to compensate landowners for anything other than a physical taking or regulatory action that leaves a landowner destitute,21

MODIFYING AGENCY BEHAVIOR

Requiring the federal government to pay compensation when reasonable land uses are restricted or prohibited can also encourage à more proper calculation of the costs and benefits of proposed regulatory actions. If political entities are able to effectively take property through regulatory activities without paying compensation, there is no incentive to consider the costs of the proposed regulation and such costs are likely to be ignored. There is thus no incentive to prioritize, and every incentive to take as much as possible. This was explained by the New York State Court of Appeals in Fred F. French Investing Co. v. City of New York:

[T]he ultimate economic cost of providing the benefit is hidden from those who in a democratic society are given the power of deciding. * * * When [the social cost is] successfully concealed, the public is not likely to have any objection to the 'cost-free' benefit.22

An example of this can be seen in the case of wetlands regulations, the primary means by which the federal government seeks to prevent the net loss of wetlands. The cost of protecting a single acre of wetlands can reach the hundreds of thousands of dollars due to the costly delays and legal conflicts that the regulatory process produces. However, other approaches to wetlands conservation, such as mitigation, restoration, and the purchase of conservation easements can preserve wetlands at a fraction of the cost. Forcing agencies to pay for the private property rights that they take through regulatory action will encourage them to examine non-regulatory approaches to achieving their statutory goals.

S. 605 achieves this purpose by providing that compensation for regulatory takings be taken from the annual appropriation of the agency responsible for the regulatory taking. Such a provision is likely to achieve the desired result of modifying agency behavior and restoring regulatory accountability.

Agencies seeking to regulate private land use will be forced to consider whether regulatory actions would produce a regulatory taking, and, if so, whether the benefits of the proposed regulatory action are worth the costs of paying compensation. This will induce agencies to prioritize and forego regulating nonharmful land uses when regulation is not truly necessary. This is because irresponsible regulation of reasonable land uses could deprive agencies of resources necessary to achieve their statutory missions. Agencies will no longer view land-use regulation as a cost-free solution of first resort. Rather, land-use regulation will only be pursued when the benefits appear to justify the costs or when other options are impractical or more costly. Arguing against takings compensation proposals, Joseph Sax asserts that S. 605

would force a choice between two equally unacceptable alternatives. Because compensation would be paid directly out of agency budgets, agencies would be required to either redirect funds from priorities established by the legislative process or refrain from executing mandated programs altogether. Either way, *** the public suffers.23

This argument presumes that the public interest is served whenever government regulates private land-use. Speaking as one who focuses on federal environmental regulation, this is simply not the case.24 Much federal environmental regulation does nothing to protect public health. Some environmental regulation actually causes environmental harm. When fires swept through Riverside County, it was not only people that lost their homes-the endangered Stephens' Kangaroo Rats did as well as their habitat went up in flames. The sad fact is that existing administrative requirements are insufficient to ensure that agencies consider the likely impacts of their options. Therefore many rules are enacted that produce minimal benefits while imposing extraordinary costs. Only those with an unquestioning faith in the wisdom of regulatory bureaucracies would wish to leave this situation as it is.

21 In fact, this charge could certainly be made against Joseph Sax, who has led Interior Department opposition to takings compensation proposals. See Sax, "Takings, Private Property and Public Rights," 81 Yale Law Journal 149 (1971).

22 39 N.Y.2d 587, 596-7, 385 N.Y.S.2d 5, 11(1976).

23 Sax.

24 See, for example, Stephen Breyer, Breaking the Vicious Circle: Toward Effective Risk Regulation (Cambridge: Harvard University Press, 1993); and, Environmental Politics: Public Costs, Private Rewards, M. Greve and F. Smith, ed. (New York: Praeger, 1992).

Under current law, so long as the government can provide for public goods through the imposition of regulatory takings, it will continue to do so, with little regard for the impact such actions have on landowners. Indeed, given the fact that government does not pay for the costs of regulatory takings, it should be no surprise that the government typically opts for coercive land-use regulations to achieve environmental goals, even when other approaches are available, are far less costly and would more effectively safeguard the environment.

PROPERTY RIGHTS VS. THE ENVIRONMENT

As alluded to above, a standard charge against paying compensation for regulatory takings is that it would amount to "paying polluters not to pollute" and therefore would undermine the protection of public health and safety. This represents a fundamental misunderstanding of the nature of property rights and the proper role of government in protecting them.

The proper aim of federal government efforts to protect "the environment" is to prevent the imposition of harmful substances upon unconsenting persons and their properties; and, failing that, punishing those who transgress against others in this manner. This is the aim of controlling pollution-controlling the unwanted imposition of wastes or toxins by one party on another. Pollution, properly defined, is a "trespass" or "nuisance" under the principles of common law. If the imposition is so minor that it creates no impact or inconvenience for the property owner, it will normally be tolerated. Otherwise it will likely result in legal action of some kind.

Many of the pollution problems with which people are familiar are not the result of too many private property rights, but too few. These problems are often the result of what is essentially a universal "easement" granted by the state to polluters, even to producers of significant and damaging pollution.25 This action by the state is of the same kind as regulatory takings-in each case the government is violating the rights of property owners in order to pursue some conception of the "public good." In the case of easements that permit "acceptable" levels of pollution the "public good" is efficiency or some other utilitarian measure. In the case of most current federal land use restrictions, the "public good" is the preservation of an environmental amenity or value that "the public" has deemed worthwhile. The federal government certainly has the power to pursue these objectives, however it is imperative that its power be restrained by requiring the payment of compensation to those landowners who are injured in the process.

TAKINGS VS. THE ENVIRONMENT

It must also be recognized that efforts to regulate land use—to “take” private land without compensation-is often bad for both landowners and the environmental values that the government regulation is designed to protect. If the specter of environmental regulation hangs over private land use decisions, private landowners will be less likely to invest in environmental improvements on their lands. Such stewardship actions will entail costs to the landowner with no reasonable expectation of future benefits. One can understand this phenomenon if one thinks of the likely result were the government to declare a policy of "protecting" pretty houses by imposing a series of regulatory restrictions upon families living in any homes that met the federal definition of "pretty." Under such a regime, no rational homeowner would beautify his or her home, lest it fall prey to government regulation that could restrict their freedom within their home. Rather than preserve the stock of pretty houses in America today, such a policy would likely prevent the construction or restoration of pretty homes ever again.

Even the Fish and Wildlife Service has acknowledged that the threat of federal regulation on private land has led to habitat loss. In the Pacific northwest, habitat destruction has been encouraged by land-use restrictions imposed to protect the northern spotted owl. Earlier this year the FWS reported in the Federal Register that these regulations have made private landowners fear the lost use of their land and that "this concern or fear has accelerated harvest rotations in an effort to avoid the regrowth of habitat that is usable by owls. 26

That landowners would respond in this manner to the imposition of federal landuse controls should not be surprising. Michael Bean characterizes them as "fairly rational decisions motivated by a desire to avoid potentially significant economic

25 Indeed, it is important to recognize that many federal statutes have effectively preempted traditional common law remedies to pollution problems. See Illinois v. Milwaukee, 406 U.S. 91 (1972) and Milwaukee v. Illinois, 451 U.S. 304 (1981).

26 60 Federal Register 9507-8 (February 17, 1995).

constraints." "27 Sam Hamilton, former Fish and Wildlife Service administrator for the state of Texas explains this more fully: "The incentives are wrong here. If I have a rare metal on my property, its value goes up. But if a rare bird occupies the land, its value disappears." 28

What Sam Hamilton describes is the inevitable result of using federal land-use controls as a means of pursuing environmental protection; land-use restrictions produce land devaluations for those who are restricted. Insofar as private landowners are threatened with the potential loss of the productive use of their land without compensation by environmental statutes, they will have an incentive not to provide whatever environmental amenity that the federal government is seeking to protect. Whether this committee or the federal courts wish to recognize such landuse controls as uncompensated regulatory takings or not, this will remain the case.

CONCLUSION

It is time to recognize that property rights are important for both economic and environmental reasons, and must be protected from both government regulation and private malfeasance. Compensating landowners when they are deprived of the reasonable use of their land will not produce environmental catastrophe. Far from it. As I, and others, have argued elsewhere, in many cases it will eliminate the negative environmental incentives created by the heavy hand of existing government regulations. Properly understood, property rights do not undermine sound environmental conservation, they lie at its foundation.

Compensation to landowners is a simple matter of justice; private parties should not bear public costs. S. 605 is not a perfect bill-it falls short of ensuring that all victims of regulatory takings will receive justice but it would represent a decisive step toward ensuring justice for landowners in this country. I urge this committee and the rest of the Senate to take this step by enacting a statutory requirement for compensation for regulatory takings.

Senator THURMOND. Thank you very much. We are glad to have you with us. Mr. Wilkins?

STATEMENT OF RICHARD G. WILKINS

Mr. WILKINS. Thank you, Mr. Chairman. My name is Richard G. Wilkins, and I am a professor of law at the J. Reuben Clark Law School, Brigham Young University.

The need to provide effective statutory protection for regulatory abuse of private property rights is plain. Although the Supreme Court has attempted to enunciate and apply workable limits on governmental power under the takings clause, that effort has proven exceptionally difficult.

This difficulty has stemmed, however, not from the inability to state governing principles, but from the inability to apply those pragmatically to given cases. This bill aids in that effort.

I am somewhat surprised to hear this bill described as a radical departure from established Supreme Court precedent because, in very large measure, what this bill does is codify and clarify existing constitutional doctrine. It does so, and in my written testimony I go through and show how most of the provisions of the bill are simple and unremarkable restatements of the holdings of the leading Supreme Court cases in this area. The one area where the court does go beyond those cases is the one area where, rather than having widespread unanimity on the court, there has been widespread confusion and, in fact, inability to apply constitutional doctrine. That provision is the one that is set forth in section (a)(2)(d) of this

27 Speech by Michael Bean to the U.S. Fish and Wildlife Service Seminar, "Ecosystem Approaches to Fish and Wildlife Conservation: 'Rediscovering the land Ethic," November 3, 1994 (from video; transcript available from CEI).

28 Quoted in Betsy Carpenter, "The Best-Laid Plans," U.S. News & World Report, October 4, 1993, p. 89.

bill, which simply puts remedial teeth in an old constitutional principle that harks back to 1922, when Justice Holmes said, “Government regulation cannot go too far without violating a takings clause."

The Supreme Court, despite its success in enunciating general principles, simply has been unable to give this important principle any real content. The Supreme Court explained in 1922 that the Government can't go too far. In 1960 it said it can't force people, "*** to bear public burdens which in all justice and fairness should be borne as the people as a whole." But how you effectuate those very, vague tasks is hardly self-evident, and the Supreme Court has been unable to give any real guidance except for what guidance this bill codifies.

The Supreme Court, in addressing when government regulation goes too far, has suggested that government never goes too far unless it takes all value or physically invades property. Now many have argued, and I know that some have argued before this Committee, that this result is desirable because it gives government regulators needed flexibility. But the Supreme Court's inability to separate the near from the far has resulted in so much flexibility, that the regulatory limits of the fifth amendment have effectively disappeared. I am not the only scholar who has suggested that the Supreme Court's inability to put any content into Justice Holmes' dictum has, to a large extent, rendered the fifth amendment, essentially, meaningless.

The extreme flexibility of current doctrine is simply not advisable. Chief Justice Rehnquist noted, "Many of the provisions of the Constitution are designed to limit flexibility and freedom of government authorities, and the just compensation of the fifth amendment is one of them."

Now Senate bill 605 will ensure that the fifth amendment performs its important limiting rule by providing a simple remedial rule. Government goes too far when it takes as much as one-third of the value of property, thereby, finally putting teeth into Justice Holmes' 1922 dictum.

Now this bright-line approach has much to commend it. First, it is understandable. Second, I believe that it effectuates a rough and fair balance between public need and individual right. Any government regulation, of course, will adversely affect property rights. Justice Holmes, himself, recognized that in Mahon, when he said government could hardly go on if you have to compensate for everything. But the Supreme Court has been unable to provide any intelligible guidance because balancing the near from the far necessarily requires a court to determine whether public need outweighs, in any given case, intrusion upon private interests. That determination, I submit, is essentially and quintessentially a political decision.

Courts are ill-equipped to determine when government has gone too far because, in the context of a discrete case, they are only given one option; invalidate the action or say this particular private property owner has to bear the entire cost of the regulatory scheme.

I think that the Supreme Court is not the only protector of constitutional rights in this country. Congress, as it has done with leg

islation under the commerce clause and 14th and 15th amendments, has the ability and, indeed, the obligation to protect the constitutional principles inherent in the takings clause.

I think that this legislation does an admirable job of doing that, and I would urge its passage.

[The prepared statement of Mr. Wilkins follows:]

PREPARED STATEMENT OF RICHARD G. WILKINS

I am pleased to have the opportunity to testify in support of Senate Bill No. 605. The Bill addresses and provides redress for-one of the most troubled areas of the Supreme Court's Takings Clause jurisprudence: that is, when does government regulation go "too far"? The bill also addresses-and alleviates an unfortunate jurisdictional tangle that has developed between United States District Courts and the Court of Claims. For both of these reasons, I hope that the Bill will be passed and signed into law.

WHEN DOES GOVERNMENT REGULATION GO “TOO FAR”?

The need to provide effective statutory protection for regulatory abuse of private property rights is plain. Although the Supreme Court has attempted to enunciate and apply workable limits on governmental power under the Fifth Amendment's Taking Clause, that effort has proven exceptionally difficult. The difficulty, moreover, has stemmed-not from the Court's inability to discern governing principles but from its inability to apply those pragmatic principles to discrete cases. Section 204(a)(2)(D) of Senate Bill 605 effectively addresses this remedial "gap.

Section 204 of Senate Bill 605, in large measure, codifies and clarifies current constitutional doctrine. It does so by explicitly adopting already-established constitutional standards and expressly acknowledging that these standards may yet evolve. Subsection (a)(1), for example, simply restates the rule in Loretto v. Teleprompter, 458 U.S. 419 (1982).1 Subsection (a)(2)(A), in turn, codifies the rule in Nollan v. California Coastal Commission, 483 U.S. 825 (1987),2 subsection (a)(2)(B) adopts the standard enunciated in Dolan v. City of Tigard, 114 S. Ct. 2309 (1994),3 subsection (a)(2)(C) sets out the test established by Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886 (1992), and subsection (a)(2)(E) recognizes that there may be addi

1 Section 204(a)(1) provides, in pertinent part:

A property owner shall receive just compensation if * as a consequence of an action of any agency, or State agency, private property (whether all or in part) has been physically invaded ***

Compare Loretto, 458 U.S. at 434 ("In short, when the 'character of the governmental action' *** is a permanent physical occupation of property, our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner ") (citations omitted).

2 Section 204(a)(2)(A) provides, in pertinent part:

A property owner shall receive just compensation if *** [government] action does not substantially advance the stated governmental interest to be achieved by the legislation or regulation on which the action is based * * *

Compare Nollan, 483 U.S. at 834 ("We have long recognized that land-use regulation does not effect a taking it if 'substantially advance[s] legitimate state interests") (citations omitted).

3 Section 204(a)(2)(B) provides, in pertinent part:

A property owner shall receive just compensation if * * * [government] action exacts the owner's constitutional or otherwise lawful right to use the property or a portion of such property as a condition for the granting of a permit, license, variance, or any other agency action without a rough proportionality between the stated need for the required dedication and the impact of the proposed use of the property. * * *

Compare Dolan, 114 S. Ct. at 2319-2320 ("We think a term such as 'rough proportionality' best encapsulates what we hold to be the requirement of the Fifth Amendment. No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development ") (citations omitted).

4Section 204(a)(2)(C) provides, in pertinent part:

Continued