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when 50 percent of the value is lost. By its terms, it applies to any appropriation of private property for public use.
We believe that the Fifth Amendment is absolute in its terms and therefore oppose any threshold level before compensation is payable. We appreciate efforts to provide some degree of certainty in determining when a taking has occurred by establishing a threshold amount of property value that must be lost before a compensable taking under those bills occurs. Some degree of certainty in this regard is necessary if an administrative claim procedure described above is to be viable. Of course, a statutory rule does not displace the constitutional guarantee of the Fifth Amendment.
There is no practical difference between a government agency taking a strip of land because it wants to build a highway and a government regulation prohibiting the use of property because of the presence of an endangered species or a wetland. In both cases, the landowner has lost the use of all or a portion of his or her property. In both cases, the loss of use diminishes the value of that private property in the name of the public interest.
Likewise, the federal government compensates private property owners when it buys private property to create a federal wildlife refuge. Again, there is no practical difference between formal creation of a wildlife refuge and de facto creation of a series of refuges resulting from prohibitions of use of private lands in the name of endangered species or wetlands protection.
Whether a land use restriction is classified as a physical taking or a regulatory taking, a permanent taking or a temporary taking, there is one common elementlandowners are deprived of the use of all or part of their property. From the perspective of farmers and ranchers, it makes no difference to their operations if land is appropriated for use as a highway or if they are prohibited from using their property because of the presence of a listed species or a wetland. They have lost economic use of that property in either event.
In addressing the issue of why compensation is required for takings caused by environmental regulations, it is also important to reiterate the fundamental basis underlying the Fifth Amendment. That principle, as often stated by the U.S. Supreme Court, is "to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” If a government action or regulation benefits the general public, then the Fifth Amendment requires that any costs of that action or regulation be borne by the public as a whole, and not by a few.
A substantial part of federal environmental legislation seeks to promote a broad, general “public interest.” The Endangered Species Act, for example, declares that protection of species is in the national interest. Likewise, protection and preservation of wetlands is declared to be in the national interest. Indeed, for both of these statutes, a national public interest must be found in order to justify federal legislation.
These “national in scope" environmental regulations are primarily imposed on farmers and ranchers, who make up less than two percent of the total population. Especially in the case of endangered species and wetlands regulations, these programs naturally target open, largely undeveloped land because that is where the species and the wetlands are found. Most of the privately owned land fitting that description belongs to farmers and ranchers. Over 75 percent of our nation's wetlands are located on private property. Reports indicate that nationwide 78 percent of listed species are on private lands, with 34 percent exclusively on private land. Most of this is farm and ranch land. Farmers take pride in producing food while seeing wildlife on their property,
With the protection of wetlands and endangered species being in the national public interest, the costs of that protection should be borne by the public as a whole. The means of distributing those costs from society as a whole to those affected few is through just compensation.
We recognize that the right to use one's private property is not absolute. Property owners, for example, cannot use their property in an unlawful manner. Further, property owners may be restricted from using their property in such a way that causes harm and that injures the property of another. Regulations designed to prohibit unlawful use of property, use of property that is a common law nuisance and or that injures the use or enjoyment of property of another would, in our view, not require compensation. These types of regulations are part of a category of regulations traditionally described as “police powers”—those designed to protect the "health, safety or morals” of the public, or to prevent public nuisances.
Most environmental statutes and regulations that are most burdensome to farmers and ranchers fall outside of this category. Thus, the compensation requirements cannot be characterized as “pay-to-pollute” provisions, because none of the activities covered either cause pollution or involve the exercise of traditional police powers. For example, section 204(dX1) of S. 605 plainly states that no compensation shall be required if the use of the property constitutes a nuisance. This is the same rule adopted by the U.S. Supreme Court in Lucas vs. South Carolina Coastal Council in 1992. Acts of pollution are a nuisance and, thus, polluters will not benefit under this bill.
Many of these laws and regulations simply fall outside the scope of traditional police power authority, and are based on entirely different grounds. The Endangered Species Act, for example, was enacted under the Commerce Clause. While the Act finds a “public interest” in preserving species, the Act does not say that the “health, safety and morals” of the country require it. The Endangered Species Act therefore falls outside the traditional “police power” matrix of federal regulation. ESA regulations that restrict or deny use of private property therefore cannot claim possible exemption from the Fifth Amendment's just compensation requirements.
Our organization has long supported fiscal responsibility by the federal government. It is not our intention to see private property legislation "bust the federal budget.” Undoubtedly, you have heard this claim. But it only points out that if the cost is that high, then it is now being borne by property owners. If the federal government wants to use the property for the good of all, it is only fair that all share in its cost.
Farm Bureau is particularly interested in and supportive of an administrative procedure for private property owners to obtain compensation for lost property rights.
Some Farm Bureau members know first hand the exorbitant costs associated with pursuing litigation to protect their legitimate private property rights. These people often have to pursue claims through an administrative process before going to federal or state court, and then maybe to an appeals court before their claims are fi. nally resolved. Pursuing these claims take a great deal of time, but also a great deal of money spent for attorney fees, court costs, discovery and other costs as they go through the various steps. Most Farm Bureau members cannot afford to pursue such claims at all and thus are victims of the process.
Providing private property rights protection under the Constitution means nothing if there is no way to enforce them. Private landowners should not be precluded by the high costs of our legal system from protecting their property rights. While our government should be sensitive to the property rights of private landowners and structure regulations in such a way that does not impact those rights, this is unfortunately not the case in actual practice. An affordable administrative procedure that allows private property owners to protect their legal rights is an absolute necessity, and we are pleased that a simplified, less formal and less expensive and time-consuming procedure is provided in these bills.
REFOCUS ENVIRONMENTAL PROTECTION By placing the responsibility for costs of environmental protection on the public where it belongs, agencies would have to refocus their regulatory efforts toward legitimate governmental interests. Where public policy implementation is achieved at little or no cost, as in the uncompensated restrictions on private property rights, there is virtually no limit to what agencies believe they can do. Where the perceived benefits of promoting governmental policies are separated from the costs of implementing those policies, there is no governmental accountability or public responsibility. In fact, they feel obligated to regulate even more, while lines of legitimate governmental interests in carrying out congressional mandates become blurred. The result is overregulation.
Associating costs to governmental regulation of endangered species and wetlands regulations will refocus the agencies on their proper and legitimate regulatory responsibilities. In the case of wetlands, agencies will be forced to focus on protection of those wetlands that are important for public health and safety purposes by making assessments of the functions and values of wetlands and determining which are most worthy of protection. With regard to endangered species, agencies will have to concentrate on how best to protect species instead of spending their appropriated funds on trying to convince the public to support such things as wolf and grizzly bear introduction.
There is no question that positive incentives would result in better protection and would better accomplish the goals of the programs better than negative regulation. This is especially true for the Endangered Species Act, where over 20 years of negative regulatory direction has produced only a handful of species that have achieved the recovery goals of the Act. Farm Bureau actively supports the idea of incentive programs for both wetlands and for endangered species protection as a means of achieving the goals of both regulatory programs without infringing on private property rights.
"GIVINGS" We also comment on the issue of government action as a "giving". It is unfortunate that "takings” and “givings” are discussed as part of the same issue. The government "givings" concept is not rooted in the Constitution.
Bruce Yandle, Alumni Professor of Economics and Legal Studies at Clemson University, puts it this way: “In contrast, if a highway is built near the owner's land, and her land increases in value, the owner has received no property rights (emphasis added). She has no legal right to stop a later decision to relocate the highway. She has simply won a lottery. If a regulatory decision is made to close the highway due to congestion or flooding, and the landowner's property values fall by 50 percent, that is no taking and no compensation is due. Payment is required when rights are transferred, not when luck of the draw affects values.”
The "givings” and “takings" issues have been raised with respect to price and income support programs for farmers and ranchers. If payments to agricultural producers were reduced, that would have an impact on land values because some portion of the yearly payments has been capitalized into the value of land. That would certainly cause hardship for those producers, but it is not a takings as defined by the Constitution. There is no constitutional right to receive farm program payments.
The issue is not about value of property. It is about the right to own and use that property, and regulations that restrict that ownership and use.
Farm Bureau believes that there are many cases where property owners gain value in their land through the actions of the federal government, but they can also gain value from several other sources. But nowhere are those gains deemed to constitute “property rights.” That is the crucial issue in this debate.
CONCLUSION Government at all levels has been disregarding private property rights for so long that it will take considerable change to fully protect private property rights as intended by the Constitution.
We support S. 605, the Omnibus Property Rights Act of 1995, as an important step in the rebalancing of power between property owners and government.
Senator THURMOND. Thank you very much. Pleased to have you here.
Our next witness is Ms. Merrily Pierce.
STATEMENT OF MERRILY PIERCE Ms. PIERCE. Good morning, Mr. Chairman, and members of the Committee. My name is Merrily Pierce, and I am a homeowner. I am also vice president of the Fairfax County Federation of Citizens Associations, which was founded 55 years ago. The Federation is the largest civic association in the county and the umbrella organization for over 150 homeowner associations representing about 200,000 homeowners.
We rarely, if ever, have an opportunity or reason to address a Senate Committee, and we are honored to be here this morning. I am here because of our concern over S. 605. The fifth amendment of the U.S. Constitution states that there shall be no takings of private property without just compensation. This provision is self-executing. No laws need to be passed to define it nor to implement it. What actually is a taking of private property is defined by the courts on a case-by-case basis looking at the specific facts of the case, including the effects of the proposed action on neighbors, the community and broad public interest.
This procedure has defined takings of private property since the Constitution was adopted. The Federation supports the Constitution and, therefore, strongly opposes S. 605.
In weighing this so-called property rights legislation, we think that Congress should recognize that the largest number of property owners in this country are homeowners. This legislation would most definitely hurt, not help, this constituency.
First of all, we have to ask why our tax dollars should be used to compensate more often than now required and what limitations will the Congress put on increasing the mandated frequency of payment?
In simple terms, S. 605 would take dollars out of the pockets of our members and of homeowners across the country.
Second, the legislation represents an ominous threat to the security of our private property rights. Our homes are the most important investment most of us will make in our lifetimes. We want to protect the value of that investment. Therefore, we depend on basic health, safety, zoning and environmental regulations to help us maintain our quality of life and those property values. Takings legislation would undermine the laws and regulations which protect our communities and our homes.
I have included several examples of situations we have faced in our county in my written testimony. I have time to cite only one recent disaster to homeowners, which could have been prevented had the necessary regulations been in place.
In the middle of our county, there is a large, well-established community of 1,500 homes. The community of Mantua has its own elementary school, tennis courts, a swim club, a stream valley park with trails, meandering streams and established hard-wood trees throughout. A strong citizens association organizes neighbors for parades, holidays and to welcome newcomers. This is a community with a rare sense of place and used to be a sought-after location for home buyers.
Five years ago a resident noticed oil flowing on the surface of a stream that ran through the back of her yard. An investigation uncovered a significant problem at a petroleum storage tank farm facility nearby. Shock became terror when the community learned that the plume of oil, estimated at 300,000 gallons, had leaked from the tank farm, under the adjacent four-lane highway, under the treed buffer area, under commercial properties along the highway and under 17 homes in the community.
How did the community suffer as private property owners? The properties over the plume suddenly became worth half of their value, adjacent homeowners saw their values reduced by 30 percent and the next ring of homeowners also experienced a loss in value. In the first 2 years of this disaster, Fairfax County lost over $800,000 in real estate taxes.
The entire community was stigmatized. Prospective home buyers stayed away and real estate agents avoided the community. Five years after the oil leak was first discovered, 60 families who lived on streets directly affected by the spill have moved. The community is still fighting to restore its proud reputation. The situation should never have been permitted to occur. Had the oil company had monitoring wells on site, which they now have, they would have had
advanced knowledge of the leaks in time to correct them. We consider the regulation put in place following the disastrous leak to be private property protection legislation. The owners of the tank farm had a responsibility to operate a safe facility.
Takings legislation would require homeowners to pay to prevent having their property damaged by irresponsible neighbors. We feel this would represent an enormously unfair financial burden on the homeowning taxpayer.
Government at all levels must ensure basic safeguards so that people need not fear unnecessary damage by other property owners because they live downstream, downwind or downhill. The Mantua oil spill demonstrates the need for environmental protection laws to protect property rights in another respect as well.
Following the discovery of the spill, a number of homeowners filed suit based on Virginia nuisance law to recover loss of their property values. Unfortunately, last April, a Federal Appeals court rejected the suit and concluded that the homeowners could not recover for loss of value because the underground spill was not physically perceptible from the homeowners' property.
This result clearly demonstrates to us the inadequacy of nuisance law to protect homeowners and a need for reasonable across-theboard regulations and standards to meet today's problems. Common and
codified law is full of examples of regulations preventing property owners from harming others or the community as a whole. For example, materials and practices which create fire hazards are regulated. The condition and operation of motor vehicles is regulated. At the national level, Clean Water legislation and other environmental laws protect our communities, our homes and our wallets.
To require homeowners to pay to prevent damage caused by irresponsible land use nearby will be costly, is unnecessary and goes against our basic American values of owning our own homes.
All property owners are and should be entitled to constitutional protection, but certain landowners should not be the beneficiaries of what we feel could be a new entitlement program that would pay them for the costs of complying with the standards that protect the majority
Senator THURMOND. I believe your time is up. Are you about through?
Ms. PIERCE. One sentence. We believe this bill to be hurtful to our members as taxpayers and homeowners. Thank you very much. Senator THURMOND. Thank you. Mr. Joseph Sax?
STATEMENT OF JOSEPH L. SAX Mr. Sax. Mr. Chairman, I am Joseph Sax, counselor to Secretary Bruce Babbitt, Department of the Interior. Thank you for the opportunity to testify this morning.
In addition to my written statement, I would like to submit for the record testimony previously given by other Administration witnesses before the Committee on Environment and Public Works on this bill, S. 605, and other related bills.
Senator THURMOND. Without objection, they will be admitted.
Mr. Sax. Thank you, Mr. Chairman. In testifying today, my primary concern is to dispel the misconception that S. 605 does no