PREPARED STATEMENT OF CENTRAL UTAH WATER CONSERVANCY DISTRICT

Chairman Hatch, my name is Gene Shawcroft, and I am the Assistant General Manager of the Central Utah Water Conservancy District. Don Christiansen, the District's General Manager sends his thanks for being asked to testify and his apologies for not being able to be present personally. He has asked me to officer this brief statement of support for this important legislation.

The Central Utah Water Conservancy District applauds your efforts and those of Senator Dole and the many other cosponsors of the Omnibus Property Rights Act. This legislation is fundamental to providing the full protections embodied in the provisions of the Constitution guaranteeing to each individual that his property may not be taken by government action without due process and just compensation. I am certain this Committee has heard numerous examples of how intrusive environmental regulations have denied a property owner the full benefit and enjoyment of his property. I am pleased today to be able to add the support of the Central Utah Water Conservancy District to the enactment of this important legislation. If I may, I would like to take a minute to suggest an area where the bill might be strengthened with respect to water rights and the doctrine of western state water law primacy.

In the eastern half of the country, where water is an abundant resource, water law and water rights are based upon the riparian doctrine. Under the riparian doctrine, water rights run with the land and are attached to real property when it is sold from one owner to the next. Under riparian water law, the owner of real property also owns the water attached to it.

In the western United States, water is a scarce and limited public resource which is used over and over again by one downstream user after another. We westerners follow the doctrine of prior appropriation in water law. Western water rights generally follow a rule of first in time, first in right. The right to use water does not, however, convey the right to own water.

Under the prior appropriation doctrine the "right" to use water does not run with the land nor is it associated with real property at all. As you know there are many stories of fraudulent desert land developers who sold property to easterners without any water rights attached to it.

Under western water law, the "right" to use water is regulated by the state water engineer who determines when, where, and how much water may be put to beneficial use by any individual. Western water rights issued by the state usually always have conditions placed upon them which burden their use.

Local governments often enact ordinances which further restrict an individual's right to use water during times of drought or for public health and safety purposes. In addition, the State Engineer will sometimes "adjudicate" the rights of a river system where there are many competing water right holders. Often after an adjudication, there are some disgruntled water right holders whose prior usage has been reduced.

Finally, when a water development project like the Central Utah Project is overlaid on top of preexisting projects such as the Provo River Project or the Strawberry Valley Project, there is a need for the State to obtain an operating agreement which will coordinate the projects water supply to produce more efficient use of the re

source.

Due to the completion of Jordanelle Reservoir, such an operating agreement was negotiated last year for the Provo River system and was brought about with the assistance of the Bureau of Reclamation and the State of Utah. This important agreement provides for the coordinated use of Jordanelle and Deer Creek Reservoirs to maximize the storage and delivery of water and to provide adequate protection of stream flows for fishery purposes.

In the Omnibus Property Rights Act, the definition of "property" and "private property" includes "the right to use and receive water". A prior appropriation water right is not private property in the same manner as a riparian water right. The difference between the nature of riparian and prior appropriation water rights is important as you consider requiring federal, state and local governments to provide compensation for actions taken which reduce the value of such rights.

We believe the bill could be strengthened to provide some differentiation between riparian and prior appropriation water rights. I am certain that the authors of the draft legislation did not intend to create a new federal cause of action for every disgruntled water right holder any time his use of water is in some legitimate way altered such as in the examples I have provided above.

We would be happy to have our Washington, D.C. counsel, Mr. Marcus Faust, whom you know, work with you and your staff to address this issue. Once again, I thank you for asking us to testify. Good luck as you move this bill forward.

PREPARED STATEMENT OF ROBERT C. FILLERUP

During a recent telephone conversation with Ron and Karen from your office, they mentioned that you were interested in cases where wetland determinations had a significant impact on a person's life. I currently represent a client involved in one of these "horror" stories.

Before I relate the story, let me give you some background. I have represented the Utah Lake Landowners Association since the early 1980's. I was the attorney that filed the multi-million dollar lawsuit on behalf of the landowners because of the flooding of Utah Lake in the 1983-5, and was plaintiffs' counsel in negotiating the new compromise agreement of 1985. I currently represent several of these landowners in the condemnation action involving the Provo City Airport expansion. I also currently represent the Utah Lake Landowners in the ongoing settlement negotiations with the State of Utah concerning the ownership boundary of the bed of Utah Lake. As a result of my continued representation of landowners around Utah Lake, I have been forced to become somewhat of an expert on wetlands issues. I tell you of my representation of these folks, not to boast, but to let you know that I am not just casually involved with wetland problems.

And now to the "horror" story at hand. One Wendell Averett, a resident of Springville, Utah owns some 23 acres of land immediately east of 1-15 and just north of the first exit off of the freeway to Springville as you are going south from Provo. This road is known as SR-75, and is the highway that passes by Valtek, Stoffer Foods, etc., on the way to its connection with US-89 at the north end of Springville. Immediately south of the Averett property, across this highway, is a large commercial development, known as Mountain Springs, consisting of a truck stop, hotel, restaurant, an associated businesses. This development is continuing to expand even

now.

Wendell has a close friend (in fact his LDS bishop) named Roger Olsen, a real estate agent who for years has specialized in listing and selling farmland through his Utah Farm Realty. Roger became aware of a company interested in purchasing Wendell's property for a commercial development, and on July 15, 1994, Wendell signed an agreement to sell the property for $30,000 per acre. ($716,100 total).

In the process of purchasing, the developer inquired whether there were any wetlands problems, since there is an open drainage ditch on the far west end. Mr. Olsen indicated that he didn't think there were any, since the parcel was currently a corn field, but agreed to check with the Corps of Engineers. Upon inquiry, COE informed Roger that the property was not listed as jurisdictional wetlands, but because it was agricultural, he needed to contact the local office of the Agricultural Stabilization and Conservation Service (ASCS). Unfortunately, Roger dutifully complied.

ASCS told Roger that Wendell would have to come in and sign an "AD-1026" form requesting a wetland determination, which Wendell did on August 3, 1994. ASCS then referred the matter to the local Soil Conservation Service (SCS).

Only two days later, on August 5, 1994 the SCS issued its first determination in this matter. (Exhibit A). The determination indicated that there were 10 acres that SCS had decided were wetlands, and the map attached to the determination indicated those areas. By August 8th, Roger was in the SCS office, and according to the SCS file, was questioning the presence of wetlands and the acres identified as wetlands (10 acres) on the SCS-CPA-026." (Part of the record on appeal, attached as exhibit E). Roger could not believe that the areas indicated constituted wetlands, and questioned whether the areas indicated on the map would add up to 10 acres. SCS then proceeded to do a "redetermination" of its previous determination. The end result was the issuance of a new determination dated September 27, 1994, (but issued September 15th) which indicated that the entire parcel had now been determined to be wetlands. (Exhibit B).

Between the time that SCS issued its first determination on August 5th, and its redetermination on September 15th, the Corps of Engineers issued a Public Notice concerning the expansion of the South University Avenue interchange in Provo by the Utah Department of Transportation (UDOT). (Exhibit C). A copy of this notice was sent to Wendell Averett, because part of UDOT's plan included taking Wendell property as a wetland mitigation site. This notice was the first time that Wendell had ever been aware that UDOT was including his property as part of its plan. Its clear from the record that SCS and COE were communicating about Wendell's property between the two determinations and during the issuance of the Public Notice

by COE. I have not established, and probably could not establish, any direct connection between what UDOT and COE had in mind for Wendell's property, and the fact that SCS "redetermined" the entire parcel to be wetlands, but I have my suspicions. Because of the wetland determination by the SCS, the COE on October 14,1994, asserted jurisdiction over Mr. Averett's property. (Letter attached as Exhibit D).

In any event, I appealed the wetland determination to the local SCS office, which referred it to the State Soil Conservationist, Mr. Philip Nelson. A copy of that appeal, including the record on appeal, is attached as Exhibit E. As might be expected, Mr. Nelson affirmed the original determination. What was totally unexpected is that Mr. Nelson, without any prior notice to me or Mr. Averett, and without any opportunity on our part to respond, solicited additional information from several agencies to confirm the decision that was being appealed. A copy of Mr. Nelson's decision is attached as Exhibit F.

I have now appealed to the National Office of the SCS (technically now its the NRCS) and a copy of that appeal is attached as Exhibit G.

I believe that reading the appeals, with the documentation attached, should fill in most of the gaps. In addition, the entire record, including photos and maps, could be examined or copied at the national office of the SCS in Washington, D.C. A copy of the acknowledgement of receipt of the appeal is attached (Exhibit H) for ref

erence.

The bottom line of all of this is that Mr. Averett had a parcel of ground which he sold on July 15, 1994 for $716,100. By the end of September, 1994, because of the wetland determination, the property was worth about $30,000. This whole affair has made Mr. Averett a nervous wreck, and it is clearly affecting his health. By the way, the buyer has now backed out of the deal.

Thank you,

ROBERT C. FILLERUP.

[EDITOR'S NOTE: Exhibits "A" through "H" are retained in committee files.]

PREPARED STATEMENT OF LON HENDERSON

I appreciate the opportunity you have given me to more fully explain Heritage Arts Foundation's conflicts with the United States Fish and Wildlife Service ("FWS") over the last several years. We believe that our experience provides compelling evidence of the need for prompt passage of S. 605. We very much appreciate Senator Hatch's willingness to co-sponsor this important legislation. Hopefully, S. 605 will pass as easily as the House version did in arch. What follows in this memorandum is a brief description of Heritage Arts foundation ("HAF ") and its disputes with FWS over application of the endangered Species Act to property owned or used by HAF.

HAF is a nonprofit corporation qualified under Section 501(c)(3) of the Internal Revenue Code HAF's primary purpose is to support the performing arts by providing facilities and other funding for arts education, artistic performances, and related community activities. HAF recently completed construction of the Tuacahn School and Performing Arts Center ("Tuacahn") on an 80-acre site near the City of Ivins in Washington County, Utah. Tuacahn cost over $18 million to construct, and includes an outdoor amphitheater and a complex of buildings and indoor stages where performing artists can be trained, rehearse, and perform. The funds for construction came almost exclusively from private donations.

Prior to commencing construction of Tuacahn, HAF commissioned a biological survey of the 80-acre construction site to determine whether there was evidence of ally species protected by the endangered Species Act. The primary target of this survey was desert tortoises. Desert tortoises are protected by the Endangered Species Act. See 16 U.S.C. §§ 1531-1544. They inhabit vast areas of the Southwestern United States, including parts of California, Nevada Arizona, and Southern Utah. There are an estimated 7,883 desert tortoises inhabiting Washington County, Utah alone. The biologist conducting the survey found no evidence of desert tortoises or other protected species at the construction site. However, during the construction of Tuacahn, HAF and FWS exchanged several letters concerning the potential risk of harm to desert tortoises due to HAF's use of a 14 mile unpaved access road which leads from Snaw Canyon state Park Road to the Tuacahn site. That road is not owned or controlled by HAF.

As a result of those letters, HAF took steps to protect tortoises from harm during construction. Unfortunately, after about a year and a half of construction and use of the access road, two dead tortoises were found on the access road in May 1994. HAF promptly notified FWS after discovering each tortoise, Despite FWS' knowledge of HAF's use of the access road, FWS elected to vigorously prosecute HAF

under the Endangered Species Act. FWS divulged that it was prepared to completely shut down construction at Tuacahn, despite the millions of dollars in funds already expended and the possibility that construction would not resume for an indefinite time due to scheduling conflicts with the contractors working at the site. Indeed, as a result of FWS' actions, HAF was compelled to request the City of Ivins to shut down the access road to motorized traffic, which Ivins did. HAF was also forced to hire expensive legal counsel to advise it on how to proceed,

After months of intense negotiations, HAP and FWS entered into a court-approved Stipulated settlement. The settlement provided that, as restitution for the two dead tortoises, HAF would pay a $20,000 penalty and immediately prepare and submit an "incidental take permit" application to FWS despite the fact that a county-wide conservation plan was then pending with FWS which would have permitted incidental "takes" of desert tortoises along the access road, Until the "incidental Lake permit" is issued, HAF must disseminate flyers about desert tortoises to all users of the access road and retain a biologist to conduct additional biological surveys searching for signs of desert tortoises. The settlement also required installation of a special tortoise fence along the access road and employment of trained tortoise monitors to walk along the road to ensure that tortoises did not venture onto the road or become entangled in the fence. If a tortoise is found along the access road, HAF is required by the settlement to close the road and contact a FWS-approved biologist to investigate the incident at HAF's expense and make recommendations to avoid future mishaps.

After great cost, time, adverse publicity, and emotional anguish, HAF was permitted to resume construction and complete the Tuacahn facilities. Some have speculated that FWS chose to "single out" HAF for especially harsh treatment in order to force other Washington County land-owners into additional concessions to be written into the Washington County conservation plan. We have no hard evidence of this, but we do feel that our activities have been subjected to unusually close scrutiny by FWS.

For a time, HAF seriously considered pursuing this matter in court. We felt and continue to feel that FWS' proposed injunction, which would have shut down all use of the access road and would have effectively ended the dreams of many, would have constituted a regulatory "taking" of HAF's property by the federal government without just compensation as required by the Fifth Amendment. In our view, FWS' action, if successful, would have denied HAF economically viable use of its property, thereby requiring compensation. See Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886 (1992).

However, due to the costs and time involved in fully pursuing such litigation, HAF elected instead to enter into the Stipulated Settlement described above. HAF had also been advised by legal counsel that such a court battle, even if waged, may not have been successful. As you may know, no property owner has ever successfully claimed that an application to the Endangered Species Act which reduces or eliminates the economic value or possible uses of private property constitutes a "taking" under the Fifth Amendment. See R. Meltz, "ESA & Private Property: Where the Wild Things Are: the Endangered Species Act and Private Property," 24 Envtl. L. 369, 385 (1994). Moreover, HAF feared a result as puzzling as that in Christy v. Hodel, 857 F.2d 1324 (9th Cir. 1988), in which a property owner, after losing 20 sheep to grizzly bears, shot one of the bears and was fined $2,500 by FWS for violating the Endangered Species Act.

Precisely because HAF felt so helpless to prevent a result which deemed manifestly and profoundly unjust, we fervently hope that S. 605 passes. If S. 605 would have been law during our confrontations with FWS, we would have had an avenue to pursue that would have guaranteed that our property rights would have been protected. I would be happy to discuss these matters further with you. Please feel free to call me at (801) 674-7100.

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OCTOBER 18, 1995

PREPARED STATEMENT OF SENATOR DIANNE FEINSTEIN

Mr. Chairman, when we legislate in the area of property rights, we need to approach the responsibility with the sensitivity that the difficulty of the task deserves. Individual nights should be honored and protected. But our task also includes promoting public health, public safety, and protecting the environment.

I plan to give very serious consideration to the concerns of property owners when I look at the ways our various federal statutes are structured and enforced. But I oppose this bill, because I believe that it is an extreme and costly measure that would open the floodgates of litigation and cripple the federal government in its efforts to create safer and healthier communities for all its citizens.

A free-standing "takings" bill such as S. 605 represents the wrong approach to protecting the rights and interests of property owners in the United States. Many years of Supreme Court jurisprudence have shown us that takings questions should be resolved on a case-by-case basis. Landholdings are unique, statutory and regulatory programs differ in their purposes and application, and impacts on property owners vary widely. As even the most conservative Supreme Court Justices consistently have held, a balancing of several factors is required to determine when “fairness and justice" requires government compensation under the 5th Amendment.

In short, "one-size-fits-all" takings legislation such as S. 605 will stimulate speculative claims, create endless litigation, and cripple federal agencies.

The Clinton Administration already has begun to examine federal programs to better accommodate landowners, particularly small landowners. This Administration has made great strides in building more flexibility into the Endangered Species Act and the wetlands program of the Clean Water Act. I urge the Administration to continue on this path. If there are areas where the federal government has been overbearing, we need to study these cases. We need to gain a better understanding of the kinds of situations that give rise to valid takings claims, and to work to find solutions on a program-by-program basis. At the same time, we cannot tilt the scales entirely in favor of individual property owners-we cannot sacrifice programs that protect the health and safety of our communities.

I. WHO WILL PAY FOR S. 605

The bill requires that funds for a vastly-expanded number of takings judgments should be withdrawn from individual agency appropriations. Where will this money

come from?

• Discretionary spending is scheduled to reach its lowest level as a percentage of GDP since World War II. The appropriations bills proposed by the current Congress would cut $441 billion from discretionary spending over the next seven years.

• According to the Office of Management and Budget (OMB), "[s]ince the costs (of S. 605) would fall under PAYGO provisions of the Budget Enforcement Act, [expected costs for takings payments] could prompt a sequester of other mandatory programs, forcing automatic across-the-board cuts in medicare, veterans' readjustment benefits, various programs that provide grants to states, child support administration, farm income and price supports, agricultural export promotion, student loans, foster care and adoption assistance, and vocational rehabilitation."

Legislation such as S. 605 would have the effect of limiting still further the funds available for crucial governmental services. It will involve tradeoffs, substantial tradeoffs, to the extent that I am unwilling to endorse.

Furthermore, Federal takings legislation, if passed, would serve as a precedent for the enactment of similar legislation at the State and local levels.

Future State or local takings legislation could seriously undermine important planning tools such as zoning laws and setback requirements. County and municipal governments, already strapped for funds, would be forced to withdraw funding for other important programs.

It is no wonder that takings legislation like S. 605 is opposed by organizations such as the National League of Cities, the American Planning Association, the National Governors Association, the National Conference of State Legislatures, thirtythree State Attorneys General, the United States Conference of Mayors, the National Trust for Historic Preservation, the Consortium for Citizens with Disabilities, and the National Institute of Municipal Law Officers.