pressors have also understood the intrinsic link between property rights and freedom. As Karl Marx explained in the Communist Manifesto: "You reproach us with planning to do away with your property. Precisely, that is just what we propose ***The theory of the Communists may be summed up in a single sentence: Abolition of private property."

II. PROPERTY RIGHTS TODAY ARE UNDER SIEGE AND COURTS HAVE NOT GONE FAR ENOUGH IN PROVIDING FOR THEIR PROTECTION

Never before have government regulations threatened to destroy property rights on so large a scale and in so many different contexts as they do today.

In just two short decades, the United States has developed, from scratch, the most extensive governmental environmental protection programs in history. Environmental regulations have become an elaborate web of intricate laws and regulations covering every conceivable aspect of property use. For example, we have regulatory programs dealing with marine protection, safe drinking water and toxic substances control. We have regulatory schemes dealing with coastal zone management, ocean dumping, global climate protection and clean water (including the wetlands program); we have federal programs regulating air emissions, automobiles, endangered species, wild horses and burros, new chemicals, chlorofluorocarbons, waste disposal and the cleanup of soils and groundwater; we regulate surface mining, underground mining, forestry, energy production, transportation of all kinds and every conceivable aspect of the use and development of land, water, minerals and other resources. But we do not have a single statute dealing with the protection of private property rights.

A. Courts alone cannot adequately protect private property rights

In 1922, Justice Oliver Wendell Holmes declared that a regulation that went too far would be recognized as an unconstitutional taking of private property. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). Since that time, courts have struggled with the question of when a regulation does, in fact, go too far. There has been no clear articulation of when the exercise of regulatory authority will violate the Just Compensation Clause. In 1978, after surveying fifty years of takings jurisprudence, Justice William Brennan threw up his hands in dismay and declared, "This Court, quite simply, has been unable to develop any 'set formula' for determining when 'justice and fairness' require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons." Penn Central Transp. Co. v. New York City, 438 U.S. 124 (1978). Justice Brennan then identified three factors which still guide courts in determining whether the Fifth Amendment has been violated: (1) the character of the government's action; (2) the reasonableness of the owner's investment-backed expectations; and, (3) the economic impact of the regulation.

Since 1978, the court has identified at least three areas which also constitute per se violations of the Fifth Amendment. In Hodel v. Irving, 481 U.S. 704 (1987), the Supreme Court held that destruction of the right to devise private property violates the Fifth Amendment. In Nollan v. California Coastal Commission, 483 U.S. 825 (1987), the Supreme Court determined that a property regulation which does not substantially advance its avowed governmental purpose also constitutes a taking. In 1992, in Lucas v. South Carolina Coastal Council, 112 S. Ct. 2866 (1992), the Supreme Court held that destruction of all productive and beneficial uses of private property violated the Fifth Amendment.

Despite these efforts by courts to flesh out Fifth Amendment guarantees, there are still many open questions in takings jurisprudence. Indeed, the most troublesome question is the one posed in 1922-determining when a regulation "goes too far."

III. TAKINGS LITIGATION TODAY IS A LONG, EXPENSIVE AND ARDUOUS PROCESS WHICH ONLY THE MOST WELL-FINANCED AND DEDICATED PROPERTY OWNER CAN ENDURE The scales of justice are unfairly tipped in favor of the government when citizens are faced with the threat of losing their property due to regulatory burdens. Not only are the laws drafted to ease the litigation burden of the government, but the costs of takings litigation can range in the hundreds of thousands or even millions of dollars, too high for the average citizen to bear. Consequently, many citizens faced with a government takings claim cannot pursue their rights under the Fifth Amendment. The government, on the other hand, does not face a similar shortage of resources (at least, in comparison to the individual property owner), and can often pursue a vigorous defense of the case without constraint. Adding to the hardship,

procedural hurdles often bar litigation on the merits of takings claims for anywhere from five to ten years, or longer!

A few examples of reported cases demonstrate how arduous and interminable the litigation of takings claims against the federal government can be:

On October 2, 1980, Florida Rock Industries was denied a wetlands permit to mine limestone on its property in southern Florida. In 1982, the company filed suit against the federal government, alleging an unconstitutional taking. Following a 1985 judgment in the company's favor, the government appealed, and the case was reversed. In 1990, following another trial, the plaintiff won again, and the government appealed. Again, the case was reversed in 1994, and is now pending yet a third trial. More than fourteen years after the original permit denial, the company is still waiting to be paid for the taking. In 1983, the Federal Government placed groundwater monitoring wells on land owned by Mr. Hendler in southern California, and issued various orders forbidding certain uses of the property. In September of 1984, Hendler filed suit against the federal government, alleging a taking. After five years of bitter litigation, the case was dismissed in December 1989. Hendler appealed, and the case was reversed by the Court of Federal Appeals in the summer of 1991. The matter is now set for trial in 1995, more than twelve years after the government first physically invaded Hendler's property.

In January 1979, Whitney Benefits Corporation was denied a permit to mine coal on land it owned in Wyoming. The company filed suit in the U.S. Court of Federal Claims in August 1983, and the case was dismissed the next year. In January 1985 the Court of Appeals reversed the dismissal and, following several years of litigation, the trial court entered judgment in favor of the plaintiff in October 1989. That judgment was affirmed in 1991, but has been followed by four more years of motions. Thus, more than sixteen years after the permit denial, Whitney Benefits has not still yet received payment for the taking. In May of 1982, Loveladies Harbor Inc. was denied a wetlands permit to develop property it owned in New Jersey, and filed suit in the Claims Court in April 1983. After extensive litigation in both the Federal District Court and the Claims Court, the plaintiff was awarded judgment in 1990. The government appealed, then moved to dismiss that appeal. Finally, in 1994, the Court of Appeals for the Federal Circuit affirmed the judgment for plaintiff-more than twelve years after the original permit denial.

IV. PROTECTION OF PRIVATE PROPERTY RIGHTS NEED NOT BE THE ENEMY OF ACHIEVING IMPORTANT SOCIAL OBJECTIVES

Legal and economic scholars have long argued that private property owners protect their property from environmental harm with greater vigor than the government. After all, it is the value of their property that will be diminished if the property is damaged. Individuals, guided by free market incentives, are often better stewards of the environment than the heavy hand of government. Nevertheless, there are instances in which the government will act to protect the environment by regulating private property. The purpose of the Just Compensation Clause is not to stop government from acting, but rather to avoid individual property owners from being singled out to pay the costs of achieving social good. In protecting the environment, we need to make sure that the Fifth Amendment's mandate that if society as a whole benefits from government actions, then society as a whole should paybe complied with.

We have heard the government regulators argue that requiring compensation for takings will prohibit the government from protecting enough land. Economically speaking, the Just Compensation Clause ensures that only property worth the cost of protecting will be regulated by requiring compensation for takings, the government is forced to weigh the costs and benefits of its regulatory schemes. The Just Compensation Clause thus protects property owners, government, and the environment property owners are protected from arbitrary government regulations that destroy the economic viability of their land. Government is protected because the Clause will slow the government from taking too much land, thus destroying the productive forces of the economy that finance government. The best stewards of land, the owners, will have the proper incentives to guard and defend it from environmental destruction with more intensity than any government bureaucrat or agency. Since no one has the right to use his property in a manner which would injure the public, those uses of private property which are public nuisances can be freely prohibited by the government. Finally, those areas deemed by society worthy

of the investment of resources to protect, or which private incentives fail to protect, can be preserved with limited and targeted regulation.

Critics of property rights proposals assert that such legislation is unfair because it only allows for the payment of compensation if property is taken. To be equitable, they assert, property owners should pay government for the benefits bestowed on them by regulation. The straight forward legal response to this position is that the Constitution does not speak to this issue. The Fifth Amendment, which contains the only express money guarantee in the Constitution, states simply that "[N]or shall private property be taken for public use, without just compensation." The obligation to pay property owners for property which has been taken simply attaches whenever government action works a taking. Armstrong v. United States, 364 U.S. 40, 49 (1960). Federal property rights legislation would merely enforce this constitutional right because courts have such difficulty in applying it in situations where property is taken due to confiscation regulations.

Additionally, examination of these so-called "free benefits" reveals such amenities are usually paid for by the property owners. Bridges do not magically appear-they are paid for by taxes imposed upon productive members of society such as property owners. The whole rationale of ad valorem taxes is to capture value added to property after purchase. Taxes come from profits made from ownership; and, special taxes are assessed from owners benefiting from services like sewer line renovation and mosquito abatement.

There is no free ride for property owners. They are not asking for a windfall from the government, just what they are constitutionally entitled to if their property is taken from them.

V. PRIVATE PROPERTY RIGHTS LEGISLATION WILL NOT BRING ABOUT ECONOMIC CHAOS

Opponents of property rights assert that legislation to compensate owners for the taking of their land will bankrupt the United States' treasury. Even if that is the case, the government should not expect to get a free ride on the backs of its citizens. Society as a whole should pay for what it takes, and not ask individual citizens to shoulder the entire burden of achieving a social objective.

More often than not, however, property rights legislation will actually reduce government costs over the long run in two important ways:

First, it requires government agencies to directly consider less expensive alternatives in proposals focusing on planning, which explicitly require government agencies to "look before they leap" by calling for a "takings impact analysis" before regulations go into effect. Compensation bills, which define a point at which a payment must be made, indirectly help keep the costs of government programs down because if government has to pay for what it takes, then government will automatically think before it destroys private property rights. Secondly, by avoiding the taking of private property, property rights bills spare government the expense of fighting lengthy and costly litigation. Either compensation will be automatically required, or the government will have avoided the taking through careful planning. Would it not have made more sense and saved taxpayer dollars to have avoided these adverse judgments in the first place?

VI. PROPERTY RIGHTS LEGISLATION DOES NOT EMASCULATE THE GOVERNMENT'S ABILITY TO KEEP INDIVIDUALS OR BUSINESSES FROM POLLUTING

To dispel another myth about property rights legislation, the Constitution only protects a person's right to make reasonable use of his property. All landowners are subject to restraints on the use of their land, such as nuisance laws which prevent owners from using their land in a way that interferes with other landowners' use of their land.

The government has always been able to prevent "harmful or noxious uses" of land without being obligated to compensate the owner, as long as the limitations on the use of the property "inhere in the title itself." That is, the restrictions must be based on "background principles of the state's law of property and nuisance" already in place. Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886, 2900 (1992).

As the Supreme Court explained, "the property owner necessarily expects the uses of his property to be restricted, from time to time, by various measures newly enacted by the State in legitimate exercise of its police powers." Id. 2899.

VII. PROPERTY RIGHTS LEGISLATION WILL NOT HINDER THE GOVERNMENT'S ABILITY TO PROTECT PUBLIC HEALTH AND SAFETY

The Fifth Amendment never forbids the government from acting to prevent imminent harm to the public safety or health, or to diminish what would be considered a public nuisance. Further, property rights bills typically provide for the government to take whatever reasonable steps are necessary to protect the public welfare without paying an affected property owner compensation.

According to literature circulated by the environmental establishment, however, current legislative proposals to protect the right to own and use property are a direct threat to not only clean air and water, but to civil rights, health care, and even cracking down on topless bars!

Fear-mongering such as this is not based in fact. It would be laughable if it had not already been successfully applied. In Mississippi, a property rights bill was almost sidetracked when opposition to the bill called the legislation the "Porn Owners Relief Measure." They argued that owners of strip bars and pornography shops could claim a taking if the city tried to shut them down. Despite these allegations, the bill exempted municipality health and safety ordinances. The damage, however, was already done.

Common sense has prevailed in the many states that have already enacted laws to protect private property rights. Polls find that while people are in favor of cleaning up the environment, they are not supportive of regulations that deny people of their rights in order to do so. This creates the opportunity to draft sensible legislation that both respects nature and constitutional liberties.

VIII. A SOUND PROPERTY RIGHTS BILL MUST CONTAIN AN ADEQUATE DEFINITION OF "TAKING" AND PROMPT COMPENSATION TO THE PROPERTY OWNER

The central problems of current takings law are dual: (1) the ambiguity inherent in a case-by-case ad hoc definition of what constitutes a taking, and (2) interminable litigation prior to payment of just compensation for the property taken. Legislation must address both of these issues if it is to ameliorate the burden placed on the property owner and to have the salutary effect of providing greater certainty for the guidance of the government and its citizens alike. I wish to underscore the point that sound property rights legislation will not only cure the injustice when a single property owner is forced to bear a burden which, in fairness, should be borne by the public as a whole; it will also provide guidance for government agencies in implementing their regulatory programs so as to avoid unnecessary government interference with private property rights.

Private property rights legislation should define a taking in terms which can readily be applied by the Courts to specific factual settings. The federal courts have provided at least two approaches to defining what constitutes a taking. The First approach analyzes the issue in terms of the diminution in value caused by the regulatory action. [See, e.g. Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470 (1987) and Florida Rock Indus. v. United States, 18 F.3d 1560 (Fed. Cir. 1994)]. The second approach analyzes the issue by ascertaining whether a recognizable property interest, deedable to the government, has been taken. [See, e.g. Loveladies Harbor Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994) and Nollan v. California Coastal Commission, 483 Ú.S. 825 (1987)]. Either of these approaches would provide far greater certainty than the case-by-case, ad hoc approach described so despairingly by Justice Brennan in the Penn Central decision. By providing to the government a bright line definition of what constitutes a taking, Congress will not only foreshorten much useless litigation but, more importantly, will allow agencies to craft their own regulatory actions so as to avoid unnecessary takings of private property.

Second, private property legislation should provide prompt and fair compensation when a taking does occur. Current takings litigation is fraught with pitfalls for the property owner. The government routinely asserts defenses such as lack of ripeness, mootness, statute of limitations, filing in the wrong court (i.e., District Court versus Court of Federal Claims, lack of jurisdiction, lack of case or controversy-to name just a few. Eliminating this procedural nightmare would do much to put the "justice" back in "just compensation". Providing an arbitration remedy might also serve to minimize the time and expense invested by both sides in litigating these complex and frustrating cases.

Finally, Congress must be careful to provide in any such legislation the full measure of just compensation. This should include, in addition to the value of the property taken, interest representing the reasonable use value of the money denied the property owner from the date of taking. The successful property owner should also be entitled to recover attorneys fees and costs of the litigation, including expert wit

ness fees (such as appraisers); for in many cases these expenses exceed the value of the property taken, at least when the litigation extends over many years.

I would be pleased to answer any questions that you may have.

The CHAIRMAN. Well, thank you so much.

Mr. Ludwiszewski, we are honored to have you here today. You have had extensive experience in this very difficult area that Senator Biden and others, including Senator Feinstein, have raised, and so we look forward to taking your testimony and I believe the committee will benefit from it.

STATEMENT OF RAYMOND B. LUDWISZEWSKI

Mr. LUDWISZEWSKI. Thank you, Chairman Hatch. As you mentioned earlier, I am Raymond Ludwiszewski. I am a partner at the law firm of Gibson, Dunn and Crutcher. Before recently entering private practice, I held a variety of senior positions at the U.S. Environmental Protection Agency, serving under then Administrator Bill Reilly between 1989 and 1993.

Before joining EPA, I served at the Environment and Natural Resources Division of the U.S. Department of Justice. In that role, I had the opportunity to help craft the U.S. position in a number of legal briefs concerning taking matters before the Supreme Court. I would like to submit my provided testimony for the record and I will now very briefly summarize it in the interests of time.

The CHAIRMAN. Without objection, all statements will be placed in the record as though fully delivered.

Mr. LUDWISZEWSKI. In my view, S. 605 offers Congress the opportunity to make several important improvements in takings jurisprudence. First, it offers three substantive improvements to the court. It helps the Federal courts struggle with three issues which they have been battling for a number of years now-it appears, at least, since 1981, and perhaps from substantially before then.

What level of regulation goes too far and triggers a taking requiring compensation under the fifth amendment, is the first question. The second is how to handle a partial taking, by which I mean the absolute deprivation of less than the entire property interest. Third, what is the correct scope and parameter of the nuisance exception, which is well recognized and I think needed in takings law, but continues to run into some creative interpretation, perhaps, by eager governments and occasionally even by some of my brethren in the bar.

The second thing that S. 605 does is it offers three important procedural improvements. The first one is the jurisdictional clarification that Judge Smith so eloquently discussed. The second is the codification of the takings impact analysis that has been in place since Roger Marzulla worked on it in the second-term Reagan administration. Finally, it affords an administrative appeal process under two of probably the most controversial environmental programs at the Federal level, the Clean Water Act Section 404 Program and the Endangered Species Act Program. This, of course, is an opportunity to get some of the controversial and difficult permit issues of those programs solved without having to take up judicial time.

In my view, these six important improvements that the act offers are very valuable. They should help facilitate citizens' ability to