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We should always be careful when we manipulate the jurisdiction of our courts, particularly when the jurisdiction of statutory courts such as the Court of Federal Claims are enhanced to the detriment of Article III courts. It is difficult to predict what the many consequences of such actions will be. However, we do know that these changes will give an Article I court the power for the first time to invalidate the actions of Congress. 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.

We also know that these changes would significantly blur the distinctions between the Court of Federal Claims and the district courts and, as a result, ignore the historical purpose and functions of the Court of Federal Claims. That Court was established by Congress pursuant to Article I of the Constitution to eliminate the need for Congress itself to consider private bills for monetary relief. Its function has been to provide a centralized forum-with expertise in specialized issues arising under federal law-to grant adequate relief at law for certain types of claims against the United States. As a result, the Court of Federal Claims has the authority to grant injunctive and declaratory relief in only very narrow circumstances. The proposed expansion of that Court's powers to grant such relief and to consider questions of state law pursuant to ancillary FTCA claims would fundamentally change the nature of that Court and its relationship to the district courts.

We are also opposed to the repeal of 28 U.S.C. § 1500, which bars the Court of Federal Claims from hearing any claim as to which the plaintiff already has a claim pending in another court. First, there is no need to repeal that section. According to the bill, repeal is necessary as current law "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." That is no longer the law. Loveladies Harbor v. United States, 27 F.3d 1545 (Fed. Cir. 1994). Second, the repeal of § 1500 would create opportunities for savvy litigators to manipulate the courts in bringing not just takings claims but all claims over which the Court of Federal Claims has jurisdiction. For example, if § 1500 were repealed, a plaintiff would be able to begin litigating aspects of a contract claim in district court and subsequently initiate a suit before the Court of Federal Claims in an effort to find the most sympathetic forum and to stretch the government's litigation resources. While the government presumably would have the right to transfer the cases and consolidate them in one forum, the government might not learn until well into the litigation that a complaint filed in the district court involved the same dispute as a complaint filed in the Court of Federal Claims due to the minimal requirements of notice pleading. The government's ability to identify related actions would be further limited by the sheer volume of civil litigation involving the United States.

V. THE TAKING IMPACT ANALYSIS REQUIREMENT IN TITLE IV WOULD CREATE MASSIVE AND COSTLY BUREAUCRATIC RED TAPE AT THE EXPENSE OF IMPORTANT PROTECTIONS

Section 403(a)(1)(B) of the bill would require all agencies to complete a private property taking impact analysis (TIA) before issuing "any policy, regulation, proposed legislation, or related agency action which is likely to result in a taking of private property." The Administration firmly believes that government officials should evaluate the potential consequences of proposed actions on private property. Indeed, we consulted with the Senate last year on a similar requirement during its work on the Safe Drinking Water Act, and we hope to continue to work with Members who are interested in this issue.

Because S. 605 establishes such a broad definition of “taking," however, Title IV 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. At a time when the Administration is reinventing government to make it more streamlined and efficient, Title IV would result in paralysis by analysis and generate a vast amount of unnecessary red tape.

The specific requirements of section 404 are also disturbing. Among other things, it would require agencies to reduce actions that are compensable under the Act to "the maximum extent possible within existing statutory requirements." By elevating property impact above all other legitimate goals and objectives, section 404 would inevitably lead to less effective implementation of any federal protections that affect property rights.

The bill's enforcement mechanisms are unclear, but section 406 of the bill suggests that actions could be filed in federal courts to enforce the TIA requirement.

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Opponents of any government action would use legal challenges under the bill to delay or defeat the action by challenging whether an analysis must be done, whether every person with an interest received notice, and whether the analysis is adequate. Such litigation would result in an enormous additional burden on the courts' already overburdened docket.

VI. CONCLUSION

The Administration strongly supports private property rights. S. 605, however, represents a radical departure from our constitutional traditions and our civic responsibilities. It would impose an enormous fiscal burden on the American taxpayer, generate unjust windfalls for large landowners, create huge and unnecessary bureaucracies and countless lawsuits, and undermine the protection of human health, public safety, the environment, worker safety, civil rights, and other vital interests important to the American people. As a result, it would hurt the overwhelming majority of American property owners, middle-class homeowners, by eroding the value of their homes and land.

The Administration would like to work with the Congress to find ways to further reduce the burden of regulatory programs on American property owners. S. 605, however, is a ham-fisted, scattershot approach that would impair the government's ability to carry out essential functions and would impose a tremendous cost on the pocketbooks of middle-class Americans. Accordingly, the Attorney General will recommend a veto if S. 605 or any similar automatic compensation scheme or compensation entitlement program were to pass.

The CHAIRMAN. Our next witnesses will be Judge Loren Smith, the chief judge of the Federal Claims Court, who will discuss the technical jurisdictional issues which the bill resolves. The witness after Judge Smith will be Nancie Marzulla, who is president of Defenders of Property Rights. She has worked closely with us in merging the smaller bills into the omnibus bill. She is also an attorney and is familiar with the bill and I think could add a lot to this. I have a lot of respect for Nancie Marzulla.

I was going to have Roger come to the table, too, if we can make room for Roger, because Roger is a noted expert in this area and if he wants to make some comments, we will be happy to listen to him while he is here.

Our final witness on this panel will be Ray Ludwiszewski, who is the former general counsel of the Environmental Protection Agency during the Bush administration. Mr. Ludwiszewski is currently with the firm of Gibson, Dunn and Crutcher, and is very familiar with both the field of takings law and the bill itself. So we will be interested in what Mr. Ludwiszewski has to say as well.

So let's turn to you, Judge Smith, and we will look at the jurisdictional matters.

PANEL CONSISTING OF LOREN A. SMITH, CHIEF JUDGE, U.S. COURT OF FEDERAL CLAIMS, WASHINGTON, DC; NANCIE G. MARZULLA, PRESIDENT AND CHIEF LEGAL COUNSEL, DEFENDERS OF PROPERTY RIGHTS, WASHINGTON, DC, ACCOMPANIED BY ROGER MARZULLA; AND RAYMOND B. LUDWISZEWSKI, FORMER GENERAL COUNSEL, U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, DC

STATEMENT OF JUDGE LOREN A. SMITH

Judge SMITH. Thank you, Mr. Chairman. It only a little change in the name of my friend, John Schmidt. So we had Schmidt and now we have moved to Smith. It is very good to be here, and I thank the committee for the opportunity to testify on section 205 of the bill dealing with jurisdiction.

Senator BIDEN. Good to see you, judge. When are you coming home?

Judge SMITH. Well, I wanted to say, Senator, that one of the things I really am happy to be here. Senator Biden was my Senator. I miss Delaware. As I think George Washington said, it is a gem of a State, the Diamond State. I also greatly appreciated, when I was confirmed 10 years ago, that you were the first Senator who sent me a note congratulating me and giving me your support, and that has meant a lot to me, Senator.

Senator BIDEN. Things have gone downhill for your old law school since then. You are no longer teaching there and I am, and they sorely miss you and need you.

Judge SMITH. That is a good asset for the school. I know, also, a mutual friend of ours, Bill Quillan, is now teaching there. He is one of the great scholars and judges whom I know. So it is good to be here, and I also want to thank Senator Grassley for the great support he and Senator Heflin have given the court in our jurisdictional changes.

I will summarize my statement, if that is all right, rather than read the statement into the record.

In coming here this morning, I looked at the stone wall that is in front of the Court of Federal Claims and Court of Appeals, and on it is carved Abraham Lincoln's admonition that it is as much the duty of the government to render prompt justice against itself as it is to render justice among its citizens.

The bill-and, again, I think it would be inappropriate for me as a judge to comment on the substantive bill. That is a matter that the political branches, our President and our Congress, should decide, and therefore the judiciary really has its constitutional mission of taking the acts of Congress and interpreting them and applying them to specific facts. So I will just focus on the provisions of section 205 that I believe will make litigation at the Court of Federal Claims and at the U.S. district courts more efficient and more effective in the area of taking litigation and other litigation. There are four specific areas that I will briefly comment on and then, of course, be open to any questions the committee may have. The provision for concurrent jurisdiction between the U.S. Court of Federal Claims and the U.S. district courts in all taking matters would avoid the problem that now is seen as a central problem by taking litigants, and I think it is also a problem to the U.S. Government in that it raises the cost of litigation and raises the uncertainty in this area of law, of the litigant first having to litigate the claim to whether they can use the property in a U.S. district court under the APA deciding whether the action denying, for example, a 404 permit is arbitrary and capricious.

After going through that whole process, which may take several years through appeal, if the litigant then loses and finds that the agency action was not arbitrary and capricious, they still may have a taking and they still start all over again now in the Court of Federal Claims, which again is a long process.

In addition, there is risk imposed by section 1500. If they make the wrong choice or they try to do both pieces of litigation together, they may be dismissed. If they make the wrong legal analysis and conclude it is a taking and go to the Court of Federal Claims rather

than a tort, they again may be bounced out of court under the current system. Neither the district court nor the Court of Federal Claims today can give complete relief.

The provisions of the bill would greatly increase the efficiency of the litigation process. It would give the citizen the choice of which court to go to, and I think a little competition in the judiciary, like in other parts of life, is good. It places a burden on the forum that is not having an efficient procedure and it allows for the experimentation and development of the best way to handle these cases. Finally, it seems to me that the bill's giving the court these remedial changes is really the appropriate act of the Congress. It has supplied us money, it has improved the structure, and now it is giving us the remedial tools to do the job that the Congress has given us.

So I thank you, Mr. Chairman, for this opportunity to be here and I hope our views have provided some help to the committee. [The prepared statement of Judge Smith follows:]

PREPARED STATEMENT OF JUDGE LOREN A. SMITH

Mr. Chairman, on behalf of the United States Court of Federal Claims, I thank you for giving the court an opportunity to present its views on S. 605, The Omnibus Property Rights Act of 1995, that you and Senator Dole have introduced with numerous cosponsors. I also wish to thank the fine committee staff for the courteous and efficient treatment I and the court have received.

In addition to the duty to decide cases, it is the judge's duty to provide assistance to the Congress where the court's experience can aid in making the administration of justice more fair and efficient. With respect to today's testimony the court hopes to provide some information drawn from our day-to-day experience with taking and other litigation. We hope that the information on this type of litigation may contribute to the improvement of the process. I should also note that, with respect to the policy goals of this legislation, I and the court take no position as this is a matter within the discretion of the political branches of our great constitutional system.

The United States Court of Federal Claims is an Article I court whose jurisdiction was established in 1855 to do justice between the citizen and his or her government. As such, we are a court uniquely related to the Congress as our first cases were direct congressional referrals. This was at a time when the only monetary relief a citizen could obtain from a federal violation of rights was a private bill. Since 1887, the Tucker Act has provided the citizen with formal legal redress, as a matter of right, from a variety of violations. We still receive several congressional referrals along with the general and special jurisdiction cases filed each year. While the court's jurisdiction is predominantly over monetary claims in the contract, tax, and military personnel areas, we may give equitable and non-monetary relief as well. With respect to S. 605, specifically the sections addressed to judicial review, they appear to the court to address a long-standing problem whose alleviation should help both the citizen and the government more effectively resolve disputes in the courts. In the balance of my testimony, I will focus on the individual provisions of the bill, but first let me provide some general comments on the problem that the legislation addresses.

The Fifth Amendment protects some of the most vital interests of any free society. While it guarantees the fundamental integrity of the human person in both its due process and taking clauses, it is also a recognition of the need for government to undertake policies that sometimes infringe on vital and fundamental personal liberties. The decision on where to draw the lines on what is an impermissible taking and what requires just compensation has largely been given to the courts with the Fifth Amendment as their only real guide. This often creates an apparent dilemma for judges, who know they are not elected. This dilemma requires the judges to risk the appearance of anti-democratic judicial law-making in order to honor their oath and decide the taking claim. Of course, a judge must decide a claim. However, perhaps in a partial bow to the other side of the dilemma, unique jurisdictional, ripeness, and remedial barriers have been created in this body of law. This makes takings cases expensive, unpredictable in their rules, and often not very just in their results to either the public or the private citizen. While it is the judge's duty to

make such decisions with the best available understanding of the Constitution's command, it is not the best way for the body politic to make these decisions for several reasons.

First, courts operate on a case-by-case basis without any general prescriptive rules. This means that neither government nor citizen has much guidance as to what will or will not be a taking. The last 73 years of taking jurisprudence (since Pennsylvania Coal Co. v. Mahon, 260 U.S. 393(1922)) have failed to clarify the rules very much further than Justice Holmes' famous line which noted:

The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. 260 U. S. 393, 415.

This is a clear indication that the legislative and executive powers of general statutory law may be needed to set general policies.

A second reason why courts alone are not the best way of dealing with this problem is that they do not have the general expertise and responsibility for government that is held by both the Congress and the President. Courts only resolve narrow disputes; after the fact. The law-making branches can create a system that minimizes and simplifies disputes as well as preventing some of them from occurring. Finally, the history of most of the branches of law we apply has showed a beneficial interrelationship of statutory law and judicial decision-making. For example, the enforcement of various provisions of the Fourteenth Amendment's due process and equal protection clauses has depended upon the combination of judicial decisions informed and directed by various civil rights acts. Neither pure judicial decision-making nor the simple enactment of statutes has ever fully-achieved the protection of individual rights or any other major governmental policy.

The proposed legislation also addresses a jurisdictional problem that tends to bring discredit upon the courts and make litigation in this area far more expensive. I refer to the current split in remedial jurisdiction between the Court of Federal Claims (generally monetary) and the district courts (generally non-monetary). Since at least the 19th century, the traditional split between the powers to give legal and equitable remedies has been the subject of criticism. Modem practice has tended toward uniting these remedies. Under the historical system that was established to give the citizen the right to legal redress against the government, the split of legal and equitable remedies still exists. It causes the citizen-litigant, and in the longrun the government, serious problems. As the late Senior Circuit Judge Philip Nichols, Jr. noted in a contract case:

While damages are supposed or imagined to provide a disincentive to violating the legal rights of others, the government here may even enjoy incentives to commit such violation in some circumstances, when equitable relief and tort liability are both unavailable. I am not advocating judicial lawmaking, however. The matter would appear to call for congressional attention as it involves the waiver of sovereign immunity." Prudential Insurance Co. of America v. United States, 801 F.2d 1295, 1303 (Fed. Cir. 1986) (Nichols, J., Concurring).

The split between legal and equitable remedies often has the effect of requiring the citizen to sue in two separate courts to obtain full relief in what is really one case. It may require a citizen to consecutively bring a suit in a district court challenging the propriety of an administrative decision or regulation, and after all appeals have been exhausted, to start all over again seeking monetary relief.

Further, the effect of 28 U.S.C. § 15001 may even require the plaintiff to make a risky decision that could result in a dismissal of his or her monetary claim because the plaintiff had to challenge both the financial loss and the administrative decision at the same time. For this reason the court believes that the section of the bill repealing 28 U.S.C. § 1500 will significantly improve the administration of justice at the court. Section 1500 today serves no useful purpose and is a serious trap for the unsophisticated lawyer or plaintiff. This is true inspite of the Federal Cir

1See, e.g., Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1173 (Fed. Cir. 1994). For a general discussion of the existing limbo that government claims litigants face resulting from $1500 and the need for remedial legislation, see The Nash and Cibinic Report, September 1993, Notes 153, pp. 141-44; Payson R. Peabody, Thomas K. Gump and Michael S. Weinstein, A Confederate Ghost that Haunts the Federal Courts: The Case for Repeal of 18 U.S.C. § 1500, 4 Fed. Cir. B.J. 95 (Summer 1994). The Supreme Court has indicated that any relief from the current impasse must come from Congress. Keene Corp. v. United States, 113 S. Ct. 2035, 2045 (1993) ("It may well be that § 1500 operates in some circumstances to deprive plaintiffs of an opportunity to assert rights that Congress has generally made available to them. But the 'proper theater' for such arguments is the halls of Congress. • "").

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