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deprives the owner of all economic value, then compensation is required. That is perhaps even a little comical as well, because some Supreme Court Justices have suggested that if you have the right to go back and look at your property or perhaps picnic on it, you haven't been deprived of all value. Between these two relatively clear lines there is, however, a vast area of uncertainly. It is in this area that Senate bill 605 provides necessary guidance.
The Supreme Court has simply been unable to identify when government goes "too far." One perhaps shouldn't be too hard on the court and the court's vacillation in this area. The problem has many, many facets, including such philosophical questions as what do we even mean by property rights in the first place? And then such essentially political issues as how do we balance the relative interests of individual property owners against the need of the public? There is also limits, I think, on the practical competency of courts to simply declare that a legislative goal goes so far that it is unconstitutional. Very difficult for a court to say it is somehow unconstitutional to protect a desert tortoise.
Senate bill 605 obviates all of these difficulties by providing a very clear remedial rule. Government goes "too far" when it diminishes the fair market value of the affected property by 33 percent
I think that this bill is absolutely vital to finally put some teeth into Justice Holmes' 1922 dictum. I think it is also quite appropriate that it be handled by the U.S. Congress. Congress has a duty to implement the fundamental values that are expressly stated in the Bill of Rights. Protecting fundamental values of the Constitution is not merely a job for the U.S. Supreme Court, this a job the court in fact hasn't done a very good job of protecting, and I think it is not only appropriate, but exceptionally wise for Congress to step in to fill a void.
Senate bill 605's bright-line approach to resolving when government action goes "too far" has a lot to commend it. It is straightforward and understandable. Much of the Court's current jurisprudence regarding when government goes “too far" simply gets bogged down in essentially philosophical debates about what's the most important property interest. You have some very strange opinions that say, so long as you have the right to look at your eagle feathers you haven't had them taken, even though eagle feathers that use to be worth millions of dollars are now worth nothing
The line drawn by Senate bill 605 not only resolves these kinds of philosophical debates, I believe that it effectuates a rough and fair balance between public need and individual rights. Any government regulation, of course, will have an impact upon property values someplace. I think you could probably find an economist who would look at the most mundane in government regulation and tell you exactly how it was gonna affect someone's pocketbook.
So Justice Holmes recognized this back in 1922 when he said, "government could hardly go on," if we had to compensate for every single effect. But the court has been unable to provide any coherent stopping point short of absolute and total confiscation. Indeed, I think the Court's cases could be read as saying anything short of total confiscation does not constitute going “too far.” And some justices have expressly suggested that being able to picnic on your property is enough to avoid a constitutional taking.
Senate bill 605, in effect, decrees that government regulation may deprive a property owner of as much as 33 percent of the value of property owners property, but beyond that point, any further exaction is a cost that must be borne as the public as a whole
by the public as a whole. In addition to resolving this very important remedial problem, I think Senate bill 605 also eliminates à troublesome jurisdictional tangle that right now may be more of interest to attorneys, which will certainly become very much of interest to the people who testified previously today if they actually went into court to try to protect their rights.
At the present time, the litigant who seeks to enjoin government regulatory action in Federal district court may be met, and in fact in my experience will be met, with the claim that they should have gone to the court of claims, because the Constitution doesn't prohibit government action, it merely requires compensation. However, once you get to the court of claims, you are met with the obverse jurisdictional argument that hey, we don't have to pay any money because you didn't enjoin the Government action in the first place in the U.Š. district court. Current law, in short, permits the Government to argue the jurisdictional equivalent of "heads we win, tails you lose,* and deprive U.S. citizens of any effective forum to protect their constitutional interests.
This bill resolves that problem by providing that both the Federal district courts and the court of claims shall have concurrent jurisdiction over monetary claims brought under the legislation, and this provision as well as the remedial provision of this bill, is most helpful and most needed. [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.
1. 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 pragmatically apply those 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, restates current constitutional doctrine. Subsection (a)(1), for example, restates the rule in Tharetto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419' (1982). Subsection a(2) (A), (B) (C) and (E) set out the tests enunciated by the Supreme Court in its recent decision in Dolan v. City of Tigard, 114 S. Ct. 2309 (1994), Lucas v. South Carolina Coastal Counsel, 112 S. Ct. 2886 (1992), and Nollan v. California Coastal Commission, 483 U.S. 825 (1987). These provisions, therefore, are rather unremarkable (unless, of course, one disagrees with the decisions just noted). The provision that I find most noteworthy in Senate Bill No. 605 is Subsection a(2)(D) of Section 204 which, as I understand it, puts remedial teeth into a constitutional principle that harks back to Justice Holmes 1922 opinion in Pennsylvania Coal Co. v. Mahon, 260 U.S. 412 (1922). That principle is this: While government has the power to regulate despite incidental impacts on property value, government regulation may not go “too far" without violating the Takings Clause. The Supreme Court has been remarkably unsuccessful in effectuating this principle.
A hypothetical illustration highlights both the tensions inherent in Justice Holme's dictum and the difficulties that have plagued the Supreme Court's efforts to enforce it. Suppose that a developer purchases a piece of property near an urban area that, for many years, has been zoned for high-density commercial development. The property, put to its highest and best commercial use, has a value in excess of $10 million. However once development begins, the property is determined to be the habitat for an endangered—and federally protected-animal species. As a result, property that once was worth $10 million comes to have little (or no) commercial value.
Some version of this hypothetical scenario is played out again and again in mod. ern society. On the one hand is the property owner who legitimately believed that it had the right to develop and use a classic property interest in a profitable manner. On the other hand is the legitimate need of the public to preserve important public interests. How are these conflicting interests to be mediated?
The governing constitutional doctrine is relatively clear: government, in the course of furthering even such important goals such as protecting endangered species, may not go “too far". Or, as the Supreme Court somewhat more cogently explained in 1960, government may not force "some people alone to bear public burdens which, in ali fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960). The result dictated by either of these for. mulations, however, is hardly self-evident. Granted that the government may not go “too far" in intruding upon the right of a property owner in the course of furthering even important governmental interest, what distinguishes the far from the near? Granted that government may not force some property owners to bear a disproportionate burden of the cost of protecting endangered species, when is that line crossed?
Supreme Court cases addressing the issue give little concrete guidance. Indeed, the Court has managed to protect property owners in only two rather discrete categories of cases. First, when government regulation constitutes an actual, physical intrusion upon property, the property owner must be compensated, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). Second, if government action deprives a property owner of all economic value, compensation is required. Senate Bill No. 605 preserves (and effectuates) these jurisprudential rules. Section 204(a)1); (aX2)(C). Between these relatively clear línes, however, lies a vast area of uncertainty. It is in this area that Senate Bill 605 provides welcome clarity.
The Supreme Court has been unable to identify precisely when government action goes "too far". (In fact, one could even argue that the Court has been unable to apply its relatively "clear" physical invasion and total loss of value rules.)1 One, perhaps, should not be too critical of the Court's vacillations in this area. The problem has many facets-including such determinations as how to define "property" in the first place (Keystone Bituminous Coal Association v. DeBenedictus, 480 U.S. 470 (1987)) and how to balance the relative interests of individual property owners and the public (Penn Central Transportation Co. v. New York City, 438 U.$. 104 (1978)) . Senate Bill 605 obviates these difficulties by providing a clear remedial rule: government goes "too far” when it "diminishes the fair market value of the affected portion of the property * * * by 33 percent or more with respect to the value immediately prior to the governmental action.” Section 204 (a)(2)(D).
The legislation, in sum, finally puts teeth into Justice Holme's 1922 dictum.
Senate Bill No. 605's bright-line approach to resolving when government action goes "too far" has much to commend it. It is straightforward and understandable. Several of the Supreme Court's discussions of when government goes “too far" have
1 The clarity of the “physical invasion" and "deprivation of all value” lines is often more apparent than real. For example, determining when a "physical” invasion has occurred has proven difficult. In the development hypothetical noted above, for example, the property owner may plausibly claim that–in the course of protecting the endangered animal—the government has imposed an easement limiting development on the affected property. If so, has there been a physical invasion requiring compensation? The property owner, furthermore, may well argue that, because regulation has effectively destroyed the commercial value of the property, it has lost all economic value.” If so, the government will predictably reply that the owner has not lost "all value": after all, the property owner may still
visit the affected property for family picnics and other outings. (See, e.g., the dissents filed in Lucas, 112 S. Ct. 2886 (1992)). The Court has hardly been consistent in addressing (and resolving) such arguments. Compare Lucas with Andrus v. Allard, 444 U.S. 51 (1979).
become bogged down in essentially philosophical debates regarding the meaning and nature of property. Is property a "bundle of rights”? If so,
what is the most important "stick” in that bundle the right to exclude others? Or is the most important stick, perhaps, the right to develop property rights to their full economic potential? Divisions between the Justices on such issues, as evidenced by the various opinions in Keystone Bituminous Coal Association v. DeBenedictus, 480 U.S. 470 (1987), give legal theoreticians and philosophers grist for learned discourse, but provide little practical help for either property owners or government regulators. This philosophical debate regarding the nature and protection of property rights, moreover, shows little sign of being resolved by the Supreme Court. The legislation, therefore, settles an important remedial issue by declaring that property rights are essentially economic rights.?
The line drawn by Senate Bill 605 not only resolves the philosophical debate just noted, it effectuates a rough (and I believe) fair balance between public need and individual right. Any government regulation, of course, will have an impact upon property values somewhere. Justice Holmes recognized that fact in Mahon when he noted that “government hardly could go on” if it had to compensate owners for every adverse effect of regulatory actions upon property rights, 260 U.S. at 413. But the Court has been unable to provide any coherent stopping point for the pragmatic need noted by Justice Holmes. Indeed, the Court's cases could be read to support the proposition that government regulation never goes “too fars unless it effectively deprives a property owner of all economic use or value of its property. Lucas, 112 s. ct. 2886 (1992). Senate Bill 605, in effect, decrees that government regulation may deprive a property owner of as much as 33 percent of the value of its property, but-beyond that point-the exaction is a cost that should be “borne by the public as a whole.” Armstrong, 364 U.S. at 49.
There will be academicians and theorists, of course, who will be dismayed by the rather straightforward, pragmatic lines drawn by this legislation. Some may protest that linking property rights with "fair market value” ignores other important values that inhere in the "bundle of rights” known as property. Others will argue that prohibiting government from taking more than 33 percent of the market value of identified property improperly and arbitrarily ties the hands of government. I have no doubt that cogent arguments can (and probably will be) made along both of those lines.
Such arguments, however, do not give me significant pause. If the Supreme Court were to adopt the pragmatic lines drawn by this legislation, the arguments that property involves more than mere economic value and that government regulatory authority should not be limited to an arbitrary percentage of that economic value would have real weight. But Senate Bill No. 605 does not establish a constitutional limit to the definitions of property, nor does it set a constitutional barrier to the exercise of government power. If experience demonstrates that either the purely economic definition of property or the 33 percent limitation on cost-free government action in unwise, the legislative power is sufficient to protect the public interest.
In the meantime, this legislation provides a clear—and needed-remedial rule in an area where Supreme Court adjudication has been unsatisfactory. The legislation pours workable content into the constitutional edict that government not go “too far" in interfering with property rights.
II. WHICH COURT HAS JURISDICTION UNDER THE TAKINGS CLAUSE? In addition to resolving the remedial problem just noted, Senate Bill 605 also eliminates a troublesome jurisdiction tangle that has developed between United States District Courts and the Court of Claims.
At the present time, a litigant who seeks to enjoin government regulatory action in Federal District Court on the ground that it violates
the Takings Clause will likely be met with the argument that, since the Takings Clause does not prohibit government action but only requires just compensation, the District Court lacks jurisdiction because the proper forum is the Court of Claims. Litigants who are prescient enough to proceed directly to the Court of Claims, however, will be met with the government argument that a damages claim is premature because injunctive relief (not available in the Court of Claims) was not sought in Federal District Court. Current law, in short, permits the government to argue the jurisdiction equivalent of "heads I'win, tails you lose.”
2 Compare Andrus v. Allard, 444 U.S. 51 (1979) (Court concludes that federal regulation which effectively destroyed all economic value of certain Indian objects did not constitute a taking because, even though objects had no commercial value, the owner retained the right to possess them).
Section 205 of Senate Bill 605 resolves this problem by providing that both the Federal District Courts and the Court of Claims shall have concurrent jurisdiction over monetary claims brought under the legislation, and by providing both courts with injunctive power to invalidate government action which violates the legislation.
This provision is helpful and most needed. As I have noted above, some may argue that the substantive lines drawn by Section 204 of the legislation are unwise. Simi. lar arguments, however, can hardly be made about Section 205. Whatever one's views regarding the proper definition of property rights, or the extent to which the government should be permitted to adversely impact property rights without paying compensation, it is simply not appropriate to permit the government to whipsaw litigants by claiming—wherever the suit is filed—that it was filed in the wrong court.
The CHAIRMAN. Well, thank you so much. That was a very scholarly presentation.
Let me start with Ken Ashby first, the president of the Farm Bureau. I want to personally thank you for coming today, President Ashby. The Farm Bureau has been a strong supporter of property rights, and we would do well if we had more organizations like yours with their members that do as good a job.
Mr. ASHBY. Thank you.
The CHAIRMAN. In your statement you noted that current support for property rights is merely a reaffirmation of the rights this Nation was founded upon. Do you see this bill as returned to those original beliefs or an expansion of those original beliefs?
Mr. ASHBY. I think it is a return to that and property rights are what this country was established on and
The CHAIRMAN. You might want to move those mikes over.
Mr. ASHBY. I believe it is a reaffirmation of those rights that were established when this country was founded.
The CHAIRMAN. What kind of difference do you think this bill will make in changing the way in which bureaucrats in Washington treat our people here in Utah?
Mr. ASHBY. Well, I think that really turns the tide in that and put it back to where the individual who owns property can stand and have that recognized. And bureaucrats will really take a lot closer look at the regulation when they think of doing something. They will need to stop and say now, you know, what effect is this having on private property. Which at this point in time, as I said, is an afterthought. That's the very last thing that is thought about in the present regulatory arena.
The "CHAIRMAN. I submit many times that is not even thought about period.
Mr. ASHBY. I would suppose that is true.
The CHAIRMAN. Well, how much help do you expect this bill will be to Utah's farmers and ranchers if we can get it passed?
Mr. ASHBY. I think it would be a great deal of help, as we have heard from the testimony of these three today, and I cited two other examples. There are many more out there that would fit in the same category. And those of us who are still out there on the land, it would certainly give us a much more calm feeling about what is going to happen to our property for our children in the future or what we might use as retirement as we get to that age.
The CHAIRMAN. Thank you.
Mr. Thompson, I want to thank you very much for being with us today and giving the excellent testimony that you did. You are a well recognized authority on water rights and your testimony