citizens. Yet some environmental toxins like lead are primarily harmful only to such sensitive individuals in certain circumstances. Finally, since nuisance law varies from State to State, the nuisance exception could lead to varying degrees of compensation or environmental protection from one State to another.

Let me just give you a few examples, so we have this, at least from my perspective, in focus. There are a few real-world examples how State nuisance laws have proven inadequate to prevent environmental harm or protect public health and safety. American Glue and Resin, Inc. v. Air Products and Chemicals, 835 Federal Supplement 36, Massachusetts, 1993. In Massachusetts, contamination of one's own property does not constitute a nuisance, even if spilled chemicals enter the ground water and migrate into a neighbor's property. That is Massachusetts State's nuisance law 1995.

In Maine, filling a portion of a property with a barrier to water drainage is not a nuisance to an adjoining property, even though it interferes with the drainage on the adjoining property because this is a reasonable use of the law, Johnson v. Whitten, 1978 case, directly analogous to wetlands regulation.

Just two more examples and I will stop. In New York, a cement plant, which created offensive noise, white powder and pollution by unlawfully discharging waste materials into a bay adjoining a residential neighborhood was not a nuisance because the cement plant's actions did not rise to the high state standard for nuisance; that the interference was intentional, negligent or reckless or was abnormally dangerous activity. That is Benjamin v. Nelstand Materials Corporation, a 1995 case.

In Maryland, a current tenant under Maryland law does not have a cause of action in a nuisance against a former tenant for contamination of property that occurred prior to the current tenant's taking possession.

There are many other aspects of this law that we should discuss here. We will discuss. But, for example, the definition of what constitutes property and changes in contract law. If there is a contract that is changed, is it a "taking"? For example, we have contracts, as the distinguished Republican Senator from Rhode Island and Democratic Senator from Vermont and the committees they chair, know. Big debates over what contracts for water that Western farmers get Federal water projects. We changed that contract. Does that require compensation? That is a definition of a taking of a property, as I read this, or public housing tenants. We raise the rate that we charge them. Do they have a cause of action? Is that a taking under this legislation?

So this is incredibly far-reaching, but the bottom line is this, in my view; that when you change the definition of what property is and what a "taking" is, as this does, and then say the safeguard is common law nuisance, what you have fundamentally changed is what the court has historically said, and that is, under the takings clause of the fifth amendment, as long as the legislature has acted in a reasonable way to protect the health and safety of the folks out there, it is not a takings. It is a legitimate regulation. You fundamentally change that, and I don't care what studies you show, you cannot convince me, and there is another study I would like to introduce into the record from the Office of Management and

Budget as to what the cost of this would be, you cannot convince me that this would not be a problem.

The ozone layer is depleted by CFC's. No one argues about that now. Assuming we passed a law here saying nobody can emit CFC's any more, no manufacturers can into the air, under common law nuisance standard, you would have to prove that I got cancer from the CFC that was emitted from Company X that went up through the ozone layer, depleted the layer, the sun then and ultraviolet rays came down and caused me to have cancer. Try it. Try it.

Consequently, if you can't prove that, then you have to compensate each of these companies for not emitting CFC's into the air because you are taking their property. What is that; $100? $100 million? A billion dollars? $10 billion? $30 billion?

I am really anxious for this hearing to get underway, so I will stop. Thank you.

Senator THURMOND [presiding]. Well, Professor Biden has presented his view. [Laughter.]

Senator BIDEN. I have. Thank you, Senator.

[The prepared statement of Senator Biden follows:]

PREPARED STATEMENT OF SENATOR JOSEPH R. BIDEN, JR.

Let me begin by identifying the point on which we all agree: The property rights of all Americans must be respected. Indeed, I believe that the right to property is a core foundation of our society-and an essential attribute of a robust and free economy.

Nevertheless, I part company with the supporters of the bill the committee is now considering. For I believe it is a radical and unwise departure from 200 years of constitutional thinking on this issue.

The fifth amendment to the constitution says that:

No private property may be taken for public use without just compensation. This means that if the Government "takes" your property-either outright in a condemnation proceeding or through regulation—it must pay you. And it must pay you fairly. The fifth amendment does not say, however, that the Government is powerless to affect property for the community good-or that any such action on behalf of the community must result in payment to the property owner.

Quite to the contrary: The right to property has always carried with it the corollary responsibility not to use property in a way that hurts a neighbor or the general public.

And it has long been considered one of government's chief responsibilities to regulate property use for the public good. As the supreme court long ago said:

We think it a settled principle, growing out of the nature of well-ordered civil society, that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that use of it may be so regulated that it shall not be injurious*** to the rights of the community.

I believe that the bill before us is based on the exact opposite premise: That a property owner has a near absolute right to the greatest possible profit from his property-without a fair regard for the consequences to others or to the public generally.

Though I agree that property rights should-and must-be protected, I disagree that they should be given the kind of super status they would be accorded under this bill.

The question of what constitutes a "taking" under the fifth amendment has occupied the minds and talents of many a Supreme Court Justice for more than a century. Over the years, the court has declined to articulate a bright line rule and has instead articulated broad principles and insisted on a careful, fact-specific balancing of the different interests at stake, both private and public.

This flexible balancing required in takings cases recognizes both that we should be able to put our property to personal and profitable use, and that we have a corresponding responsibility not to exercise property rights in ways that hurt others. The bill before us would change all that. It does away with the careful balancing of interests, and instead, substitutes a mechanical rule of compensation that elevates individual property rights over the community welfare.

Among other provisions, the bill says that the Government-and let's be clear, that means you and me, the taxpayers-must pay the property owner if a regulation results in a 33 percent loss-in-value to any portion of property-regardless of the property owner's legitimate expectations:

• Regardless of the profitable use of the property as a whole, and

• Regardless, even, of the potential harm that a proposed property use might cause others.

This is a revolutionary idea. First, it says what not even the most pro-property rights justices on the Supreme Court-like Justices Scalia and Rehnquist-have ever said: That a loss of property value, standing alone without regard to other factors, is enough to trigger compensation.

What's more, the Supreme Court has consistently made clear that, in assessing regulatory burdens on property, we should look to the property as a whole, rather than segmenting it into smaller parts.

This is only fair: A regulation that limits the use of part of a property, like a setback rule, is fair to both the neighbors and to property owners. Similarly, a regulation that only restricts the use of a fraction of a larger parcel still leaves the property owner with land that's productive and profitable.

But this bill would give a property owner a right to compensation when a regulation impacts a portion of the property. Think about that for a minute: Once property or a property right can be segmented into portions, any loss in value can be manipulated to become a 100 percent loss and easily a 33 percent loss.

The scope of this bill should not be underestimated-for it also goes beyond mere land-use restrictions and covers the waterfront of environmental, public safety and civil rights regulations.

Suppose the FDA, thanks to some new research, determines that a drug out on the market poses some serious health risks. When the FDA bans the drug, its manufacturer is going to have a lot of useless inventory on its hands. Should we have to compensate the manufacturer for its business losses?

After we passed the Americans With Disabilities Act, some restaurants have had to expand their restroom facilities to accommodate wheelchairs. Suppose the renovation means that the restaurant loses some table space. Should we have to compensate the restaurant for its losses?

And what about pollution. When the Government sets air or water quality standards, compliance by industry can be expensive. Should we have to pay those companies not to pollute?

I say "no." But the bill before us could very well mean that in the future the answer will be "yes."

In the 1960's, there were those who argued that our landmark civil rights laws unreasonably restricted their property rights. These segregationists argued that if the Government was going to require integration-and thereby reduce their property values then it should pay them to do it.

I am proud to live in a place where the highest court in the land rejected such a claim. And it is with that proud tradition in mind that I oppose this takings legislation.

If this bill becomes law, I believe that we will be faced with two equally untenable options. Either we'll have to cut back on health, safety, environment, and civil rights protections; or we'll have to pay up-we'll have to pay employers not to discriminate, pay companies to ensure worker safety, and pay manufacturers not to pollute. Indeed, the cost estimates that have accompanied the various takings proposals before the Congress are breathtaking. The office of management and budget has estimated that the narrower house-passed takings bill—which covers only certain environmental regulations—would cost the taxpayers $28 billion over the next seven years.

OMB says that this bill, which is much broader, would be several-fold more expensive.

Let me also say: The vast majority of property owners in this country are folks like my parents-individual homeowners. These are people who have invested in a house, signed a mortgage note, and made a commitment to a particular community.

Our civil rights laws, our health and safety laws, our environmental laws all contribute to the property values of our homes. For it is clean water, clean air, and safe land management that make our property more valuable.

If these laws are rolled back-which is what I believe is the ultimate purpose of this takings legislation-homeowners will be the real losers.

There is a better way. Instead of trying to rewrite the constitution, we should focus on specific laws placing unreasonable burdens on property owners and make necessary changes to those laws.

The current administration appears to be well on the way to doing just that. For example, it is already taking steps to relieve most homeowners from certain requirements of the Endangered Species Act and wetlands regulation.

As the committee considers this legislation, I will continue to raise these concerns. I look forward to discussing the issues with our witnesses this morning, and I join Chairman Hatch in welcoming all of you here.

Senator THURMOND. I would just like to emphasize two points here; the importance of protecting private property and the significance of the low CBO cost estimate.

The protection of private property is a fundamental right which stands beside our most treasured liberties in the Bill of Rights. Yet some are satisfied to let this basic liberty go without solid protection. I am not. I support S. 605 because it creates a fair and balanced opportunity for Americans to defend their rights against an ever-increasing Federal bureaucracy.

There have been a number of attacks against this bill, which are simply not accurate. All along we have said that the Administration's inflated cost estimate was based not on economics but on politics. Now we have the proof. The neutral arbiter of budgetary questions, the Congressional Budget Office, has estimated the cost of this bill to be a tiny fraction of what the Clinton administration claims.

I look forward to disproving any other arguments against this bill as clearly and decisively as the CBO letter disproves this one. I ask unanimous consent that the CBO letter be placed in the record at this point.

[The CBO letter follows:]

DEAR MR. CHAIRMAN: At the request of your staff, the Congressional Budget Office has prepared the enclosed cost estimate for S. 605, the Omnibus Property Rights Act of 1995.

Enacting S. 605 would not affect direct spending or receipts. Therefore, pay.asyou-go procedures would not apply to the bill.

If you wish further details on this estimate, we will be pleased to provide them. Sincerely,

JUNE E. O'NEILL,

Director.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

1. BILL NUMBER: S. 605

2. BILL TITLE: Omnibus Property Rights Act of 1995 3. BILL STATUS: As introduced on March 23, 1995

October 17, 1995

4. BILL PURPOSE

S. 605 would codify the constitutional prohibition against the taking of private property without paying just compensation to the owner. The bill would establish specific conditions, definitions, and standards to be used in determining when an agency action has caused a taking of private property and what compensation is due to the owner.

Two titles of this legislation would make it easier and less expensive to pursue claims for compensation against the United States. First, Title II would establish a statutory right to judicial redress that could be used by owners to sue the government when property rights may have been taken by the activities of a federal (or authorized state) agency.

Second, Title V would establish special rules for resolving property rights disputes that involve federal programs carried out under the Endangered Species Act (ESA) and section 404 of the Federal Water Pollution Control Act (FWPCA). This title would amend the two statutes to provide landowners with a right to appeal and/ or seek compensation for agency actions through a new administrative process.

Other provisions of the bill would require agencies to consider and minimize the effects of their actions on private property rights. For example, Title IV would require agencies to conduct impact analyses before taking actions that are likely to affect private property. Agencies could not promulgate final rules that would result in uncompensated takings. Where existing regulations are found to be in conflict with the new law, agencies would have to issue new regulations. Similarly, Title V would require agencies to administer programs carried out under the ESA and FWPCA in a manner that has the least impact on the rights of property owners. Finally, the bill would require that all compensation payments to property owners be paid from funds appropriated to the agency that caused the taking. This requirement would apply to all payments (including any awarded interest and cost reimbursements), whether determined by court judgment, settlement, arbitration, or administrative decision.

5. ESTIMATED COST TO THE FEDERAL GOVERNMENT

Implementing S. 605 would involve two types of federal expenditures: (1) payments of compensation to property owners, and (2) operating and administrative expenses incurred by federal agencies.

Payments of Compensation. CBO expects that additional payments of compensation over the next few years would probably be less than the additional administrative costs (discussed below) because most of the cases that would be resolved during this period would be small administrative claims involving minor dollar amounts. CBO has no basis for estimating the additional amounts of compensation that the government might have to pay for cases where property owners choose to pursue larger claims in court.

Administrative Costs. Assuming appropriation of the necessary amounts, CBO estimates that federal agencies would spend an additional $30 million to $40 million a year over the next five years to implement and operate the administrative appeals and claims procedures prescribed by Title V. After this period, additional ongoing administrative expenses would fall. In addition to these costs, federal agencies would incur additional administrative expenses to conduct takings impact analyses and to develop new guidelines and practices for ongoing regulatory activities. Also, some agencies would incur new operating costs to manage land or other property interests acquired as a result of takings. CBO has not completed its estimate of these other costs, which could be significant for some agencies.

Payments of compensation

6. BASIS OF ESTIMATE

In the first few years following enactment of S. 605, additional costs of compensation resulting from the legislation would probably account for a relatively small portion of each affected agency's operating budget because few claims would be paid over this period and those that would be paid would typically involve small awards. The cost of compensating property owners in the longer run is very uncertain and would depend on a number of unknown factors, including how property owners and federal agencies would react to the legislation and how the legislation would be interpreted by the Administration and the courts.

CBO expects that enacting the bill would cause federal agencies to attempt to avoid paying compensation by modifying their decisions, processing permits more quickly, or otherwise changing their behavior. Although the number of small claims brought against the United States could increase dramatically-especially since so