advanced knowledge of the leaks in time to correct them. We consider the regulation put in place following the disastrous leak to be private property protection legislation. The owners of the tank farm had a responsibility to operate a safe facility. Takings legislation would require homeowners to pay to prevent having their property damaged by irresponsible neighbors. We feel this would represent an enormously unfair financial burden on the homeowning taxpayer. Government at all levels must ensure basic safeguards so that people need not fear unnecessary damage by other property owners because they live downstream, downwind or downhill. The Mantua oil spill demonstrates the need for environmental protection laws to protect property rights in another respect as well. Following the discovery of the spill, a number of homeowners filed suit based on Virginia nuisance law to recover loss of their property values. Unfortunately, last April, a Federal Appeals court rejected the suit and concluded that the homeowners could not recover for loss of value because the underground spill was not physically perceptible from the homeowners' property. This result clearly demonstrates to us the inadequacy of nuisance law to protect homeowners and a need for reasonable across-theboard regulations and standards to meet today's problems. Common and codified law is full of examples of regulations preventing property owners from harming others or the community as a whole. For example, materials and practices which create fire hazards are regulated. The condition and operation of motor vehicles is regulated. At the national level, Clean Water legislation and other environmental laws protect our communities, our homes and our wallets. To require homeowners to pay to prevent damage caused by irresponsible land use nearby will be costly, is unnecessary and goes against our basic American values of owning our own homes. All property owners are and should be entitled to constitutional protection, but certain landowners should not be the beneficiaries of what we feel could be a new entitlement program that would pay them for the costs of complying with the standards that protect the majority Senator THURMOND. I believe your time is up. Are you about through? Ms. PIERCE. One sentence. We believe this bill to be hurtful to our members as taxpayers and homeowners. Thank you very much. Senator THURMOND. Thank you. Mr. Joseph Sax? STATEMENT OF JOSEPH L. SAX Mr. SAX. Mr. Chairman, I am Joseph Sax, counselor to Secretary Bruce Babbitt, Department of the Interior. Thank you for the opportunity to testify this morning. In addition to my written statement, I would like to submit for the record testimony previously given by other Administration witnesses before the Committee on Environment and Public Works on this bill, S. 605, and other related bills. Senator THURMOND. Without objection, they will be admitted. Mr. SAX. Thank you, Mr. Chairman. In testifying today, my primary concern is to dispel the misconception that S. 605 does no more than to implement or to reflect the private property protection embodied in the fifth amendment and also to speak about the nuisance defense. On the contrary, S. 605 embodies a radical departure from the constitutional standard adopted by the Supreme Court. For 150 years, the interpretation and meaning of the takings provision of the Constitution has been vouched safe to the Supreme Court of the United States. All during that period, in every era and every Justice, with a remarkable degree of unanimity, regardless of their views otherwise, have interpreted the takings provision in a way that is inconsistent with each of the primary elements of this Bill S. 605. They have rejected the segmentation notion implicit in this bill under the affected portion language. They have required that expectations be taken into account, which play no role in this bill. They have said the diminution of value alone, except where all value has been taken away, is not a sufficient standard. They have rejected the notion that any single factor, such as diminution, is decisive, and they have said that nuisance need not be present in order to disallow compensation. It would be hard to find an issue of any kind of constitutional interpretation on which there has been such widespread unanimity. I would urge that the greatest caution be exercised before departing in the radical way that this bill does from the collective judgment and the collective wisdom of the court over so long a period and with such unvarying consistency. I would like to turn now to the nuisance defense and to supplement the comments that were made earlier by Senator Biden. Section 605 contains a narrow exemption, which would avoid a duty to compensate if the regulated use constitutes a nuisance. The court has expressly rejected a taking standard that required a determination of whether a regulated activity was a nuisance according to the common law. Because so much conduct falls outside the scope of the nuisance doctrine, the court has routinely allowed regulation for conduct that was not a nuisance; destruction of diseased trees, liquor prohibition and conventional urban zoning. Neither common law nuisance nor the novel formulations in other bills provide the public with adequate protection. Many environmentally harmful activities now regulated by Federal law are not nuisances in at least some states, though they may be nuisances in others. Of course, there would be an enormous divergence of result and lack of uniformity under this bill. Some of them have been mentioned earlier; flooding caused by filling of adjacent property, hazardous waste contamination of property, ground water contamination, asbestos removal and contamination of a creek by a leaking landfill, all cases of pollution, all governed by Federal law. These are the examples that have led opponents of the bill to say that this bill would generate, in some circumstances, a duty to compensate polluters for not polluting, since nuisance law was never intended and has never served as a complete protection of all human health risks and other threats to the public welfare. Indeed, the reason Federal environmental laws were enacted in the first place was to address problems that were not being adequately addressed under state nuisance law in the legislative history of the Clean Air Act and the Clean Water Act are explicit on that point. There are several reasons why nuisance law has proved inadequate to control matters such as widespread pollution. Many of those were expressed by Senator Biden, the technical requirements of nuisance law. There are many critical Federal activities that are not governed by nuisance, but are governed by Federal law, interstate matters and others. I see that my time has expired. Thank you. Statement of Joseph L. Sax Counselor to the Secretary U.S. Department of the Interior Before the Senate Judiciary Committee October 18, 1995 Mr. Chairman, and Members of the Committee: Thank you for the opportunity to testify today on proposed compensation legislation, and on the extent to which such proposals depart from the constitutional standard set by the United States Supreme Court over the course of our national history. I want to call particular attention to the nuisance defense, and its insufficiency, as well as its potential for generating protracted and costly litigation. In this respect, I would like to call to your attention the recent testimony of Office of Management and Budget Director Alice Rivlin, before the Senate Environment and Public Works Committee, in which she estimated that the House-passed compensation bill (H.R. 9) would impose about $28 billion in new costs over seven years, and that S. 605, if enacted, would potentially cost several times that amount. S. 605 would require payment in countless instances where an owner would not be entitled to compensation under the Constitution, and it would require Government to pay much more when it does compensate. It does this by requiring payment when regulation diminishes the value of any portion of property below its most profitable use, regardless of the illegality of that use or of the property owner's reasonable expectations It would also allow recovery of lost business profits, a measure of recovery not permitted in compensation cases. S. 605 would thus grant windfalls to those who declare their intention to use their property in violation of federal law. For these and other reasons, letters previously sent to you from many Executive Branch Departments have expressed strong opposition to S. 605, and have stated that if that bill in its current form or any similar legislation is sent to the President, a veto will be recommended. This Administration is unqualifiedly committed to assuring protection of the rights In testifying today, my primary concern is to dispel the misconception that S 605 does no more than to implement or reflect the private property protection embodied in the Fifth Amendment On the contrary, 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. For more than 150 years, and in dozens of cases, the Supreme Court has spoken with extraordinary consistency on the fundamental rights of property owners. These decisions include both 5th Amendment "takings" cases as well as those that have arisen under the rubrics of due process, and the obligation of contract. Justices in every era and of all stripes of opinion, stretching all the way from Justice Taney in the Charles River Bridge' case in 1837, to the first Justice Harlan in Mugler,2 and Justices Sutherland in Euclid, Stone in Miller v. Schoene, Holmes and Brandeis in Pennsylvania Coals and Holmes as well in Erie Railroad and Block, Brennan in Penn Central, Stevens in Keystone, Scalia in Nollan 10 and Lucas," Souter in Concrete Pipe, 12 and Rehnquist in Dolan, 13 have sounded a consistent theme. While this is by no means the entire pantheon of cases and justices, it is strikingly illustrative of the singularity of view the Court has taken about the basic rights of property owners over virtually the whole of our nation's history. Taken together, this body of precedent offers the collective judgment of the Court as an institution, transcending particular differences among justices, and the particular circumstances of a specific moment in the nation's history. The Court's consensus has focused largely on the very issues raised by the pending legislation, issues such as diminution of value, segmentation of property, the importance of expectations in determining compensability, the effects of nuisance law on regulatory authority, and the limitations of a single, supposed "bright-line" standard. The cornerstone of the Court's reasoning has been that each case must be considered on its own facts. The mechanical, one-size-fits-all language of S. 605, which mandates compensation when use of any "portion" of a property has been limited repudiates the Supreme Court's counsel to eschew set formulas and to recognize that the requirements of fairness can only be determined in the setting of a particular factual inquiry. S. 605 radically departs from and misapprehends the Constitutional approach in the way it addresses the following subjects: 2 3 Charles River Bridge v. Warren Bridge, 36 U.S. 341 (1837). Supra. Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). Erie Railway Co. v. Board of Public Utility Commissioners, 254 U.S. 394 (1921). 8 Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978). 9 Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987). 10 Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987). 11 Lucas v. South Carolina Coastal Council, 112 S.Ct. 2886 (1992). 12 Concrete Pipe & Products of California v. Construction Laborers Pension Trust for Southern California, 113 S.Ct. 2264 (1993). 13 Dolan v. City of Tigard, 114 S.Ct. 2309 (1994). 1. The Proposition that diminution in value alone--short of loss of all economic viability is a key to compensation. Bills that provide compensation based solely on reduction in value represent a departure from the Constitutional standard. Only two years ago, the Supreme Court unanimously stated that "our cases have long established that mere diminution in the value of property, however serious, is insufficient to demonstrate a taking."14 This reflects the Court's unwavering recognition that, while the extent of a reduction in value is relevant to determining whether an action works a taking, it is almost never decisive. Under S. 605's mechanical approach, when a portion of property value can be shown to be reduced by 33%, an owner is automatically entitled to compensation (subject only to sharply limited defenses). It does not require consideration of the owner's reasonable expectations, or whether the owner can continue to earn a reasonable return from the property with the use restriction. It does not consider the impact of the proposed use on neighboring property owners or on the public at large. It may even encourage owners to seek approval for potentially lucrative uses they have no intention of undertaking. It does not even require the proposed use to be a legal one. The mechanical formula in S. 605 also may allow claims that effectively turn a public subsidy into a compensable property right. One such example is illustrated by the Federal reclamation program. If the government orders individuals receiving water from a Federal reclamation project to stop practices that cause excessive runoff and resulting water pollution, S. 605 could be read to obligate the government to pay the water users the fair market value of the water, rather than its actual cost. Where users receive Federal reclamation water at subsidized rates, and the difference between subsidized and fair market rates is large, a substantial windfall should result. Notably, in some states, state laws expressly provide that such activity is not a nuisance, private or public. 2. An invitation to segment property, both by percentage diminution standards and by directing compensation to the "portion" of property affected by regulation. ... In assessing the fairness of regulatory burdens on property, the Court has consistently examined the property as a whole, rather than segmenting it into smaller parts. The entire Court joined Justice Souter's recent reminder that "a claimant's parcel of property [can]not be divided into what was taken and what was 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.' Even more recently, Chief Justice Rehnquist, writing for a majority, indicated there could be "no argument" to support a claim that a property owner has been denied all use of one portion of her property when she "operates a retail store on [another portion of] the lot."16 #15 |