have grown that would make it a wetland. Therefore, you can't use it, so you are deprived of the value of your property.

But there are other kinds of takings when we require through a regulation an industry or an individual to take money out of their pocket to engage in technology, to put something on the end of that pipe that takes the carcinogenic substance out of that water or out of that liquid before it goes into the environment. That costs money, so that is a taking, right?

Mr. SCHMIDT. Yes; I mean, the question is whether it is a taking in the constitutional sense, but it could be.

Senator BIDEN. That is what this bill is talking about.

Mr. SCHMIDT. Right.

Senator BIDEN. We are not just talking about whether or not there is a taking or a regulation as it relates to the use of a physical piece of property.

Mr. SCHMIDT. No; we are talking about regulatory actions.

Senator BIDEN. A taking or a regulation is also arguable in terms of costs required of individuals and companies to take actions to clean the environment to the point that the executive branch of the Government or the legislative branch of the Government says they must do it, correct?

Mr. SCHMIDT. Yes.

Senator BIDEN. Now, what happens if there is a-right now, as I understand it, the courts have basically looked and said, look, we are not going to second-guess whether 2 parts per billion or 20 parts per billion is required to do damage to environment and individuals. They have basically given pretty wide latitude to legislators, allegedly reflecting the view of the public at large, as to what they believe constitutes clean water, right?

Mr. SCHMIDT. Right.

Senator BIDEN. Now, as I understand this bill, it is consistent with Professor Epstein. He did not write the bill. I am not saying that, but the school of thought that believes we should change the jurisprudence, either legislatively or through the courts, as it relates to what constitutes a taking versus a regulation.

The court would be required to apply a different standard, would it not? It is not merely whether or not it was reasonable for the Congress to pass such a law and whether or not that really does or doesn't protect the public health, but they would have to apply a standard that would amount to a nuisance standard, at a minimum, or a tort standard, wouldn't they?

Mr. SCHMIDT. Well, yes. What the bill imposes is a one-third requirement. Professor Epstein probably wouldn't accept a third; he would probably go down to

Senator BIDEN. I am going to get to that.

Mr. SCHMIDT. But, basically, what the bill says is if the regulatory impact reduces the value of the property by a third or more, then regardless of those other factors, there is a taking which requires compensation.

Senator BIDEN. So if the company comes in that is taking this effluent from a process by which they make widgets and says the cost of adding on the containment vessels we need to meet the standards of the Clean Water Act equals a third of the value of our property, now what standard has to be applied under the bill by

the court to determine whether or not this is a legitimate regulation or a taking, as you read it?

Mr. SCHMIDT. Well, again, I think the question would be whether the impact of that regulation is to reduce the value of the property by a third or more.

Senator BIDEN. Right.

Mr. SCHMIDT. That might not be exactly the same as the cost of doing whatever it is the Government requires. I guess it would be a test of

Senator BIDEN. I mean, I can think of circumstances where, if you were required to take the action the Government is asking for, you, in fact, are going to reduce the market value of your property by a third. So help me out here, professor. Let's stipulate that that is what it will do, OK?

Mr. SCHMIDT. Right.

Senator BIDEN. Now, once it has done that, if that is the case, what happens?

Mr. SCHMIDT. That property owner is entitled to recover compensation from the Government.

Senator BIDEN. Period?

Mr. SCHMIDT. Yes, period. I mean, this is an across-the-board test. It has the advantage of simplicity.

Senator BIDEN. My time is expired. I will come back for a second round, if I may. Thank you very much.

The CHAIRMAN. Well, let me just move to Senator Grassley, but before we do, let me just say that I think the nuisance exception will cover CFC emissions into the air. That would be a nuisance. Now, true, the Government must demonstrate some harm before the exception will be given effect, but that is what this bill is about; that is what the fifth amendment is about.

This bill in no way would go as far as Professor Epstein would go. I mean, we are not attempting to do that. We are trying to follow, really, the Lucas, Nollan, and Dolan cases.

Senator BIDEN. Senator, may I ask you a question? Does it require to demonstrate harm to an individual? Most nuisance standards require you to demonstrate harm to an individual.

Mr. SCHMIDT. Nuisance is a tort law. Somebody has to show that they are directly harmed.

Senator BIDEN. Right.

Mr. SCHMIDT. I mean, I can't go and recover on a nuisance theory for somebody

Senator BIDEN. Excuse me. I am not asking you, General. I am asking the Senator what he means by

The CHAIRMAN. Well, it covers public and private uses, and certainly if you can show harm to an individual

Senator BIDEN. But you have to show harm to an individual to establish nuisance.

The CHAIRMAN. Yes, but there are various ways of showing harm. It is not impossible to do so. What I am saying is this doesn't go nearly as far as what you are indicating by quoting Professor Epstein. That is not our goal here.

Senator BIDEN. I made it clear that Professor Epstein didn't say this. I am talking about the overall philosophy.

The CHAIRMAN. I agree.

Senator BIDEN. If you will just indulge me 30 more seconds, the ability to prove that the ozone layer depletion has caused harm to a specific individual is overwhelmingly difficult to do. Yet, no one questions that depletion of the ozone layer has a fundamentally negative impact on humankind. Therefore, it is a different standard, very difficult to meet.

The CHAIRMAN. Well, maybe the Government is going to have to meet it. I mean, you know, maybe that is just the way life is because there are a lot of differences as to whether that applies or not.

Senator BIDEN. I appreciate your answer. Thank you.

The CHAIRMAN. Now, let me also just say one other thing and then we will go to Senator Grassley. As to the partial taking, the 33-percent level, the Lucas Supreme Court case left that issue up in the air and left it open, and the Federal circuit court in the Florida Rock case created a balancing test to determine what is, "partial taking.” All we are trying to do is tell the Supreme Court what it is, and we think it is time that we defined that so that citizens aren't just robbed day in and day out. Somebody has to define this because the Court is not doing it, and it is probably appropriate that it doesn't do it. We have an obligation to do it, and that is what this legislation is all about.

Senator Grassley?

Senator GRASSLEY. I don't think I have any questions, Mr. Chairman, but I do want to say something at this point.

The CHAIRMAN. Sure.

Senator GRASSLEY. I have listened to a lot of discussion of this not only in this environment, but in a lot of other environments in the last year. Although I know our Constitution does not differentiate property rights from big corporations or little individualsthey are all treated the same I think there is a case trying to be made over the last couple of years on this issue by opponents of it that this is nothing but an effort to protect corporate polluters and to encourage corporate pollution.

The fact of economic life in America is that big corporations probably are as unaffected by the issues we are trying to get at in this legislation than anybody because they have the capability of passing on costs to the consumer and they have got the capability of hiring the big law firms to defend themselves when they have to defend themselves.

For the individual or the small self-employed person, a government judgment that deprives economic use of property can be a life-or-death situation because they can't pass on costs to the consumer or they can't afford the very expensive legal counsel that it takes to defend a situation or to protect rights.

I see this legislation as extremely important to people in my State because in my State over 98 percent of the land is privately owned, and I don't think there are more than two or three other States that have that high of a percentage of privately held land. So virtually every government regulation in some way affects the ability of land owners, particularly in my State, to use their property.

I think this legislation helps to relieve the regulatory burden on individuals. Simply stated, I think it strikes a balance between the

public good and the desire to protect private property rights, and think today I see the deck just extremely stacked in favor of the Government and against property owners; particularly, the smaller they are, the more so. The intimidation of a Federal bureaucrat gets individuals and small business people in this country just to knuckle under, and it shouldn't be that way.

Now, I know opponents of this bill are arguing that the Constitution already protected the rights of private property owners. But you have got to be able to make use of the courts to get this done, and I think Chief Judge Smith points out very well today that a petitioner seeking to invoke these constitutional protections faces both jurisdictional and procedural hurdles that are not very easily

overcome.

Just some CRS statistics, reporting for 1993: of 31 Federal court decisions on takings issues, only 2 were decided in favor of property owners. Litigation under the Takings Clause is extremely expensive and time-consuming to do, and hence very costly. Aggrieved property owners are effectively barred from judicial remedy due to the cost and time involved in their case.

I think the proposed legislation will clear this up by giving us a clear standard, by eliminating jurisdictional hurdles, and by expediting the process in favor of the land owner who has suffered a taking. I think the bill will force agencies to consider whether their actions affect the use of private property.

I think just this bill's impact upon the thought process and the culture of decisionmaking of our bureaucracy is the most beneficial impact. I think it is going to force some common-sense approaches to regulation writing, and just the institution of a little bit of common sense in public policymaking in America, particularly in a bureaucracy where there isn't an interaction between the people affected and the policymakers, I think would be such a good discipline to institute upon government.

This bill does not in any way turn back the clock of the gains that have been made in environment or safety legislation or a lot of other things. Critics of this legislation arguing that the Government will be forced to pay polluters to comply with environmental law and somehow awarding bad actors just can't be given paramount position when such government action doesn't really hurt these bad actors like it really impacts negatively upon the lawabiding individual, the little guy of America and the self-employed person or the ma-and-pa operations of America. I think our common law nuisance approaches to taking care of these problems are going to see that that doesn't happen. So I think, Mr. Chairman, this bill is sorely needed to bring common sense to the promulgation, and most importantly the enforcement of those regulations. Mr. Chairman, I would ask that my entire statement be included in the record.

The CHAIRMAN. It will be included in the record.

[The prepared statement of Senator Grassley follows:]

PREPARED STATEMENT OF SENATOR CHARLES E. GRASSLEY

I thank the distinguished Chairman, Senator Hatch, for introducing S. 605 the Omnibus Property Rights Act of 1995 and for calling this hearing. I am pleased to be an original cosponsor of this important piece of legislation.

This legislation is extremely important to the people of my state. In Iowa, over 98 percent of the land is privately-owned. I believe only 3 other states have a higher percentage of privately-held land. So virtually every government regulation in some way affects the ability of a landowner to use their property.

The people have grown tired of the increasing regulatory encroachment on their everyday lives. The plea I hear most often when I return to Iowa is "Get the government off our back." I believe that sentiment was the driving force behind the November 1994 elections. I also believe that my party will have a difficult time maintaining its majority status if it does not pay careful attention to this sentiment.

This bill helps relieve the regulatory burden on individuals in three important ways. First, it provides for compensation to landowners whose property is taken or devalued by 33 percent. Second, it forces agencies to analyze proposed regulations as to the likelihood that the regulation will result in a taking. And third, the bill makes it easier for aggrieved landowners to seek remedy from the government in federal court.

Simply stated, the legislation strikes a balance between the public good and the desire to protect private property rights. Currently, the deck is stacked in favor of the government and against property owners.

Opponents of the bill will argue that the Constitution already protects the rights of private property owners in the Fifth and Fourteenth Amendments. However, for the reasons pointed out in the testimony we will hear from Chief Judge Smith, a petitioner seeking to invoke these constitutional protections faces both jurisdictional and procedural hurdles that are not easily overcome. In fact, CRS reports that of 31 federal court decisions on the takings issue in 1993, only 2 were decided in favor of the property owner.

Moreover, litigation under the Takings Clause is generally more expensive and time consuming than other types of litigation because of its fact-intensive nature and lack of clear judicial standards. Thus, many aggrieved landowners are effectively barred from a judicial remedy due to the cost and time involved in trying their case. This proposed legislation sets a clear standard, eliminates jurisdictional hurdles and expedites the process in favor of the landowner who has suffered a taking.

The bill also will force agencies to consider whether their actions affect the use of private property. This requirement will result in more innovative regulations that both promote the public good and limit the infringement of the government on property rights.

This bill does not turn back the clock on the gains we have made in the last two decades in improving the environment. Critics of this legislation argue that the government will be forced to pay polluters to comply with environmental law, thus rewarding so-called "bad actors." This is simply not the case. No compensation will be paid for activity that constitutes a common law nuisance.

In closing, this bill is sorely needed to bring back some common sense to the way agencies promulgate and enforce regulations. It is also needed to give the aggrieved landowner a fighting chance against a government, that has failed to uphold the sanctity of private property rights.

The CHAIRMAN. I said that we would go to Senator Feinstein next, and then we will go to Senator Leahy.

STATEMENT OF HON. DIANNE FEINSTEIN, A. U.S. SENATOR

FROM THE STATE OF CALIFORNIA

Senator FEINSTEIN. Thank you very much, Mr. Chairman. Mr. Chairman, all of my adult life I have fought for property rights. I did it as a member of an air pollution control district in the Bay area of California. I did it as a member of the Coast Commission. I did it as a member of the Bay Conservation Development Commission. I did it for 9 years as a county supervisor, and I did it for 9 years as mayor of San Francisco in turning down every single request for eminent domain that ever came before me, no matter how civically-oriented that was.

But I must say, Mr. Chairman, I believe this is a bad bill. I will fight it every way I possibly can, and I want to suggest to you why. It should be no coincidence that the National League of Cities opposes this bill. The National Conference of State Legislatures op