tain circumstances. And this was recognized in common law of nuisance that goes clear back to preconstitutional days.

And the U.S. Supreme Court has recognized in its most recent decisions that the law of nuisance is implicit in property right. What that essentially means is you don't owe you don't have the right as a property owner to use your property in such a way that it constitutes a legal nuisance to the community.

Now, what constitutes a legal nuisance is a much narrower definition. I believe that many government regulators would want-I would guess that you would have a lot of government regulators that would want a very, very broad definition of nuisance. I think that you have to adhere rather closely to the old common law definition of noxious use.

But essentially if you can show that property owners are using their property in such a way that it does constitute a noxious use, then government can prohibit that noxious use without cost. It is when you go beyond noxious uses to securing positive benefits for the community, such as protection of turtles and acquisition of scenic easements, and all the other kinds of things we try to do by regulation. It is when you try to obtain those positive public benefits that this test will kick in and require that the public pay for those benefits.

The CHAIRMAN. Well, on the 33 percent line amount for partial takings, that arose out of a—that was a result of a number of discussions with various economists in the congressional budget office. It was believed that if we set the amount at less than 33 percent, that this would act as a disincentive for agencies to settle lawsuits. Mr. WILKINS. May well be.

The CHAIRMAN. And they would just litigate forever because the Government has more power to litigate than the average citizen, or any citizen, for that matter. Setting it above 33 percent would be unfair to property owners. So we chose, you know, 33 percent is a pragmatic compromise. Personally I would like it to be a little lower than 33 percent. But right now most people who look at it say it is probably a good bright line to start with.

Mr. WILKINS. I think it is a pretty good bright line. In fact I— the clients you know, I'm a law professor so I do not represent clients very often. But a couple of big cases, because I am a constitutional lawyer, and written in this area, I've been contacted by people in some big cases. And I'll tell you, the property owners in those big cases would have been vastly relieved.

What usually happens, from my experience, is you will take a piece of property that may be worth $10 million—and just drawing hypothetical numbers out of the air-and as a result of government regulation, that $10 million piece of property is suddenly worth $80,000 or $90,000. You are seeing diminishment in the range of 95 to 98 percent. And the courts are simply turning their backs and saying that doesn't go "too far." So anybody in that situation will be very relieved with the 33 percent line.

The CHAIRMAN. Well, I want to personally thank all six of you who have testified here today. It has been terrific to have you here. I know it has been a real inconvenience for you, but I think over the long run these type of hearings are what helps bring about change back there.

Now, this is a major change. The Supreme Court has not been willing to definitively resolve the problems and conflicts in this area. They tinkered at the edges, I agree with you, Professor Wilkins, some of the cases are very interesting and they've held out a lot of hope. As bad as the Lucas case was, it still held out some hope because at least it came part of the way, but a very, very limited part of the way.

And it's time to really have the national legislature resolve these problems because people are being torn a part by these problems only for their country. And as you can see, our three witnesses who have preceded you today, and some that you have mentioned here who have had great difficulties, really have not been treated fairly, and it is time to change that.

Now, there are many in the audience who wish to submit testimony. If there are, if you want to, anybody in the audience or anyone else, for that matter. We will keep the record open for 10 days and we would like you to mail your testimony. And we would love to have other illustrations to use for our callings back there. We have plenty of them, but we could use plenty more.

Send them to the Senate Judiciary Committee, 224 Dirksen Office Building Senate Judiciary Committee, 224 Dirksen Office Building; Washington, DC 20210.

the

And I have to say, as chairman of the U.S. Senate Judiciary Committee, we are very, very concerned about this. And I think it is about time the Senate Judiciary Committee has been concerned about these issues. Because, you know, I hear all these arguments when we have Supreme Court nominations about unenumerated rights that come out of emanations and penumbras, to borrow some of the Supreme Court language. These we are talking about are enumerated in the Constitution, they are there explicitly, and yet still the American people are not being treated fairly in many instances across the country.

So your testimony really has been important here today. We have made a record that I think is unparalleled and very important, and hopefully we can pass this bill, which would be of great benefit to our society and to everybody who believes in the right to own property, which is what has really driven the American dream through all of these last 200 years.

So this is an important hearing, for those of you who are not used to this, this is a hearing involving some of the most important principles of constitutional law that we have, and you're participating in it, and I for one want to express my gratitude to all of you who have come of interest or because you are suffering or because you just plain want to know more about what's going on in Washington and here.

I just want to thank you all, and with that we'll recess the Judiciary Committee until further notice. Thank you.

[Whereupon, at 11:15 a.m., the committee adjourned.]

THE OMNIBUS PROPERTY RIGHTS ACT OF

1995

WEDNESDAY, OCTOBER 18, 1995

U.S. SENATE,

COMMITTEE ON THE JUDICIARY,

WASHINGTON, DC.

The committee met, pursuant to notice, at 10:01 a.m., in room 226, Senate Dirksen Office Building, Hon. Orrin G. Hatch (chairman of the committee), presiding.

Also present: Senators Thurmond, DeWine, Biden, and Simon.

OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S.
SENATOR FROM THE STATE OF UTAH

The CHAIRMAN. I want to welcome everyone here to this third hearing on S. 605, the Omnibus Property Rights Act of 1995. The theme of this hearing is the effect of the modern day regulatory state on the traditional notions of private property rights. More specifically, we will explore today how federal regulations, particularly environmental regulations, impact the private ownership of property. This impact is very real for the citizens of my home State of Utah and for each of the several States.

In recent decades, America has witnessed an explosion of Federal regulation of society that jeopardizes the private ownership of property with the consequent loss of individual liberty. Today, excesses in government planning and land use regulation threaten to seriously undermine the free market and the individual's use of private property, even when such use does not demonstrably harm a neighbor's property. In other words, excesses in land use regulations collectivize property by prohibiting the owners of their property the ability to use productively their property.

S. 605 was written to fulfill the promise of the fifth amendment that no property shall be taken by the Government except for public use and with just compensation to the property owner. This bill is a moderate measure designed to balance the public's need to protect the environment against the equally important need to protect private property rights. It codifies recent Supreme Court decisions and clarifies the meanings of sometimes confusing case law. Thus, "bright-line" standards are created that will guide the Federal agencies as to what constitutes a taking. This will aid the agencies in avoiding the promulgation of rules that will result in the need to compensate property owners. S. 605 in no way prevents the Government from promulgating regulations designed to protect public health, safety and welfare. What it does do is to assure, as required

by the Constitution, that just compensation be paid when the Government "takes" a property interest.

One of the myths that has been raised by opponents of this bill is that the bill pays polluters not to pollute. Put simply, this is nonsense. The common law has for untold generations recognized that the very definition of property did not include the use of property in a manner that directly interferes with others' property interests or in a way that damages public health, safety and order. This conception has been codified in the bill as a nuisance exception whereby no compensation may be paid if the Government demonstrates that the use of private property would constitute a private or public nuisance at common law. The nuisance exception is broad enough to cover all governmental bans on pollution. No one has the right to pollute the environment. We have excellent witnesses who will address this nuisance issue.

I am also pleased to announce the very significant news that the Congressional Budget Office has just completed a study of the costs to the Federal agencies of implementing S. 605. Released yesterday, this study first concluded that costs due to increased litigation under title II of the bill would not be substantial because large claims are already litigated under the Tucker Act and the majority of new lawsuits would involve relatively small claims. Moreover, litigation costs would deter many small claims.

Secondly, CBO also found that administrative compensation costs incurred under title V of the bill will, in the short run, increase due to the increase in small claims made possible by the bill. CBO estimated these cost would, but only in the short run, amount to between $30 million to $40 million annually. This is a far cry from the tens of billions of dollars estimated by the White House.

Finally, CBO opined that the reason compensation and administrative costs will decrease over time is that enactment of the bill would encourage agencies to avoid taking actions that would cause property owners to seek compensation. The fact that the bill draws "bright-line" standards as to what constitutes a taking, requires agencies to conduct impact analyses before regulating private property, and mandates that compensation be paid out of agency appropriations, was crucial to CBO in its estimation. This is the purpose, after all, of any property rights measure—the prevention of future violations of property rights.

I regret that I, personally, will not be able to stay for today's hearings. I am very grateful for Senator Thurmond's willingness to conduct these hearings because I have to be at some other mandatory meetings.

We have three distinguished Senators who will be making statements and five witnesses, who I am confident will discuss the issues thoroughly, but the schedule of the Senate being what it is, these other meetings will keep me from this one. So I am very grateful to Senator Thurmond and Senator Biden for being willing to go through with these hearings, and I will turn the gavel over to him.

But, first, we will turn to the distinguished Democratic leader on the Committee.