designated such an official-typically the chief
counsel, general counsel, or solicitor. Finally, the four agencies told us
that they fully consider the potential takings implications of their
planned regulatory actions, but they provided us with limited documentary
evidence to support this claim. Specifically, agency officials told us
that takings implication assessments are not always documented in writing,
and with the passage of time any assessments that were documented may no
longer be on file with the agency.

o  	According to Justice data, property owners or other parties brought 44
regulatory takings cases against the four agencies that were concluded
during fiscal years 2000 through 2002. Of these, the courts decided in
favor of the plaintiff in 2 cases, resulting in awards of just
compensation totaling about $4.2 million. The Justice Department settled
in 12 other cases, providing total payments of about $32.3 million. The
EO's requirements for assessing the takings implications of planned
regulatory actions applied to only 3 of these 14 cases. For the other 11
cases, the associated regulatory action either predated the EO's issuance
or the matter at hand was otherwise excluded from the EO's provisions.
Based on the evidence made available to us, the relevant agency assessed
the takings potential of its action in only one of the three cases subject
to the EO's requirements. As of the end of fiscal year 2002, Justice
reported that 54 additional regulatory takings cases involving the four
agencies were pending resolution.

Background 	The just compensation clause of the Fifth Amendment provides
that the government may not take private property for public use without
just compensation. Initially, this clause applied to the government's
exercise of its power of eminent domain. In eminent domain cases, the
government invokes its eminent domain power by filing a condemnation
action in court against a property owner to establish that the taking is
for a public use or purpose, such as the construction of a road or school,
and to allow

the court to determine the amount of just compensation due the property
owner. In such cases, the government takes title to the property,
providing the owner just compensation based on the fair market value of
the property at the time of the taking. Supreme Court decisions later
established that regulatory takings are also subject to the just
compensation clause. In contrast to the direct taking associated with
eminent domain, regulatory takings arise from the consequences of
government regulatory actions that affect private property. In these
cases, the government does not take action to condemn the property or
offer compensation, but rather effectively takes the property by denying
or limiting the owner's planned use of the property, referred to as an
inverse taking.4 An owner claiming that a government action has effected a
taking and that compensation is owed must initiate suit against the
government to obtain any compensation due.5 The court awards just
compensation to the owner upon concluding that a taking has occurred.

In 1987, concerned with the number of pending regulatory takings lawsuits
and with court decisions seen as increasing the exposure of the federal
government to liability for such takings, the President's Task Force on
Regulatory Relief began drafting an executive order to direct executive
branch agencies to more carefully consider the takings implications of
their proposed regulations or other actions. The President issued this EO
on March 15, 1988.

According to the EO, actions subject to its provisions include
regulations, proposed regulations, proposed legislation, comments on
proposed legislation, or other policy statements that, if implemented or
enacted, could cause a taking of private property. Such actions may
include rules and regulations that propose or implement licensing,
permitting, or other conditions, requirements or limitations on private
property use. The EO also enumerates agency actions that are not subject
to the order, including the exercise of the power of eminent domain and
law enforcement actions involving seizure, for violations of law, of
property for forfeiture, or as evidence in criminal proceedings.

4In general, an inverse taking has the effect of an affirmative exercise
of the power of eminent domain. An inverse taking is also referred to as
inverse condemnation.

5Takings of property effected by government actions may occur in a number
of ways, including: (1) a government regulation restricting development,
(2) a government requirement that a landowner provide the public access to
private property (such as by providing access to a private beachfront),
and (3) an agency's denial of a mineral drilling permit.

The EO also requires the U.S. Attorney General to issue general guidelines
to help agencies evaluate the takings implications of their proposed
actions, and, as necessary, update these guidelines to reflect fundamental
changes in takings case law resulting from Supreme Court decisions.

The guidelines provide that agencies should assess takings implications of
their proposed actions to determine their potential for a compensable
taking and that decision makers should consider other viable alternatives,
when available, to meet statutorily required objectives while minimizing
the potential impact on the public treasury. In cases where alternatives
are not available, the potential takings implications are to be noted,
such as in a notice of proposed rulemaking. The guidelines also include an
appendix that provides detailed information regarding some of the case law
surrounding considerations of whether a taking has occurred and the extent
of any potential just compensation claim. For example, the appendix
discusses the Penn Central Transportation Co. v. City of New York6 case in
which the Supreme Court set out a list of three "influential factors" for
determining whether an alleged regulatory taking should be compensated:
(1) the economic impact of the government action, (2) the extent to which
the government action interfered with reasonable investment-backed
expectations, and (3) the "character" of the government action. However,
the appendix provides a caveat that it is not intended to be an exhaustive
account of relevant case law, adding that the consideration of the
potential takings of an action as well as the applicable case law will
normally require close consultation between agency program personnel and
agency counsel.

Agency officials and other experts differ on the need to update the
Attorney General's guidelines to reflect changes in regulatory takings
case law since 1988. Justice officials said that the guidelines had not
been updated since 1988 because there had been no fundamental changes in
regulatory takings case law, which is the EO's criterion for an update.
They said that the guidelines, as written, are still sufficient to
determine the risk of a regulatory taking and that subsequent Supreme
Court decisions have not substantially changed this analysis. For example,
officials said the three-factor test outlined in the 1978 Penn Central
case remains the most important guidance for analyzing the potential for a
taking that is subject to just compensation. Justice officials also
emphasized that the guidelines address only a general framework for

  Justice Has Not Updated Its 1988 Guidelines, but Has Issued Supplemental
  Guidelines for Three of Four Agencies

6438 U.S. 104 (1978).

agencies' evaluations of the takings implications of their proposed
actions and thus are not intended to be an up-to-date, comprehensive
primer on all possible considerations. The guidelines state that the
individual agencies must still conduct their own evaluations, including
necessary legal research, when assessing the takings potential of a
proposed regulation or action.

The four agencies were divided on the need to update the guidelines. Corps
and EPA officials supported Justice's position that the guidelines do not
need to be updated. Corps staff indicated that, based on their review of
relevant Supreme Court decisions since 1988, no fundamental change in the
criteria for assessing potential takings had occurred and thus no update
to the Attorney General's guidelines was necessary. Similarly, EPA staff
said that some of the takings cases decided since 1988 gave the appearance
that the Court was changing the three-pronged test set out in the Penn
Central decision. However, these officials noted that more recent cases
have returned to the Penn Central test, thereby removing the need for
updating the Attorney General's guidelines. In contrast, officials at
Interior and Agriculture said that it would be helpful if Justice updated
the summary of key takings cases contained in an appendix to the
guidelines to reflect significant developments in this case law over the
past 15 years.

Other legal experts said that the Attorney General's guidelines should be
updated, noting that regulatory takings case law had not remained static
over the past 15 years. For example, legal experts concerned with the
protection of private property rights said that there had been significant
developments in regulatory takings case law since 1988. These experts said
that the mere passage of time and the sheer number of regulatory takings
cases concluded since 1988 argued for updating the guidelines. In another
case, a law professor, who has written and lectured on the issue of
regulatory takings, said that the level of specificity with which Justice
prepared the original guidelines sets a precedent that calls for updating
these guidelines to reflect the many important changes in regulatory
takings case law since 1988.

The Attorney General has issued supplemental guidelines required by the EO
for three of the four agencies-the Corps, EPA, and Interior.7 The EO

7Justice issued supplemental guidelines for the Corps on January 23, 1989;
for Interior on March 29, 1989; and for EPA on January 14, 1993. According
to Justice and agency officials, these guidelines have not been updated
since their original issuance.

directed the Attorney General, in consultation with each executive branch
agency, to issue supplemental guidelines for each agency as appropriate to
the specific obligations of that agency. The Attorney General's guidelines
state that the supplement should prescribe implementing procedures that
will aid the agency in administering its specific programs under the
analytical and procedural framework presented in the EO and the Attorney
General's guidelines, including the preparation of takings implication
assessments. In general, the three agencies' supplemental guidelines
include specific categorical exclusions from the EO's provisions for
certain agency actions.

The Attorney General has not issued supplemental guidelines for
Agriculture because Justice and Agriculture could not agree on how to
assess the potential takings implications of the latter agency's actions
related to grazing and special use permits covering applicants' use of
public lands.8 Agriculture argued that such permit actions should be
exempt from the EO's requirements or, if not, that the agency should be
allowed to do a generic takings implication assessment that would apply to
multiple permits. Agriculture officials indicated that Justice officials
did not agree with these suggestions, and the matter was never resolved.
While lacking supplemental guidelines, Agriculture officials said that
their implementation of the EO and the Attorney General's guidelines has
not been encumbered. Justice officials agreed with this assessment.

Although the EO's requirements have not been amended or revoked since
1988, the four agencies' implementation of some of its key provisions has
changed over time in response to subsequent OMB guidance. For example, the
agencies no longer prepare annual compilations of just compensation awards
or account for these awards in their budget documents because OMB guidance
issued in 1994 advised agencies that such information was no longer
required.9 According to OMB, this information is not needed because the
number and amount of these awards are small and the awards were not paid
from the agencies' appropriations but are paid from the Department of the
Treasury's Judgment Fund. In addition, because the

  Implementation of Key Provisions by the Four Agencies Has Changed Over the
  Life of the Executive Order

8A grazing permit provides official written permission to a rancher to
graze a specific number, kind, and class of livestock for a specified time
period on defined federal rangeland. A special use permit is a written
instrument that grants rights or privileges of occupancy and use, such as
for recreational and commercial purposes, subject to specified terms and
conditions.

9The agencies had difficulty documenting their submission of compilations
reports for the period 1989 through 1993 because the passage of time made
documents less accessible.

number and dollar amounts of just compensation awards and settlements paid
by the federal government annually are relatively small, OMB officials
said the overall budget implications for the government are small. Hence,
in their view, information on just compensation awards in agency annual
budget submissions was also unnecessary.

OMB and Justice officials said that the relative lack of regulatory
takings cases and associated just compensation awards each year is an
indication that the EO has succeeded in raising agencies' awareness of the
need to carefully consider the potential takings implications of their
actions.

Although OMB no longer requires agencies to comply with these EO
provisions, the provisions remain in the EO. However, OMB and Justice
officials noted that because executive orders are not the equivalent of
statutory requirements, non-compliance with these provisions does not have
the same implications. Instead, executive orders are policy tools for the
executive branch and are subject to changing interpretation and emphasis
with each new administration.

Other provisions of the EO have been implemented. For example, each of the
four agencies has designated an official to be responsible for ensuring
that the agency's actions comply with the EO's requirements. In general,
the responsible official at each agency is the agency's senior legal
official.10 EPA's and Interior's supplemental guidelines specifically
identify the designated official by title. Agency officials could not
provide us with any documentary evidence of this designation for
Agriculture and the Corps, but agency officials assured us that their
senior legal official fulfilled this role.

Officials at each of the four agencies said that they fully consider the
potential takings implications of their planned regulatory actions, but
again provided us with limited documentary evidence to support this claim.
Agencies provided us a few written examples of takings implication
assessments. Agency officials said that these assessments are not always
documented in writing, and, with the passage of time, any assessments that
were put in writing may no longer be on file. They also noted that these
assessments are internal, predecisional documents that generally are not
subject to the Freedom of Information Act or judicial review. As a

10At Agriculture and EPA, the designated official is the General Counsel.
At the Corps, this official is the Chief Counsel. At Interior, the
designated official is the Solicitor.

result, they said, the assessments are not typically retained in a central
file for a rulemaking or other decision, and therefore difficult to
locate. For example, the Corps internal guidance states that takings
implication assessments should be removed from the related administrative
file once the agency has concluded a decision on a permit. In addition,
agency officials also noted that they do not maintain a master file of all
takings implication assessments. In many cases, attorneys assigned to
field offices conduct these assessments. In these cases, agency officials
said that headquarters staff might not have copies. Nevertheless, with the
exception of EPA, each agency provided us with some examples of written
takings implication assessments.11 These assessments varied in form and
the level of detail included.

To determine if and how the four agencies documented their compliance with
the EO when issuing regulatory actions, we reviewed information contained
in Federal Register notices on takings implication assessments related to
their proposed and final rulemakings, but had limited success.
Specifically, 375 notices mentioned the EO in 1989, 1997, and 2002, but
relatively few provided an indication as to whether a takings implication
assessment was done. Most of these rules included only a simple statement
that the EO was considered and, in general, that there were no significant
takings implications. In contrast, 50 specified that an assessment of the
rule's potential for takings implications was prepared, and of these, 10
noted that the rule had the potential for "significant" takings
implications. Given the limited amount of information available from the
agencies or available in the Federal Register notices that we reviewed, we
could not fully assess the extent to which agencies considered the EO's
requirements.

11EPA officials indicated that they did not have any written examples of
takings implication assessments prepared by the agency largely because the
agency's actions are generally excluded from the EO's requirements.

  Few Awards of Just Compensation Were Made Against the Four Agencies for
  Takings Cases Concluded during Fiscal Years 2000 through 2002

According to Justice data, 44 regulatory takings cases against the four
agencies were concluded during fiscal years 2000 through 2002.12 Fourteen
of these 44 cases resulted in government payments. In 2 of these 14 cases,
the U.S. Court of Federal Claims decided in favor of the plaintiff,
resulting in awards of just compensation totaling about $4.2 million. The
Justice Department settled in 12 other cases providing total payments of
about $32.3 million.13 Of these combined 14 cases with awards or
settlement payments, 10 related to actions of Interior, 3 to actions of
the Corps , and 1 to an action of Agriculture.

In general, the settled cases were concluded with compromise agreements,
including stipulated dismissals or settlement agreements, reached among
the litigants and approved by the applicable court. In these cases, the
document usually stated that the parties had agreed to end the case with a
payment to the plaintiff, but no finding that a taking occurred. For
example, in one case concluded in 2001 that alleged a taking of an oil and
gas lease on federal land managed by Interior's Bureau of Land Management,
the litigants negotiated a stipulated dismissal that provided that a
payment of $3 million be made to the plaintiffs to cover all claims.
However, the stipulated dismissal also provided that the final outcome
should not be construed as an admission of liability by the United States
government for a regulatory taking. In addition, the dismissal required
that the plaintiffs surrender their interests in a portion of the lease.
In the two cases with award payments, the court concluded that a taking
had occurred and thus it awarded just compensation.

Of the 14 cases with awards or settlement payments, the 10 Interior cases
generally dealt with permits related to mining claims on federal lands
managed by that agency or matters related to granting access on public
lands. For example, one case involving mining claims resulted in the
plaintiff receiving a settlement of almost $4 million. In another case,

12The data provided by Justice referred to these 44 cases as regulatory
takings cases. According to information provided by Interior, at least 9
of the 44 cases, including 4 with award or settlement payments, were
alleged by the property owner to be "legislative" takings. In legislative
takings cases, the potential taking results directly from an act of
Congress. One of these nine cases (Board of County Supervisors of Prince
William County, Virginia v. United States) involved the government's
taking title to property by exercising its power of eminent domain.

13In addition to the financial remuneration made to the plaintiff, the
award and settlement payment totals may include compensation for attorney
fees, interest, and other litigation costs.

involving the denial of preferred access to a lake on land managed by the
agency, the plaintiff received a settlement of $100,000. The Corps' three
cases generally related to a denial or issuance, with conditions, of
wetlands permits for private property. One of these cases, concerning the
filling of a wetland in Florida, resulted in a settlement payment of $21
million, accounting for more than half of the total compensation awards
and settlement payments related to the 14 cases. The Agriculture case
concerned the title to mineral rights in a national forest managed by the
agency. The plaintiff received an award of $353,000 in this case.
(Appendix I provides further information on just compensation awards or
settlement payments, by agency, for cases concluded during fiscal years
2000 through 2002.)

In addition to the cases concluded during fiscal years 2000 through 2002,
Justice reported that an additional 54 regulatory takings cases involving
the four agencies were still pending resolution at the end of fiscal year
2002. Of the 54 pending cases, 30 involved Interior, 14 involved the
Corps, 7 involved Agriculture, and 3 involved EPA.

The EO's requirements for assessing the takings implications of planned
regulatory actions applied to only 3 of these 14 cases. For the other 11
cases, the associated regulatory action either predated the EO's issuance
or the matter at hand was otherwise excluded from the EO's provisions.

Based on evidence made available to us, the relevant agency assessed the
takings potential of its action in only one of the three cases subject to
the EO's requirements. In that case, the Corps denied a wetlands permit
sought by the plaintiff to fill wetlands on the plaintiff's property in
order to develop a commercial medical center. The plaintiff brought suit
against the agency alleging a compensable taking had occurred. In its
takings implication assessment, the Corps had concluded that the permit
denial did not constitute a taking because the applicant was still free to
use the property for other purposes that did not involve filling the
wetland. Therefore, the Corps concluded that the permit denial did not
deprive the plaintiff of all viable economic use of the property. However,
the case ended with a stipulated dismissal and a payment of $880,000 to
the plaintiff.14

14James Koconis & Ted G. Koconis v. United States.

In the two other cases, based on information Interior provided to us, it
appears that the EO would apply. Interior stated that, in hindsight, it
appears that the EO may have applied in the first case involving a denial
of applications to drill for oil and gas on federal land. Although a
formal takings implication assessment was not prepared in this case,
Interior stated there was a "good faith" discussion of its takings
implications within the department. The case concluded with settlement of
$380,000 to the plaintiff for attorney fees.15 In the second case,
concerning anticipated and actual denial of oil and gas drilling permits
for federal land, Interior was not certain whether the EO actually applied
to the case in the first place, but believed that a takings assessment had
been done and documented in a related environmental impact statement.
However, Interior was unable to provide us a copy of this document. We
believe that the EO applied and, lacking documentation, that no formal
assessment was done. This case concluded with a settlement of $3 million
for the plaintiff.16

Mr. Chairman, this completes my prepared statement. I would be pleased to
respond to any questions that you or other Members of the Subcommittee may
have at this time.

For further information about this testimony, please contact me at (202)
512-3841. Doreen Feldman, Jim Jones, Ken McDowell, Jonathan McMurray, and
John Scott, made key contributions to this statement.

                                GAO Contacts and

  Staff Acknowledgment

15Devon Energy Corporation, et al. v. United States. 16W.A. Moncrief, Jr.
et al. v. United States.

Appendix I: Awards of Just Compensation or Settlement Payments for Concluded
Regulatory Takings Cases, for Four Agencies, Fiscal years 2000 through 2002

                             (Dollars in thousands)

Source: GAO.

Note: GAO analysis of data provided by the Department of Justice's
Environment and Natural Resources Division

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