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

protect their constitutional rights, and I commend the new Congressional leadership for recognizing the need for this legislative guidance to the Federal courts to ensure the continuing value of citizens' fifth amendment rights and I look forward to assisting the committee in any way possible in this important legislation.

Thank you.

[The prepared statement of Mr. Ludwiszewski follows:]

PREPARED STATEMENT OF RAYMOND B. LUDWISZEWSKI

Thank you Mr. Chairman. I am Raymond B. Ludwiszewski, a partner in the law firm of Gibson, Dunn & Crutcher. I have been an environmental lawyer for my entire career. Before entering private practice, I held a variety of senior positions in the U.S. Environmental Protection Agency (EPA) between May 1989 and April 1993. In early 1991, EPA Administrator Bill Reilly designated me to serve as the Agency's chief environmental enforcement officer, the Assistant Administrator for Enforcement. Subsequently, Administrator Reilly asked me serve as the General Counsel. Between 1985 and 1988, I served in the Environment and Natural Resources Division of the U.S. Justice Department. In that role, I had the opportunity to help craft the legal briefs filed by the United States in a significant number of takings cases before the Supreme Court. I would like to begin by thanking the Chairman and the Committee for the opportunity to appear before you today to discuss S. 605 and the protection afforded private property by the 5th Amendment's "just compensation" clause.

Since the passage of the Bill of Rights in 1789, this country has protected private property from confiscation, or "taking," by the federal government without "just compensation." In the early years of the Republic, the federal courts had little difficulty administering justice under the "just compensation" clause. Most government takings were obvious and bold. Typically, the government physically occupied private property-either permanently or temporarily by flooding the property or barracking troops on the property. In these straight-forward circumstances, the federal courts readily ordered the payment of compensation to the injured landowners. As government began to intrude increasingly into its citizens' daily lives through regulation, however, the courts found it much more difficult to define the contours of the takings protections of the Bill of Rights. Confronted with a myriad of land use regulations, the federal courts were challenged to explain when a regulation "went too far" and worked a "regulatory taking" that required compensation. Since 1922, the federal courts have struggled repeatedly with this question and have done so with very limited success.

Indeed, the Supreme Court has expended considerable effort in recent years to explain the scope of the Constitution's "just compensation" protections. The long litany of post-1980 Supreme Court cases seeking to bring further definition to the "just compensation" guarantee are familiar: Riverside Bayview Homes, Webb's Pharmacies, Midkiff, Agins, Loretto, Hamilton Bank, County of Yolo, First English, Keystone Bituminous Coal, Nollan, Lucas and Dolan. While the Supreme Court has sought to clarify the law in this area, the lower federal courts have found interpreting the just compensation clause to be challenging. A number of celebrated takings cases have dragged on interminably in lower federal court dockets. For example, more than a dozen years have passed since the original complaint was filed in Florida Rock. The case has outlasted it original trial judge and has made two trips to the Court of Appeals. It is still pending. Similarly, the Loveladies Harbor case was filed in 1983. The case required numerous rulings by the Court of Appeals and was not resolved until 1994, more than eleven years after the original claim was filed. Against this backdrop of confused jurisprudence, I believe that S. 605 could serve a very useful function in providing the federal courts with additional guidance in this area through legislation.

In my view, congressional guidance on a number of the complex and undecided questions that currently surround regulatory takings laws would be especially valuable to the federal courts. First, there is the question of what level of over-regulation is necessary before compensation is required? As Justice Holmes once noted "Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law." On the other hand, this truism can be read too broadly. Government can seek to advance broad social purposes, such as habitat conservation or historic preservation, by imposing specific and costly restrictions on an individual's property rights. If we allow this regulation to go without compensation, then the individuals' property rights

have been confiscated just as effectively as if the government had occupied their land. To date, the courts have been unsuccessful in drawing a clear line between legitimate regulation and over-regulation that demands compensation. The guidance S. 605 provides to the courts on this important issue would be especially useful.

Second, the federal courts-including the U.S. Supreme Court-have been unable to determine a consistent view on the constitutional protections available for partial takings absolute deprivations of less than the entirety of a citizen's property. For example, a landowner may have a large tract of land where only 10 percent of the property is subject to development restrictions due to wetlands regulations. Does the fact that the landowner can still use 90 percent of its land absolve the government from a "regulatory taking" of the remaining 10 percent? In the 1922 case of Pennsylvania Coal v. Mahon, the Supreme Court basically answered this question “no.” Unfortunately, in the 1987 case of Keystone Coal, the Court essentially reversed itself and answered the question "yes." S. 605's direction to the courts on this important policy question could bring needed consistency to federal judicial decisions in this vital area.

Third, since development of the early common law of England, courts have acknowledged that no person has the unfettered right to make a noxious use of property. In other words, government can regulate, and even prohibit, nuisances on property without paying compensation. This long-recognized and well-reasoned exemption to the just compensation guarantee now threatens to swallow the rule, however. Indeed, some advocates have offered the courts a completely circular approach to this issue because the land use contemplated must by definition violate the regulation that is being challenged as a taking, the activity must also by definition be a “nuisance” that does not merit just compensation.

Driven by a desire to avoid paying for regulatory deprivations, financiallystrapped governments have become increasingly creative in defining what constitutes a "nuisance." Moreover, the courts are often reluctant to second-guess the determination of the elected representatives of the people as to what constitutes a noxious use of land in modern society. However, their reluctance can make the 5th Amendment just compensation guarantee a hollow promise. The direction provided in S. 605 on how courts should view the "nuisance exemption" would be particularly valuable.

In addition to offering useful guidance on the substantive issues outlined above, S. 605 contains several significant procedural improvements. For example, it affords the Federal Court of Claims and the Federal District Courts concurrent jurisdiction for both monetary and injunctive relief in takings claims. This will effectively end the "ping-ponging" of takings claimants between these two courts. Similarly, S. 605 allows for alternative dispute resolution to expedite the conclusion of takings claims. Title VI codifies the requirement that a Taking Impact Analysis be performed on new regulations. Implementation of these provisions should produce superior regulations that reflect careful consideration of the impact of new rules on citizens' rights. Finally, Title VII of S. 605 creates administrative appeal rights to afford affected property owners a ready opportunity to challenge jurisdictional determinations under the controversial Endangered Species Act and Section 404 Wetlands pro

grams.

S. 605 should bring much needed clarity to takings jurisprudence. Moreover, S. 605 should facilitate citizens' ability to protect their constitutional rights without interfering with progress on environmental protection. I commend the new congressional leadership for recognizing the need for legislative guidance to the federal courts to ensure the continued value of each citizen's 5th Amendment rights. look forward to assisting the Committee in any way possible on this important legislation.

The CHAIRMAN. Well, thank you.

Let me just ask one question of Judge Smith and then I will turn the time over to Senator Biden because I think you can answer Senator Biden's questions. First of all, Judge Smith, I want to thank you for your comprehensive and informative discussion of the jurisdictional issues involved in this very perplexing area of law. This committee feels very fortunate to have somebody of your intellect and ability to help us through these issues, and I want to thank you for coming here today. I would also like to add, and I hope you will be glad to know, that your request in the Boles case

opinion for Congressional action has not gone unnoticed, so we are trying to do something here.

One of the issues I would like to ask you about, though, concerns the Constitution. There are those who have raised questions about the constitutionality of the Federal Court of Claims exercising some of the authority that this bill will grant to it. As I understand it, the provision is perfectly constitutional, but I would like to hear your thoughts on the matter as chief judge of the Courts of Claims if you would be kind enough to give it to us.

Judge SMITH. I appreciate that, Senator. I have heard that issue raised over the past years once or twice, and it seems to me that it comes from a misapprehension of the role of article I courts as opposed to article III courts. Article I courts are staffed by constitutional officers just like article III courts. We are confirmed by the Senate and appointed by the President in the same manner, and we take the same oath, which is to really uphold and defend the Constitution of the United States and decide all laws under the Constitution.

Of course, in order to do that, we have to have the power, and it is inherent in the role of a judge, to declare actions which are against the Constitution unconstitutional. Otherwise, the hypothetical-if we had a law passed by the Congress saying that Presbyterians couldn't get tax refunds and a Presbyterian filed a suit in our court and said, I want a tax refund, we would be faced with either having to ignore the Constitution entirely and say, no, because you are a Presbyterian, you can't get a tax refund, or we would have to declare that action of Congress unconstitutional as violative of the first amendment.

Since the court began its history, really, it has declared actions unconstitutional. In the 1950's, it declared a loyalty provision which took a pension away, I believe, in Steinberg, unconstitutional. Currently, article III Federal judges are suing in the court seeking to declare a provision of the Social Security Act unconstitutional as violative of the article III protection of salary.

Almost everyday the court is dealing with claims that a particular action has either taken property, and therefore the lack of compensation violates the Constitution; contract provisions where contracts are breached, where the constitutional rights are implicated. In our military pay issue cases, we adjudicate fourth amendment questions of whether a search and seizure is improper and violates the Constitution.

So all through the history of the court, both during its article III and article I phases, and there have been several of those, it has been able to declare actions of either statutes or Federal executive actions unconstitutional, and no one, to my knowledge, has ever in opinions raised the question of whether an article I court can do that.

It seems to me that the real issue in any case is what kind of remedy the court is empowered by the Congress to use. The Court of Federal Claims for the most part, though not exclusively, gives money judgments. We do have equitable remedies in the bid protests and some tax cases and, of course, in military and civilian pay cases. We can order the Government through injunctions to do certain actions. We have declaratory relief in various areas.

So this bill would make, really, it seems to me, a remedial change and it would not only give us the power which has now been given us to find actions amounting to a violation of the fifth amendment without compensation, and therefore awarding compensation, but would give us also the specific relief, the injunctive and equitable relief, to give another kind of remedy which might in a lot of ways be less severe than the monetary judgment. So I don't believe that there is any constitutional problem with that part of the bill or any argument that I have seen raised that would create a problem.

The CHAIRMAN. Well, thank you very much. I have to step out for a minute, but I am going to turn to our Democrat leader on the committee and he will ask questions. I will be back in just a few minutes.

Senator BIDEN. Ms. Marzulla, could you give me some more detail on the case you cited about the, I assume, rancher in the part of Nevada that lost his or her

Ms. MARZULLA. His.

Senator BIDEN. Can you tell me more about the facts of the case? Ms. MARZULLA. I can, but I don't think you would be terribly interested because I am not holding it out as an example of a case that would be corrected by this law. I held it up as an example of the type of people that we represent.

Senator BIDEN. OK, all right.

Ms. MARZULLA. But I would be happy to go into the case.

Senator BIDEN. No, no. There are a couple of things I am trying to figure out here; first of all, how extensive the application of this law would be. For example, you have outfits like the League of Cities coming in in opposition to this. You have the Delaware State Legislature, a conservative legislative body, voting down legislation relating to takings, not the same legislation.

I was wondering whether or not the example you were using related to you said a Federal action.

Ms. MARZULLA. No; I said a government action.
Senator BIDEN. I am sorry, I am sorry.

Ms. MARZULLA. I purposefully tried to be clear, but I should have been more clear. I apologize.

Senator BIDEN. No, no. That is all right. I just want to understand it.

Now, if I may ask you, Mr. Marzulla, would you explain to the committee again why this would not-well, let me ask it another way. Would the questions raised concerning the Reclamation Act of 1902, a statute which, as you know as well as I do, was written to help settle the West under which land owners in the Western States continue to contract with the U.S. Government to obtain water subsidies-would that be affected at all, or is it the contract that they have with the State government who, in turn, contracts with the Federal Government? Could you enlighten me on the Reclamation Act and whether or not this statute would be applicable to it?

Mr. MARZULLA. I will start, Senator, by saying that I do not purport to be an expert on the Reclamation Act. I know relatively little of its operation by reason of my experience with the Justice Department and my representation of private clients at the moment.