ment can properly ban anything prospectively under the bill without paying compensation, but the government cannot go into that store and take those guns that are lawfully held without paying just compensation. Senator BIDEN. That is correct. The CHAIRMAN. The government has the right to ban weapons if it so chooses. I think it is inadvisable, personally. Senator BIDEN. So for legislative interpretive purposes, you don't think the intent of the author of this bill is in any way to diminish the right of the Federal Government-if it concluded, as it did, that certain weapons should not be able to be manufactured, your reading of this bill is that the manufacturer of those weapons is not entitled to compensation? The CHAIRMAN. Absolutely right, absolutely right, and if anybody interprets it beyond that, I think they are doing an extreme interpretation. Senator BIDEN. That is interesting. The CHAIRMAN. Now, Senator, let me make a suggestion. We have got six other witnesses here. Senator BIDEN. But we have got the Justice Department here, Senator. The CHAIRMAN. Fine, and the Justice Department has testified and we are going to keep the record open for questions in writing, and we may have future hearings, but I think we have got to get the Senator BIDEN. Senator, you and I hardly ever fight, and very seldom in public, but this is being unreasonable. The CHAIRMAN. I don't want to fight over it, but I also don't want to be here until 3 o'clock. Senator BIDEN. The Justice Department is testifying. No extraneous question has been asked yet, and you are about to cut it off and say maybe we will have additional hearings. That is outrageous, absolutely outrageous. The CHAIRMAN. Well, then, I will be outrageous because we have done it on this committee from day one. There are limits to questions because we want to accommodate other people and we want to accommodate other Senators, and I have a markup to go to. Senator BIDEN. How long was the Justice Department before this committee, 1 hour, 12 hours? The CHAIRMAN. Probably that long. Senator BIDEN. And that is unreasonable, you are telling me? The CHAIRMAN. I am not saying it is unreasonable. I am saying that it is reasonable to limit questions on the committee. You have taken enough time. I have given you my time. Senator BIDEN. You have given me a total of about 25 minutes. The CHAIRMAN. Senator, if we need to bring the Justice Department back, we will do so. Senator BIDEN. I am telling you now, I have many more questions for the Justice Department. The CHAIRMAN. Then put them in writing. Senator BIDEN. I ask that they be brought back. The CHAIRMAN. Then put them in writing, Senator, and we will go from there. Senator BIDEN. This is a new ball game, pal. The CHAIRMAN. No, it isn't a new ball game. Let me tell you, you ran the committee this way, too. Senator BIDEN. And I never cut you off. I never shut down a hearing, never, and I never once, when you had the Reagan and/ or the Bush Justice Department before you and you had questions of them, ever cut you off. The CHAIRMAN. Senator, you can continue if you want to, but let me just say this. I am trying to accommodate six other witnesses. I am trying to accommodate your schedule and my schedule, and especially mine, and I am trying to Senator BIDEN. You are trying to ram through a bill without any due consideration. The CHAIRMAN. Senator, ask any questions you want to. I will sit here forever and we will just defer everything. You just ask all the questions you want to and we will just let people wait. Senator BIDEN. That is the usual practice of the committee. The CHAIRMAN. Yes; listen, let's just do what you want to do. I will be happy to wait. Senator BIDEN. Let me ask you about the contractual issue, if I may. Is this a new cause of action that is created under fifth amendment jurisprudence, this notion that the language in the statute where is that language, if I may ask, on contracts? I had it here. Mr. SCHMIDT. It is pages eight and nine, which have a definition of property generally that is expansive beyond current fifth amendment law. One of my colleagues pointed out to me with respect to water rights that it actually goes beyond even contractual rights. It refers to the Senator BIDEN. Explain in which way it goes beyond. Mr. SCHMIDT. Well, it talks about, in paragraph (B) on page 9, "the right to use water or the right to receive water." It does not seem to be limited there to a contractual right, so even if it were not embodied in a contract, if there were some interference with a preexisting right to use water, that would represent a compensable taking under this statute. Senator BIDEN. If the Federal Government built a dam in the West causing the riparian water rights below to be affected, is that compensable now under takings jurisprudence? Mr. SCHMIDT. I believe the general answer to that would be no. You know, there might be some special circumstances and if someone here wants to correct me on that, I will stand corrected, but I think the general answer would be it would not be. Senator BIDEN. The enforcement of environmental statutes is often cited as the best example of takings, and today this bill moves beyond land use statutes. How would the definition and compensation schemes contemplated under the bill affect the ability of the Department of Justice to enforce such statutes as the Americans With Disabilities Act-you have spoken to that or the civil rights laws? How would it affect the enforcement of existing civil rights laws? Mr. SCHMIDT. I think the Americans With Disabilities Act is probably the strongest example because that does have a direct effect upon people's property by saying that under certain circumstances they have to provide access of one sort or another. If a requirement of that nature results in a reduction in the value of somebody's property of more than a third, then the Government would have to pay compensation. So either the Justice Department or whoever else is enforcing the law would decide we couldn't go forward, or if we went forward, there would have to be compensation. I don't want to suggest, and I don't think I did, that, in general, the civil rights laws impose restraints which reduce the value of people's property. So I don't think in that general sense there is an impact on the civil rights laws, but there clearly is when it comes to the ADA, which requires people to change and modify their property. Senator BIDEN. We either have heard when I was in the caucus or about to hear about the unfortunate and, in my view, unfair circumstances surrounding the condemnation of Ms. Edwards' property. What sort of Federal role would there be in a condemnation proceeding by the city of Provo? Mr. SCHMIDT. None; her property, as I understood it, was condemned by the city of Provo and it was not a Federal condemnation. Senator BIDEN. So would she have a cause of action under this legislation for what happened to her? Mr. SCHMIDT. Well, as I understand it, her contention was that the designation of her property as a wetland, which preceded the city of Provo's condemnation, had an impact on the value of her property. I guess under this statute, if that had happened and if that value exceeded a third, then she conceivably would have had a cause of action under the statute. Senator BIDEN. Apparently, after the condemnation of her property, Provo subsequently developed her property, and Ms. Edwards' understanding was that her property was classified as a wetland and could not be developed. Under what circumstance would the city be allowed to develop a property that a private citizen would be precluded from developing? Mr. SCHMIDT. To my knowledge, there is none. Someone here who is an expert on wetlands may correct me, but I don't think that the circumstances are different. So, presumably, if the city was able to get permission to do it, conceivably she could have. But, you know, those would be facts and circumstances, and I really don't want to get in a position of arguing with someone who knows her own circumstances far better than certainly I do at this point. Senator BIDEN. Now, the bill requires the Federal Government to conduct, "a private property taking impact analysis," before it issues "any policy, regulation, proposed legislation, or related agency action which is likely to result in the taking of private property." The Supreme Court told us in its taking analysis, that "it is an essentially ad hoc inquiry." That was the Penn Central case that you cited earlier. Now, this bill would require Federal bureaucrats and Congressional staff to try to assess, in the abstract, the nationwide taking impact on each and every proposed regulation or piece of legislation that met the broad definition of a taking under the act, which is presently not the constitutional standard. What kind of impact will this have on our ability to pass laws before the fact? The CHAIRMAN. That is an executive order, right, which is still law? Mr. SCHMIDT. There is a executive order that relates to circumstances where there is an anticipated taking under the current constitutional standard. Senator BIDEN. Right, not under this standard. Mr. SCHMIDT. If you limit that requirement to takings which meet the constitutional standard, then I think that is something that, as you indicate, Senator, the executive branch is not necessarily opposed to. The problem is when you apply that to an expansive definition of taking which applies to any governmental action which can have, I guess it would mean, any impact on anybody which reduces the value of their property or any portion of their property by a third or more. I think you are effectively saying that they would have to do an analysis of that kind with respect to virtually every conceivable action, so it is the breadth of the taking definition that comes back into that analysis requirement and becomes a kind of bureaucratic Senator BIDEN. I don't have any more questions. Thank you. Mr. Schmidt, we appreciate your taking time to be with us today. The CHAIRMAN. I am sincere about working with you. Mr. SCHMIDT. Thank you. The CHAIRMAN. I want to have the benefit of your advice and your expertise, and we will keep the record open so anybody can ask written questions and clarify any or all of these matters from a written questions standpoint. Thank you for taking time. We respect you and we appreciate your doing it. Mr. SCHMIDT. Thank you. [The prepared statement of Mr. Schmidt follows:] PREPARED STATEMENT OF JOHN R. SCHMIDT I. INTRODUCTION MR. CHAIRMAN, AND MEMBERS OF THE COMMITTEE: Thank you for the opportunity to provide the Administration's views regarding S. 605, the "Omnibus Property Rights Act of 1995," and similar bills that seek to expand the traditional concept of "takings." It is sometimes worthwhile to state the obvious just to ensure that no one is laboring under any misconceptions. This Administration strongly supports the protection of private property rights. The right to own, use, and enjoy private property is at the very core of our nation's heritage and our continued economic strength. These rights must be protected from interference by both private individuals and governments. That is why the Constitution ensures that if the government takes someone's property, the government will pay "just compensation" for it. That is what the Constitution says. That is what the President demands of his government. To the extent government regulation imposes unreasonable restrictions or unnecessary burdens on the use of private property, this Administration is committed to reforming those regulations to make them more fair and flexible. We have already implemented a number of significant regulatory reforms to alleviate burdens on property owners, and we are developing additional ways to improve federal programs to provide greater benefits to the public while reducing regulatory burdens, particularly for small landowners. I will describe some of these reforms in greater detail later in this testimony. Mr. Chairman, no one could disagree with the concerns that underlie S. 605. All citizens should be protected from unreasonable regulatory restrictions on their property. But S. 605, and H.R. 925 passed by the House of Representatives, will do little or nothing to protect property owners or to ensure a fairer and more effective regulatory system. Rather, we are convinced that these proposals to require compensation in contexts very different from the balance struck under the Constitution itself are a direct threat to the vast majority of American citizens. The truth is that this bill and similar proposals are based on a radical premise that has never been a part of our law or tradition: that a private property owner has the absolute right to the greatest possible profit from that property, regardless of the consequences of the proposed use on other individuals or the public generally. As a result, passage of these arbitrary and radically new compensation schemes into law will force all of us to decide between two equally unacceptable alternatives. The first option would be to cut back on the protection of human health, public safety, the environment, civil rights, worker safety, and other values that give us the high quality of life Americans have come to expect. The cost of these protections and programs after passage of the proposed compensation legislation would be vastly increased. Ironically, if we chose this path, the value of the very property this legislation seeks to protect would erode as vital protections are diminished. The other option would be to do what these proposals require: pay employers not to discriminate, pay corporations to ensure the safety of their workers, pay manufacturers not to dump their waste into the streams that run through their property and our neighborhoods, pay restaurants and other public facilities to comply with the civil rights laws. That is, each American would be forced to pay property owners to follow the law. In the process, we would end any hope of ever balancing the budget. No matter which of these two avenues we pursue, hardworking American taxpayers will be the losers. Either they will no longer be able to enjoy the clean skies, fresh water, and safe workplaces they have come to expect, or they will be forced to watch as their tax dollars are paid out to corporations and other large property owners as compensation. The Administration will not and cannot support legislation that will hurt homeowners or cost American taxpayers billions of dollars. The Administration, therefore, strongly opposes S. 605 and similar bills. The Attorney General would recommend that the President veto S. 605 or similar legislation. II. THE COMPENSATION SCHEMES IN TITLES II AND V WOULD HARM THE OVERWHELMING MAJORITY OF PROPERTY OWNERS, COST AMERICAN TAXPAYERS BILLIONS OF DOLLARS, CREATE HUGE NEW BUREAUCRACIES AND A LITIGATION EXPLOSION AND UNDERMINE VITAL PROTECTIONS A. The fifth amendment to the U.S. Constitution As you know, the Fifth Amendment to the Constitution of the United States provides that "private property [shall not] be taken for public use, without just compensation." That short phrase has provided the compensation standards for takings cases since the founding of our country. Within its contours lies a balance between the authority of the government to act in the public interest and its obligation to provide compensation when those actions place an unfair burden on an individual's property. Before we consider proposals to alter and expand those standards, it is worth discussing what the Constitution provides and why we believe it has served the American people so well over the last 200 years. The genius of the Constitution's Just Compensation Clause is its flexibility. In deciding whether a regulation is a compensable taking, the Constitution requires the government, and if necessary the courts, to consider the nature of the property interest at issue; the regulation's economic impact; its nature and purpose, including the public interest protected by the regulation; the property owner's legitimate expectations; and any other relevant factors. The ultimate standards for compensation under the Constitution are fairness and justice. Thus, we have never recognized an absolute property right to maximize profits at the expense of the property or other rights of others. For example, reasonable zoning by local governments has long been accepted as a legitimate means to promote safe and decent communities without requiring the payment of compensation to those whose property values might be adversely affected. Indeed, we recognize that the value of property in the community as a whole is thereby enhanced. On the other hand, when government regulation "goes too far" (in the words of Justice Holmes) and imposes a burden so unfair on an individual property owner that it constitutes a taking, compensation must be paid. This constitutional tradition has been carefully developed by the courts through hundreds of cases over the course of our nation's history. As I mentioned, its genius is its flexibility, for it allows the courts to address the many different situations in which regulations might affect property. It allows for the fair and just balancing of |